


	UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended December 31, ~~2016~~2017 or
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to ____________



Commission File Number	Registrant; State of Incorporation; Address; and Telephone Number	I.R.S. Employer Identification No.

1-5324	EVERSOURCE ENERGY (a Massachusetts voluntary association) 300 Cadwell Drive Springfield, Massachusetts 01104 Telephone: (800) 286-5000	04-2147929

0-00404	THE CONNECTICUT LIGHT AND POWER COMPANY (a Connecticut corporation) 107 Selden Street Berlin, Connecticut 06037-1616 Telephone: (800) 286-5000	06-0303850

1-02301	NSTAR ELECTRIC COMPANY (a Massachusetts corporation) 800 Boylston Street Boston, Massachusetts 02199 Telephone: (800) 286-5000	04-1278810

1-6392	PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (a New Hampshire corporation) Energy Park 780 North Commercial Street Manchester, New Hampshire 03101-1134 Telephone: (800) 286-5000	02-0181050

~~0-7624~~	~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~ ~~(a Massachusetts corporation)~~ ~~300 Cadwell Drive~~ ~~Springfield, Massachusetts 01104~~ ~~Telephone: (800) 286-5000~~	~~04-1961130~~

Securities registered pursuant to Section 12(b) of the Act:



Registrant	Title of Each Class	Name of Each Exchange on Which Registered

Eversource Energy	Common Shares, $5.00 par value	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:



Registrant	Title of Each Class

The Connecticut Light and Power Company	Preferred Stock, par value $50.00 per share, issuable in series, of which the following series are outstanding:

		$1.90 $2.00 $2.04 $2.20 3.90% $2.06 $2.09 4.50% 4.96% 4.50% 5.28% $3.24 6.56%	Series Series Series Series Series Series E Series F Series Series Series Series Series G Series	of 1947 of 1947 of 1949 of 1949 of 1949 of 1954 of 1955 of 1956 of 1958 of 1963 of 1967 of 1968 of 1968

NSTAR Electric Company	Preferred Stock, par value $100.00 per share, issuable in series, of which the following series are outstanding:

		4.25% 4.78%	Series Series	of 1956 of 1958

NSTAR Electric Company and Public Service Company of New Hampshire ~~and Western Massachusetts Electric Company~~ each meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K, and each is therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I(2) toof Form ~~10-K.~~10‑K.

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.



	Yes	No

	x	¨

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



	Yes	No

	¨	x

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.



	Yes	No

	x	¨

Indicate by check mark whether the registrants have submitted electronically and posted on its corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).



	Yes	No

	x	¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated ~~filer.~~filer, smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of ~~"accelerated filer"~~“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"large accelerated filer"~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



	Large ~~Accelerated Filer~~accelerated filer	Accelerated ~~Filer~~filer	Non-accelerated ~~Filer~~filer	Smaller reporting company	Emerging growth company

Eversource Energy	x	¨	¨	¨	¨
The Connecticut Light and Power Company	¨	¨	x	¨	¨
NSTAR Electric Company	¨	¨	x	¨	¨
Public Service Company of New Hampshire	¨	¨	x
~~Western Massachusetts Electric Company~~	¨	¨	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):



	Yes	No

Eversource Energy	¨	x
The Connecticut Light and Power Company	¨	x
NSTAR Electric Company	¨	x
Public Service Company of New Hampshire	¨	x
~~Western Massachusetts Electric Company~~	¨	x

The aggregate market value of Eversource Energy's Common Shares, $5.00 par value, held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of Eversource Energy's most recently completed second fiscal quarter (June 30, ~~2016)~~2017) was ~~$18,939,770,997~~$19,210,596,737 based on a closing market price of ~~$59.90~~$60.71 per share for the ~~316,189,833~~316,432,165 common shares outstanding held by non-affiliates on June 30, ~~2016.~~2017.

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:



Company - Class of Stock	Outstanding as of January 31, ~~2017~~2018
Eversource Energy Common ~~shares,~~Shares, $5.00 par value	316,885,808 shares

The Connecticut Light and Power Company Common ~~stock,~~Stock, $10.00 par value	6,035,205 shares

NSTAR Electric Company Common Stock, $1.00 par value	~~100~~200 shares

Public Service Company of New Hampshire Common ~~stock,~~Stock, $1.00 par value	301 ~~shares~~

~~Western Massachusetts Electric Company~~ ~~Common stock, $25.00 par value~~	~~434,653~~ shares

Eversource Energy holds all of the 6,035,205 shares, ~~100 shares, 301~~200 shares and ~~434,653~~301 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire, ~~and Western Massachusetts Electric Company,~~ respectively.

Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire ~~and Western Massachusetts Electric Company~~ each separately file this combined Form 10-K. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.

GLOSSARY OF TERMS

The following is a glossary of abbreviations orand acronyms that are found in this report:



Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the Company	Eversource Energy and subsidiaries
Eversource parent or ES parent	Eversource Energy, a public utility holding company
ES parent and other companies	ES parent and other companies are comprised of Eversource parent, Eversource Service and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), and the consolidated operations of CYAPC and YAEC, and Aquarion's water business from the date of acquisition on December 4, 2017 through December 31, 2017
CL&P	The Connecticut Light and Power Company
NSTAR Electric	NSTAR Electric Company
PSNH	Public Service Company of New Hampshire
~~WMECO~~	~~Western Massachusetts Electric Company~~
NSTAR Gas	NSTAR Gas Company
Yankee Gas	Yankee Gas Services Company
Aquarion	Eversource Aquarion Holdings, Inc and its subsidiaries (formerly known as Macquarie Utilities Inc)
NPT	Northern Pass Transmission LLC
Northern Pass	The HVDC and associated alternating-current transmission line project from Canada into New Hampshire
Eversource Service	Eversource Energy Service Company
Bay State Wind	A project being developed jointly by Eversource and Denmark-based Ørsted (formerly known as DONG Energy) to construct an offshore wind farm off the coast of Massachusetts
CYAPC	Connecticut Yankee Atomic Power Company
MYAPC	Maine Yankee Atomic Power Company
YAEC	Yankee Atomic Electric Company
Yankee Companies	CYAPC, YAEC and MYAPC
~~Regulated companies~~Electric and Natural Gas Companies	The Eversource ~~Regulated~~electric and natural gas companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO,~~PSNH, the natural gas distribution businesses of Yankee Gas and NSTAR Gas, NPT, the generation ~~activities~~facilities of PSNH, and ~~WMECO, and NPT~~
	the solar power facilities of NSTAR Electric
Regulators:
DEEP	Connecticut Department of Energy and Environmental Protection
DOE	U.S. Department of Energy
DOER	Massachusetts Department of Energy Resources
DPU	Massachusetts Department of Public Utilities
EPA	U.S. Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
ISO-NE	ISO New England, Inc., the New England Independent System Operator
MA DEP	Massachusetts Department of Environmental Protection
NHPUC	New Hampshire Public Utilities Commission
PURA	Connecticut Public Utilities Regulatory Authority
SEC	U.S. Securities and Exchange Commission
SJC	Supreme Judicial Court of Massachusetts

Other Terms and Abbreviations:
Access Northeast	A project being developed jointly by Eversource, ~~Spectra Energy Partners, LP~~Enbridge, Inc. ("~~Spectra"~~Enbridge"), and National Grid plc ("National Grid") through Algonquin Gas Transmission, LLC to bring needed additional natural gas pipeline and storage capacity to New England.
ADIT	Accumulated Deferred Income Taxes
AFUDC	Allowance For Funds Used During Construction
AOCL	Accumulated Other Comprehensive Loss
ARO	Asset Retirement Obligation
~~Bay State Wind~~	~~A proposed offshore wind project being developed off the coast of Massachusetts~~
Bcf	Billion cubic feet
C&LM	Conservation and Load Management
CfD	Contract for Differences
Clean Air Project	The construction of a wet flue gas desulphurization system, known as "scrubber technology," to reduce mercury emissions of the Merrimack coal-fired generation station in Bow, New Hampshire
CO₂	Carbon dioxide
CPSL	Capital Projects Scheduling List
CTA	Competitive Transition Assessment
CWIP	Construction Work in Progress
EDC	Electric distribution company
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974



ESOP	Employee Stock Ownership Plan
ESPP	Employee Share Purchase Plan
Eversource ~~2015~~2016 Form 10-K	The Eversource Energy and Subsidiaries ~~2015~~2016 combined Annual Report on Form 10-K as filed with the SEC
~~FERC ALJ~~	~~FERC Administrative Law Judge~~
Fitch	Fitch Ratings
FMCC	Federally Mandated Congestion Charge
FTR	Financial Transmission Rights
GAAP	Accounting principles generally accepted in the United States of America
GSC	Generation Service Charge
GSRP	Greater Springfield Reliability Project
GWh	Gigawatt-Hours
HQ	Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDC	~~High voltage~~High-voltage direct current
Hydro Renewable Energy	Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP	Independent Power Producers
ISO-NE Tariff	ISO-NE FERC Transmission, Markets and Services Tariff
kV	Kilovolt
kVa	Kilovolt-ampere
kW	Kilowatt (equal to one thousand watts)
kWh	Kilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour)
LBR	Lost Base Revenue
LNG	Liquefied natural gas
LRS	Supplier of last resort service
~~McF~~MMcf	Million cubic feet
MGP	Manufactured Gas Plant
MMBtu	One million British thermal units
Moody's	Moody's Investors Services, Inc.
MW	Megawatt
MWh	Megawatt-Hours
NEEWS	New England East-West Solution
~~NETO~~NETOs	New England Transmission Owners
~~Northern Pass~~	~~The high-voltage direct-current~~ (including Eversource, National Grid and ~~associated alternating-current transmission line project from Canada into New Hampshire~~Avangrid)
NOx	Nitrogen oxides
OCI	Other Comprehensive Income/(Loss)
PAM	Pension and PBOP Rate Adjustment Mechanism
PBOP	Postretirement Benefits Other Than Pension
PBOP Plan	Postretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance
PCRBs	Pollution Control Revenue Bonds
Pension Plan	Single uniform noncontributory defined benefit retirement plan
PPA	Pension Protection Act
RECs	Renewable Energy Certificates
Regulatory ROE	The average cost of capital method for calculating the return on equity related to the distribution and generation business segment excluding the wholesale transmission segment
RNS	Regional Network Service
ROE	Return on Equity
RRB	Rate Reduction Bond or Rate Reduction Certificate
RSUs	Restricted share units
S&P	Standard & Poor's Financial Services LLC
SBC	Systems Benefits Charge
SCRC	Stranded Cost Recovery Charge
SERP	Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SIP	Simplified Incentive Plan
SO₂	Sulfur dioxide
SS	Standard service
TCAM	Transmission Cost Adjustment Mechanism
TSA	Transmission Service Agreement
UI	The United Illuminating Company

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

~~2016~~2017 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS



		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	2324

PART II
Item 5.	Market for the Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2627
Item 6.	Selected Consolidated Financial Data	2829
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	6663
Item 8.	Financial Statements and Supplementary Data	6764
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~145~~139
Item 9A.	Controls and Procedures	~~145~~139
Item 9B.	Other Information	~~145~~139

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~146~~140
Item 11.	Executive Compensation	~~149~~143
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~175~~167
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~176~~168
Item 14.	Principal Accountant Fees and Services	~~177~~169

PART IV
Item 15.	Exhibits and Financial Statement Schedules	~~178~~170
Item 16.	Form 10-K Summary	~~178~~170
Signatures		~~179~~171

iii

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995

References in this Annual Report on Form 10-K to "Eversource," ~~"the Company,~~the "Company," "we," "our," and "us" refer to Eversource Energy and its consolidated subsidiaries. CL&P, NSTAR Electric, ~~PSNH~~ and ~~WMECO~~PSNH are each doing business as Eversource Energy.

From time to time, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify our forward-looking statements through the use of words or phrases such as "estimate," "expect," "anticipate," "intend," "plan," "project," "believe," "forecast," "should," "could," and other similar expressions. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to:

cyber breaches and other disruptions to our information technology system that may compromise the confidentiality of our proprietary information and the personal information of our customers,

acts of war, or terrorism or grid disturbances that may disrupt our transmission and distribution systems,

ability or inability to successfully commence and complete our major strategic development opportunities,

actions or inaction of local, state and federal regulatory, public policy and taxing bodies,

changes in business conditions, which could include disruptive technology related to our current or future business model,

changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,

fluctuations in weather patterns, including extreme weather due to climate change,

changes in laws, regulations or regulatory policy,

changes in levels or timing of capital expenditures,

disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,

developments in legal or public policy doctrines,

technological developments and alternative energy sources,

changes in accounting standards and financial reporting regulations,

actions of rating agencies, and

other presently unknown or unforeseen factors.

Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.

All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, ~~and~~many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A, Risk Factors, included in this combined Annual Report on Form 10-K. This Annual Report on Form 10-K also describes material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to ~~Consolidated~~ Financial Statements. We encourage you to review these items.

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

PART I

Item 1. Business

Please refer to the Glossary of Terms for definitions of defined terms and abbreviations used in this combined Annual Report on Form 10-K.

Eversource Energy, headquartered in Boston, Massachusetts and Hartford, Connecticut, is a public utility holding company subject to regulation by the FERC under the Public Utility Holding Company Act of 2005. We are engaged primarily in the energy delivery business through the following wholly-owned utility subsidiaries:

The Connecticut Light and Power Company (CL&P), a regulated electric utility that serves residential, commercial and industrial customers in parts of Connecticut;

NSTAR Electric Company (NSTAR Electric), a regulated electric utility that serves residential, commercial and industrial customers in parts of eastern ~~Massachusetts;~~and western Massachusetts and owns solar power facilities;

Public Service Company of New Hampshire (PSNH), a regulated electric utility that serves residential, commercial and industrial customers in parts of New Hampshire and owns generation assets used to serve customers;

Western Massachusetts Electric Company (WMECO), a regulated electric utility that serves residential, commercial and industrial customers in parts of western Massachusetts and owns solar generating assets;

NSTAR Gas Company (NSTAR Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Massachusetts; and

Yankee Gas Services Company (Yankee Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Connecticut.

Aquarion Water Company (Aquarion), a regulated water utility holding company that serves residential, commercial, industrial and fire protection customers through its separate three regulated utilities, AWC-CT, AWC-MA and AWC-NH in parts of Connecticut, Massachusetts and New Hampshire;

CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH also serve New England customers through Eversource Energy's electric transmission ~~business.~~

~~CL&P, NSTAR Electric, PSNH~~business, and ~~WMECO~~ are each doing business as Eversource Energy in their respective service territories.

On December 31, 2017, Western Massachusetts Electric Company, a former subsidiary of Eversource Energy, merged with and into NSTAR Electric, with NSTAR Electric as the surviving entity. As a result, NSTAR Electric serves all of Eversource Energy’s electric customers in Massachusetts. For purposes of this combined Annual Report on Form 10-K, the financial statements and financial information presented for prior years were retrospectively adjusted as if the merger had occurred on the first day of the earliest period presented. Upon the closing of the merger, all assets, contracts, rights and obligations of Western Massachusetts Electric Company were reflected as part of NSTAR Electric.

On December 4, 2017, Eversource acquired Macquarie Utilities Inc., subsequently renamed Eversource Aquarion Holdings, Inc., and its Aquarion Water Company subsidiaries. Collectively, these water utility companies serve residential, commercial, industrial and fire protection customers in parts of Connecticut, Massachusetts and New Hampshire.

Eversource Energy, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH each report their financial results separately. We also include information in this report on a segment basis for Eversource Energy. Eversource Energy recognizes three reportable segments: electric distribution, electric transmission, and natural gas distribution. Eversource Energy's electric distribution segment includes the ~~generation~~ results of ~~PSNH~~PSNH's generation facilities and ~~WMECO. These three~~NSTAR Electric's solar power facilities. The energy transmission and distribution segments represented substantially all of Eversource Energy's total consolidated revenues for the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014.~~2015. CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH do not report separate business segments.

NSTAR ELECTRIC ~~DISTRIBUTION SEGMENT~~COMPANY

(a Massachusetts corporation)

~~General~~800 Boylston Street

Boston, Massachusetts 02199

Telephone: (800) 286-5000

04-12788101-6392

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

(a New Hampshire corporation)

Energy Park

780 North Commercial Street

Manchester, New Hampshire 03101-1134

Telephone: (800) 286-5000

02-0181050

Securities registered pursuant to Section 12(b) of the Act:



Registrant	Title of Each Class	Name of Each Exchange on Which Registered

Eversource Energy	Common Shares, $5.00 par value	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:



Registrant	Title of Each Class

The Connecticut Light and Power Company	Preferred Stock, par value $50.00 per share, issuable in series, of which the following series are outstanding:
		$1.90 $2.00 $2.04 $2.20 3.90% $2.06 $2.09 4.50% 4.96% 4.50% 5.28% $3.24 6.56%	Series Series Series Series Series Series E Series F Series Series Series Series Series G Series	of 1947 of 1947 of 1949 of 1949 of 1949 of 1954 of 1955 of 1956 of 1958 of 1963 of 1967 of 1968 of 1968

NSTAR Electric Company	Preferred Stock, par value $100.00 per share, issuable in series, of which the following series are outstanding:
		4.25% 4.78%	Series Series	of 1956 of 1958

NSTAR Electric Company and Public Service Company of New Hampshire each meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K, and each is therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I(2) of Form 10‑K.

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.



	Yes	No
	x	¨

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



	Yes	No
	¨	x



	Yes	No
	x	¨



	Yes	No
	x	¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company

Eversource Energy	x	¨	¨	¨	¨
The Connecticut Light and Power Company	¨	¨	x	¨	¨
NSTAR Electric Company	¨	¨	x	¨	¨
Public Service Company of New Hampshire	¨	¨	x	¨	¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):



	Yes	No
Eversource Energy	¨	x
The Connecticut Light and Power Company	¨	x
NSTAR Electric Company	¨	x
Public Service Company of New Hampshire	¨	x

The aggregate market value of Eversource Energy's Common Shares, $5.00 par value, held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of Eversource Energy's most recently completed second fiscal quarter (June 30, 2017) was $19,210,596,737 based on a closing market price of $60.71 per share for the 316,432,165 common shares outstanding held by non-affiliates on June 30, 2017.

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:



Company - Class of Stock	Outstanding as of January 31, 2018
Eversource ~~Energy's~~Energy Common Shares, $5.00 par value	316,885,808 shares

The Connecticut Light and Power Company Common Stock, $10.00 par value	6,035,205 shares

NSTAR Electric Company Common Stock, $1.00 par value	200 shares

Public Service Company of New Hampshire Common Stock, $1.00 par value	301 shares

Eversource Energy holds all of the 6,035,205 shares, 200 shares and 301 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire, respectively.

Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire each separately file this combined Form 10-K. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.

GLOSSARY OF TERMS

The following is a glossary of abbreviations and acronyms that are found in this report:



Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the Company	Eversource Energy and subsidiaries
Eversource parent or ES parent	Eversource Energy, a public utility holding company
ES parent and other companies	ES parent and other companies are comprised of Eversource parent, Eversource Service and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), and the consolidated operations of CYAPC and YAEC, and Aquarion's water business from the date of acquisition on December 4, 2017 through December 31, 2017
CL&P	The Connecticut Light and Power Company
NSTAR Electric	NSTAR Electric Company
PSNH	Public Service Company of New Hampshire
NSTAR Gas	NSTAR Gas Company
Yankee Gas	Yankee Gas Services Company
Aquarion	Eversource Aquarion Holdings, Inc and its subsidiaries (formerly known as Macquarie Utilities Inc)
NPT	Northern Pass Transmission LLC
Northern Pass	The HVDC and associated alternating-current transmission line project from Canada into New Hampshire
Eversource Service	Eversource Energy Service Company
Bay State Wind	A project being developed jointly by Eversource and Denmark-based Ørsted (formerly known as DONG Energy) to construct an offshore wind farm off the coast of Massachusetts
CYAPC	Connecticut Yankee Atomic Power Company
MYAPC	Maine Yankee Atomic Power Company
YAEC	Yankee Atomic Electric Company
Yankee Companies	CYAPC, YAEC and MYAPC
Electric and Natural Gas Companies	The Eversource electric and natural gas companies are comprised of the electric distribution ~~segment consists of the distribution~~and transmission businesses of CL&P, NSTAR Electric and PSNH, the natural gas distribution businesses of Yankee Gas and ~~WMECO, which are engaged in~~NSTAR Gas, NPT, the ~~distribution of electricity to retail customers in Connecticut, eastern Massachusetts, New Hampshire and western Massachusetts, respectively, plus the regulated electric~~ generation ~~assets~~facilities of PSNH, and ~~WMECO.~~the solar power facilities of NSTAR Electric
Regulators:
DEEP	Connecticut Department of Energy and Environmental Protection
DOE	U.S. Department of Energy
DOER	Massachusetts Department of Energy Resources
DPU	Massachusetts Department of Public Utilities
EPA	U.S. Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
ISO-NE	ISO New England, Inc., the New England Independent System Operator
MA DEP	Massachusetts Department of Environmental Protection
NHPUC	New Hampshire Public Utilities Commission
PURA	Connecticut Public Utilities Regulatory Authority
SEC	U.S. Securities and Exchange Commission
SJC	Supreme Judicial Court of Massachusetts
Other Terms and Abbreviations:
Access Northeast	A project being developed jointly by Eversource, Enbridge, Inc. ("Enbridge"), and National Grid plc ("National Grid") through Algonquin Gas Transmission, LLC to bring needed additional natural gas pipeline and storage capacity to New England.
ADIT	Accumulated Deferred Income Taxes
AFUDC	Allowance For Funds Used During Construction
AOCL	Accumulated Other Comprehensive Loss
ARO	Asset Retirement Obligation
Bcf	Billion cubic feet
C&LM	Conservation and Load Management
CfD	Contract for Differences
Clean Air Project	The construction of a wet flue gas desulphurization system, known as "scrubber technology," to reduce mercury emissions of the Merrimack coal-fired generation station in Bow, New Hampshire
CO₂	Carbon dioxide
CPSL	Capital Projects Scheduling List
CTA	Competitive Transition Assessment
CWIP	Construction Work in Progress
EDC	Electric distribution company
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974

~~The following table shows the sources of 2016 electric franchise retail revenues for Eversource Energy's electric distribution companies, collectively, based on categories of customers:~~

(Thousands of Dollars, except percentages) 2016 % of Total
Residential $ 3,448,043
54 %
Commercial 2,465,664
39 %
Industrial 328,103
5 %
Other 139,527
2 %
Total Retail Electric Revenues $ 6,381,337
100 %



ESOP	Employee Stock Ownership Plan
ESPP	Employee Share Purchase Plan
Eversource 2016 Form 10-K	The Eversource Energy and Subsidiaries 2016 combined Annual Report on Form 10-K as filed with the SEC
Fitch	Fitch Ratings
FMCC	Federally Mandated Congestion Charge
FTR	Financial Transmission Rights
GAAP	Accounting principles generally accepted in the United States of America
GSC	Generation Service Charge
GSRP	Greater Springfield Reliability Project
GWh	Gigawatt-Hours
HQ	Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDC	High-voltage direct current
Hydro Renewable Energy	Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP	Independent Power Producers
ISO-NE Tariff	ISO-NE FERC Transmission, Markets and Services Tariff
kV	Kilovolt
kVa	Kilovolt-ampere
kW	Kilowatt (equal to one thousand watts)
kWh	Kilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour)
LBR	Lost Base Revenue
LNG	Liquefied natural gas
LRS	Supplier of last resort service
MMcf	Million cubic feet
MGP	Manufactured Gas Plant
MMBtu	One million British thermal units
Moody's	Moody's Investors Services, Inc.
MW	Megawatt
MWh	Megawatt-Hours
NEEWS	New England East-West Solution
NETOs	New England Transmission Owners (including Eversource, National Grid and Avangrid)
NOx	Nitrogen oxides
OCI	Other Comprehensive Income/(Loss)
PAM	Pension and PBOP Rate Adjustment Mechanism
PBOP	Postretirement Benefits Other Than Pension
PBOP Plan	Postretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance
PCRBs	Pollution Control Revenue Bonds
Pension Plan	Single uniform noncontributory defined benefit retirement plan
PPA	Pension Protection Act
RECs	Renewable Energy Certificates
Regulatory ROE	The average cost of capital method for calculating the return on equity related to the distribution and generation business segment excluding the wholesale transmission segment
RNS	Regional Network Service
ROE	Return on Equity
RRB	Rate Reduction Bond or Rate Reduction Certificate
RSUs	Restricted share units
S&P	Standard & Poor's Financial Services LLC
SBC	Systems Benefits Charge
SCRC	Stranded Cost Recovery Charge
SERP	Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SIP	Simplified Incentive Plan
SO₂	Sulfur dioxide
SS	Standard service
TCAM	Transmission Cost Adjustment Mechanism
TSA	Transmission Service Agreement
UI	The United Illuminating Company

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

2017 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS



		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	24

PART II
Item 5.	Market for the Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	Selected Consolidated Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 8.	Financial Statements and Supplementary Data	64
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	139
Item 9A.	Controls and Procedures	139
Item 9B.	Other Information	139

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	140
Item 11.	Executive Compensation	143
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	167
Item 13.	Certain Relationships and Related Transactions, and Director Independence	168
Item 14.	Principal Accountant Fees and Services	169

PART IV
Item 15.	Exhibits and Financial Statement Schedules	170
Item 16.	Form 10-K Summary	170
Signatures		171

iii

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995

References in this Annual Report on Form 10-K to "Eversource," the "Company," "we," "our," and "us" refer to Eversource Energy and its consolidated subsidiaries. CL&P, NSTAR Electric, and PSNH are each doing business as Eversource Energy.

cyber breaches and other disruptions to our information technology system that may compromise the confidentiality of our proprietary information and the personal information of our customers,

acts of war, terrorism or grid disturbances that may disrupt our transmission and distribution systems,

ability or inability to successfully commence and complete our major strategic development opportunities,

actions or inaction of local, state and federal regulatory, public policy and taxing bodies,

changes in business conditions, which could include disruptive technology related to our current or future business model,

changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,

fluctuations in weather patterns, including extreme weather due to climate change,

changes in laws, regulations or regulatory policy,

changes in levels or timing of capital expenditures,

disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,

developments in legal or public policy doctrines,

technological developments and alternative energy sources,

changes in accounting standards and financial reporting regulations,

actions of rating agencies, and

other presently unknown or unforeseen factors.

Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.

All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A, Risk Factors, included in this combined Annual Report on Form 10-K. This Annual Report on Form 10-K also describes material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements. We encourage you to review these items.

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

PART I

Item 1.Business

Please refer to the Glossary of Terms for definitions of defined terms and abbreviations used in this combined Annual Report on Form 10-K.

The Connecticut Light and Power Company (CL&P), a regulated electric utility that serves residential, commercial and industrial customers in parts of Connecticut;

NSTAR Electric Company (NSTAR Electric), a regulated electric utility that serves residential, commercial and industrial customers in parts of eastern and western Massachusetts and owns solar power facilities;

NSTAR Gas Company (NSTAR Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Massachusetts; and

Yankee Gas Services Company (Yankee Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Connecticut.

CL&P, NSTAR Electric and PSNH also serve New England customers through Eversource Energy's electric transmission business, and are each doing business as Eversource Energy in their respective service territories.

Eversource Energy, CL&P, NSTAR Electric and PSNH each report their financial results separately. We also include information in this report on a segment basis for Eversource Energy. Eversource Energy recognizes three reportable segments: electric distribution, electric transmission, and natural gas distribution. Eversource Energy's electric distribution segment includes the results of PSNH's generation facilities and NSTAR Electric's solar power facilities. The energy transmission and distribution segments represented substantially all of Eversource Energy's total consolidated revenues for the years ended December 31, 2017, 2016 and 2015. CL&P, NSTAR Electric and PSNH do not report separate business segments.

~~A summary of our distribution companies' retail electric GWh sales volumes and percentage changes for 2016, as compared to 2015, is as follows:~~

2016 2015
Percentage
Change
Residential 21,002
21,441
(2.0 )%
Commercial 27,206
27,598
(1.4 )%
Industrial 5,434
5,577
(2.6 )%
Total 53,642
54,616
(1.8 )%

For 2016, retail electric sales volumes at our electric utilities with a traditional rate structure (NSTAR Electric and PSNH) were lower, as compared to 2015, due primarily to the impact of increased customer energy conservation efforts, including those resulting from company-sponsored energy efficiency programs. Fluctuations in retail electric sales volumes at NSTAR Electric and PSNH impact earnings as they operate under a traditional rate structure, where sales volume, impacted by weather, has a direct impact on revenue recognized.

For CL&P and WMECO, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission approved distribution revenue decoupling mechanisms. These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and WMECO reconcile their annual base distribution rate recovery amounts to their respective pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, respectively. Any difference between the allowed level of distribution revenue for CL&P and WMECO and the actual amount delivered during a 12-month period is adjusted through rates in the following period.

~~ELECTRIC DISTRIBUTION – CONNECTICUT~~

~~THE CONNECTICUT LIGHT AND POWER COMPANY~~

CL&P's distribution business consists primarily of the purchase, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2016, CL&P furnished retail franchise electric service to approximately 1.2 million customers in 149 cities and towns in Connecticut, covering an area of 4,400 square miles. CL&P does not own any electric generation facilities.

~~The following table shows the sources of CL&P's 2016 electric franchise retail revenues based on categories of customers:~~

CL&P
(Thousands of Dollars, except percentages) 2016 % of Total
Residential $ 1,603,351
61
Commercial 858,965
32
Industrial 139,556
5
Other 47,672
2
Total Retail Electric Revenues $ 2,649,544
100 %

~~A summary of CL&P's retail electric GWh sales volumes and percentage changes for 2016, as compared to 2015, is as follows:~~

2016 2015
Percentage
Change
Residential 9,907
10,094
(1.9 )%
Commercial 9,461
9,635
(1.8 )%
Industrial 2,249
2,342
(4.0 )%
Total 21,617
22,071
(2.1 )%

~~Rates~~

CL&P is subject to regulation by the PURA, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities. CL&P's present general rate structure consists of various rate and service classifications covering residential, commercial and industrial services. CL&P's retail rates include a delivery service component, which includes distribution, transmission, conservation, renewable energy programs and other charges that are assessed on all customers. Connecticut utilities are entitled under state law to charge rates that are sufficient to allow them an opportunity to recover their reasonable operating and capital costs, in order to attract needed capital and maintain their financial integrity, while also protecting relevant public interests.

Under Connecticut law, all of CL&P's customers are entitled to choose their energy suppliers, while CL&P remains their electric distribution company. For those customers who do not choose a competitive energy supplier, under SS rates for customers with less than 500 kilowatts of demand, and LRS rates for customers with 500 kilowatts or more of demand, CL&P purchases power under standard offer contracts and passes the cost of the purchased power to customers through a combined charge on customers' bills.

CL&P continues to supply approximately 42 percent of its customer load at SS or LRS rates while the other 58 percent of its customer load has migrated to competitive energy suppliers. Because this customer migration is only for energy supply service, it has no impact on CL&P's electric distribution business or its operating income.

~~The rates established by the PURA for CL&P are comprised of the following:~~

An electric GSC, which recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers. The GSC is adjusted periodically and reconciled semi-annually in accordance with the policies and procedures of the PURA, with any differences refunded to, or recovered from, customers.

A revenue decoupling adjustment (effective December 1, 2014) that reconciles the amounts recovered from customers, on an annual basis, to the distribution revenue requirement approved by the PURA in its last rate case, which currently is an annual amount of $1.059 billion.

A distribution charge, which includes a fixed customer charge and a demand and/or energy charge to collect the costs of building and expanding the infrastructure to deliver electricity to customers, as well as ongoing operating costs to maintain the infrastructure.

An FMCC, which recovers any costs imposed by the FERC as part of the New England Standard Market Design, including locational marginal pricing, locational installed capacity payments, and any costs approved by the PURA to reduce these charges. The FMCC also recovers costs associated with CL&P's system resiliency program. The FMCC is adjusted periodically and reconciled semi-annually in accordance with the policies and procedures of the PURA, with any differences refunded to, or recovered from, customers.

A transmission charge that recovers the cost of transporting electricity over high-voltage lines from generating plants to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.

A CTA charge, assessed to recover stranded costs associated with electric industry restructuring such as various IPP contracts. The CTA is reconciled annually to actual costs incurred and reviewed by the PURA, with any difference refunded to, or recovered from, customers.

An SBC, established to fund expenses associated with various hardship and low income programs and a program that compensates municipalities for lost property tax revenues due to decreased values of generating facilities caused by electric industry restructuring. The SBC is reconciled annually to actual costs incurred and reviewed by the PURA, with any difference refunded to, or recovered from, customers.

A Clean Energy Fund charge, which is used to promote investment in renewable energy sources. Amounts collected by this charge are deposited into the Clean Energy Fund and administered by the Clean Energy Finance and Investment Authority. The Clean Energy Fund charge is set by statute and is currently 0.1 cent per kWh.

A conservation charge, comprised of a statutory rate established to implement cost-effective energy conservation programs and market transformation initiatives, plus a conservation adjustment mechanism charge to recover the residual energy efficiency spending associated with the expanded energy efficiency costs directed by the Comprehensive Energy Strategy Plan for Connecticut.

As required by regulation, CL&P, jointly with UI, entered into the following contracts whereby UI will share 20 percent and CL&P will share 80 percent of the costs and benefits (CL&P's portion of these costs are either recovered from, or refunded to, customers through the FMCC):

Four capacity CfDs (totaling approximately 787 MW of capacity) with three electric generation units and one demand response project, which extend through 2026 and have terms of up to 15 years beginning in 2009. The capacity CfDs obligate both CL&P and UI to make or receive payments on a monthly basis to or from the project and generation owners based on the difference between a contractually set capacity price and the capacity market prices that the project and generation owners receive in the ISO-NE capacity markets.

Three peaker CfDs (totaling approximately 500 MW of peaking capacity) with three peaking generation units. The three peaker CfDs pay the generation owners the difference between capacity, forward reserve and energy market revenues and a cost-of-service payment stream for 30 years beginning in 2008 (including costs of plant operation and the prices that the generation owners receive for capacity and other products in the ISO-NE markets).

~~Long-term commitment to purchase 20 MW of solar power from a multi-site project in Connecticut. This project is expected to be operational by the end of 2017.~~

The PURA approved CL&P's application to amend customer rates, effective December 1, 2014, for a total base distribution rate increase of $152 million, which included an authorized ROE of 9.02 percent for the first twelve month period and 9.17 percent thereafter. The distribution rate increase included a revenue decoupling mechanism effective December 1, 2014, and the recovery of 2011 and 2012 storm restoration costs and system resiliency costs.

~~Sources and Availability of Electric Power Supply~~

As noted above, CL&P does not own any generation assets and purchases energy supply to serve its SS and LRS loads from a variety of competitive sources through requests for proposals. CL&P periodically enters into full requirements contracts for the majority of SS loads for periods of up to one year for its residential customers and small and medium commercial and industrial customers. CL&P is authorized to supply the remainder of the SS loads through a self-managed process that includes bilateral purchases and spot market purchases. CL&P typically enters into full requirements contracts for LRS for larger commercial and industrial customers every three months. Currently, CL&P has full requirements contracts in place for 70 percent of its SS loads for the first half of 2017 and has bilateral purchases in place to self-manage the remaining 30 percent. For the second half of 2017, CL&P has 50 percent of its SS load under full requirements contracts, and intends to purchase an additional 20 to 30 percent of full requirements and will self-manage the remainder as needed. None of the SS load for 2018 has been procured. CL&P has full requirements contracts in place for its LRS loads through the second quarter of 2017 and intends to purchase 100 percent of full requirements for the third and fourth quarters of 2017.

~~ELECTRIC DISTRIBUTION – MASSACHUSETTS~~

NSTAR ELECTRIC COMPANY

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~(a Massachusetts corporation)

800 Boylston Street

The electric distribution businesses of NSTAR Electric and WMECO consist primarily of the purchase, delivery and sale of electricity to residential, commercial and industrial customers within their respective franchise service territories. As of December 31, 2016, NSTAR Electric furnished retail franchise electric service to approximately 1.2 million customers in Boston, ~~and 80 surrounding cities and towns in~~ Massachusetts including Cape Cod and Martha's Vineyard, covering an area of approximately 1,700 square miles. WMECO provides retail franchise electric service to approximately 210,000 customers in 59 cities and towns in the western region of Massachusetts, covering an area of approximately 1,500 square miles. Neither NSTAR Electric nor WMECO owns any generating facilities used to supply customers, and each purchases its respective energy requirements from competitive energy suppliers.02199

Telephone: (800) 286-5000

In 2009, WMECO was authorized by the DPU to install solar energy generation in its service territory. From 2010 through 2014, WMECO completed development of a total of 8 MW solar generation facilities on sites in Pittsfield, Springfield, and East Springfield, Massachusetts. WMECO currently sells all energy and other products from its solar generation facilities into the ISO-NE market. NSTAR Electric does not own any solar generation facilities. On December 29, 2016, the DPU approved the NSTAR Electric and WMECO application to develop 35 MW and 27 MW, respectively, of solar generation facilities, in addition to WMECO's existing 8 MW of solar generation facilities. We expect development of the facilities to be completed by the end of 2017. We expect that NSTAR Electric and WMECO will sell energy from the new solar generation facilities into the ISO-NE market. We estimate our investment in these new facilities will be between approximately $180 million to $200 million.

~~The following table shows the sources of the 2016 electric franchise retail revenues of NSTAR Electric and WMECO based on categories of customers:~~

NSTAR Electric WMECO
(Thousands of Dollars, except percentages) 2016 % of Total 2016 % of Total
Residential $ 1,097,093
45
$ 225,685
58
Commercial 1,190,597
49
120,146
31
Industrial 84,834
4
32,849
9
Other 46,756
2
7,910
2
Total Retail Electric Revenues $ 2,419,280
100 %
$ 386,590
100 %

~~A summary of NSTAR Electric's and WMECO's retail electric GWh sales volumes and percentage changes for 2016, as compared to 2015, is as follows:~~

NSTAR Electric WMECO
2016 2015
Percentage
Change
2016 2015
Percentage
Change
Residential 6,518
6,687
(2.5 )% 1,441
1,465
(1.6 )%
Commercial 12,925
13,120
(1.5 )% 1,479
1,478
0.1 %
Industrial 1,176
1,248
(5.8 )% 626
620
1.0 %
Total 20,619
21,055
(2.1 )% 3,546
3,563
(0.5 )%

~~Rates~~

NSTAR Electric and WMECO are each subject to regulation by the DPU, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, acquisition of securities, standards of service and construction and operation of facilities. The present general rate structure for both NSTAR Electric and WMECO consists of various rate and service classifications covering residential, commercial and industrial services. Massachusetts utilities are entitled under state law to charge rates that are sufficient to allow them an opportunity to recover their reasonable operating and capital costs, in order to attract needed capital and maintain their financial integrity, while also protecting relevant public interests.

Under Massachusetts law, all customers of each of NSTAR Electric and WMECO are entitled to choose their energy suppliers, while NSTAR Electric or WMECO remains their electric distribution company. Both NSTAR Electric and WMECO purchase power from competitive suppliers on behalf of, and pass the related cost through to, their respective customers who do not choose a competitive energy supplier (basic service). Most of the residential customers of NSTAR Electric and WMECO have continued to buy their power from NSTAR Electric or WMECO at basic service rates. Most commercial and industrial customers have switched to a competitive energy supplier.

The Cape Light Compact, an inter-governmental organization consisting of the 21 towns and two counties on Cape Cod and Martha's Vineyard, serves 200,000 customers through the delivery of energy efficiency programs, effective consumer advocacy, competitive electricity supply and green power options. NSTAR Electric continues to provide electric service to these customers including the delivery of power, maintenance of infrastructure, capital investment, meter reading, billing, and customer service.

NSTAR Electric continues to supply approximately 31 percent of its customer load at basic service rates while the other 69 percent of its customer load has migrated to competitive energy suppliers. WMECO continues to supply approximately 39 percent of its customer load at basic service rates while the other 61 percent of its customer load has migrated to competitive energy suppliers. Because customer migration is limited to energy supply service, it has no impact on the delivery business or operating income of NSTAR Electric and WMECO.

~~The rates established by the DPU for NSTAR Electric and WMECO are comprised of the following:~~

A basic service charge that represents the collection of energy costs, including costs related to charge-offs of uncollectible energy costs from customers. Electric distribution companies in Massachusetts are required to obtain and resell power to retail customers through basic service for those who choose not to buy energy from a competitive energy supplier. Basic service rates are reset every six months (every three months for large commercial and industrial customers). Additionally, the DPU has authorized NSTAR Electric to recover the cost of its NSTAR Green wind contracts through the basic service charge. Basic service costs are reconciled annually, with any differences refunded to, or recovered from, customers.

A distribution charge, which includes a fixed customer charge and a demand and/or energy charge to collect the costs of building and expanding the distribution infrastructure to deliver power to its destination, as well as ongoing operating costs.

For WMECO, a revenue decoupling adjustment that reconciles distribution revenue, on an annual basis, to the amount of distribution revenue approved by the DPU in its last rate case in 2011. Currently, WMECO is allowed to collect $132.4 million annually.

A transition charge that represents costs to be collected primarily from previously held investments in generating plants, costs related to existing above-market power contracts, and contract costs related to long-term power contract buy-outs.

~~A renewable energy charge that represents a legislatively-mandated charge to support the Massachusetts Renewable Energy Trust Fund.~~

~~An energy efficiency charge that represents a legislatively-mandated charge to collect costs for energy efficiency programs.~~

Reconciling adjustment charges that recover certain DPU-approved costs as follows: pension and PBOP benefits, low income customer discounts, lost revenue and credits associated with net-metering facilities installed by customers, storms, consultants retained by the attorney general, long-term renewable contracts and energy efficiency programs and lost base revenue associated with energy efficiency measures. In addition to these adjustments common to both NSTAR Electric and WMECO, NSTAR Electric has reconciling adjustment charges that collect costs associated with certain safety and reliability projects. WMECO has a reconciling adjustment charge that recovers costs associated with certain solar projects owned and operated by WMECO.

As required by regulation, NSTAR Electric and WMECO, along with two other Massachusetts electric utilities, signed long-term commitments to purchase a combined estimated generating capacity of approximately 334 MW of wind power from two wind farms in Maine over 15 years. One unit began operating in late 2015, and the other unit began operating in late 2016. In addition, WMECO previously signed a long-term commitment to purchase an estimated generating capacity of approximately 37.5 MW of wind power from a wind farm in Maine over 15 years that began operating in 2016.

Pursuant to a 2008 DPU order, Massachusetts electric utilities must adopt rate structures that decouple the volume of energy sales from the utility's revenues in their next rate case. WMECO is currently decoupled and NSTAR Electric has proposed decoupling in its current rate case, which will occur in the second half of 2017, for rates effective January 1, 2018.

NSTAR Electric and WMECO are each subject to service quality ("SQ") metrics that measure safety, reliability and customer service, and could be required to pay to customers a SQ charge of up to 2.5 percent of annual transmission and distribution revenues for failing to meet such metrics. Neither NSTAR Electric nor WMECO will be required to pay a SQ charge for its 2016 performance as each company achieved results at or above target for all of its respective SQ metrics in 2016.

~~Sources and Availability of Electric Power Supply~~

As noted above, neither NSTAR Electric nor WMECO owns any generation assets (other than WMECO's solar generation), and both companies purchase their respective energy requirements from a variety of competitive sources through requests for proposals issued periodically, consistent with DPU regulations. NSTAR Electric and WMECO enter into supply contracts for basic service for 50 percentof their respective residential and small commercial and industrial customers twice per year for twelve month terms. Both NSTAR Electric and WMECO enter into supply contracts for basic service for 100 percent~~of large commercial and industrial customers every three months.~~

~~Proposed Merger of NSTAR Electric and WMECO~~

Eversource has proposed to merge WMECO into NSTAR Electric with an anticipated effective date of January 1, 2018. On January 13, 2017, Eversource made two filings with FERC related to the proposed merger. One filing requests FERC approval of the merger, and the other filing requests FERC approval of NSTAR Electric's assumption of WMECO's short-term debt obligations. It is expected that FERC will act on these filings by mid-2017.

On January 17, 2017, NSTAR Electric and WMECO jointly filed an application with the DPU for approval of new base distribution rates, effective January 1, 2018. Among other things, the application proposes to streamline and align rate classifications between NSTAR Electric and WMECO, and request a revenue decoupling rate mechanism for NSTAR Electric. WMECO has a revenue decooffupling mechanism in place. For further information, see "Regulatory Developments and Rate Matters - Massachusetts - Distribution Rates" in the accompanying Item 7, ~~Management's Discussion and Analysis of Financial Condition and Results of Operations.~~

~~ELECTRIC DISTRIBUTION – NEW HAMPSHIRE~~

04-12788101-6392

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

PSNH's distribution business consists primarily of the generation, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2016, PSNH furnished retail franchise electric service to approximately 511,000 retail customers in 211 cities and towns in(a New Hampshire covering an area of approximately 5,630 square miles. PSNH currently owns and operates approximately 1,200 MW of primarily coal-, natural gas-, and oil-fired electricity generation plants. PSNH's distribution business includes the activities of its generation assets.corporation)

Energy Park

~~The following table shows the sources of PSNH's 2016 electric franchise retail revenues based on categories of customers:~~780 North Commercial Street

Manchester, New Hampshire 03101-1134

Telephone: (800) 286-5000

02-0181050

Securities registered pursuant to Section 12(b) of the Act:

PSNH
(Thousands of Dollars, except percentages) 2016 % of Total
Residential $ 521,914
56
Commercial 295,956
32
Industrial 70,864
8
Other 37,188
4
Total Retail Electric Revenues $ 925,922
100 %



Registrant	Title of Each Class	Name of Each Exchange on Which Registered ~~A summary of PSNH's retail electric GWh sales volumes and percentage changes for 2016, as compared to 2015, is as follows:~~

Eversource Energy	Common Shares, $5.00 par value	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

2016 2015
Percentage
Change
Residential 3,136
3,195
(1.8 )%
Commercial 3,342
3,365
(0.7 )%
Industrial 1,382
1,367
1.1 %
Total 7,860
7,927
(0.8 )%



Registrant	Title of Each Class

The Connecticut Light and Power Company	Preferred Stock, par value $50.00 per share, issuable in series, of which the following series are outstanding:
		$1.90 $2.00 $2.04 $2.20 ~~Rates~~3.90% $2.06 ~~PSNH is subject to regulation by~~$2.09 4.50% 4.96% 4.50% 5.28% $3.24 6.56%	Series Series Series Series Series Series E Series F Series Series Series Series Series G Series	of 1947 of 1947 of 1949 of 1949 of 1949 of 1954 of 1955 of 1956 of 1958 of 1963 of 1967 of 1968 of 1968

NSTAR Electric Company	Preferred Stock, par value $100.00 per share, issuable in series, of which the ~~NHPUC, which, among other things, has jurisdiction over rates, certain dispositions~~ following series are outstanding:
		4.25% 4.78%	Series Series	of ~~property~~1956 of 1958

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.



	Yes	No
	x	¨

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



	Yes	No
	¨	x



	Yes	No
	x	¨



	Yes	No
	x	¨



	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company

Eversource Energy	x	¨	¨	¨	¨
The Connecticut Light and plant, mergers and consolidations, issuances of securities, standards of service and construction and operation of facilities. New Hampshire utilities are entitled under state law to charge rates that are sufficient to allow them an opportunity to recover their reasonable operating and capital costs, in order to attract needed capital and maintain their financial integrity, while also protecting relevant public interests. Under New Hampshire law, all of PSNH's customers are entitled to choose competitive energy suppliers, with PSNH providing default energy service under its ES rate for those customers who do not choose a competitive energy supplier. At the end of 2016, approximately 25 percent of all of PSNH's customers (approximately 56 percent of load) were taking service from competitive energy suppliers, compared to 21 percent of customers (approximately 53 percent of load) at the end of 2015. ~~The rates established by the NHPUC for PSNH are comprised of the following:~~ A default energy service charge which recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers. These charges recover the costs of PSNH's generation, as well as purchased power, and include an allowed ROE of 9.81 percent. A distribution charge, which includes an energy and/or demand-based charge to recover costs related to the maintenance and operation of PSNH's infrastructure to deliver power to its destination, as well as power restoration and service costs. This includes a customer charge to collect the cost of providing service to a customer; such as the installation, maintenance, reading and replacement of meters and maintaining accounts and records. A transmission charge that recovers the cost of transporting electricity over high-voltage lines from generating plants to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. ~~An SCRC, which allows PSNH to recover its stranded costs, including above-market expenses incurred under mandated power purchase obligations and other long-term investments and obligations.~~ ~~An SBC, which funds energy efficiency programs for all customers, as well as assistance programs for residential customers within certain income guidelines.~~ ~~An electricity consumption tax, which is a state mandated tax on electric energy consumption.~~ The energy charge and SCRC rates change semi-annually and are reconciled annually and differences between actual costs incurred versus current rates are either refunded or recovered in subsequent rates charged to customers. PSNH distribution rates were set in a 2010 NHPUC rate case settlement, which expired on June 30, 2015. As part of the 2015 settlement over the cost of the pollution-control equipment at PSNH's Merrimack facility, and the ability of PSNH to divest itself of its generation assets (as further described under "Generation Divestiture," below), PSNH agreed that its present distribution rates will stay in effect until at least July 1, 2017. However, certain aspects of the 2010 rate case settlement will continue, including funding for reliability enhancement program activities, adjustment of distribution rates for certain exogenous events that in the aggregate exceed $1 million, and major storm reserve funding. ~~Generation Divestiture~~ ~~On June 10, 2015, Eversource and PSNH entered into the 2015~~ Power Company	¨	¨	x	¨	¨
NSTAR Electric Company	¨	¨	x	¨	¨
Public Service Company of New Hampshire ~~Restructuring~~	¨	¨	x	¨	¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):



	Yes	No
Eversource Energy	¨	x
The Connecticut Light and ~~Rate Stabilization Agreement (the "Agreement") with~~Power Company	¨	x
NSTAR Electric Company	¨	x
Public Service Company of New Hampshire	¨	x

The aggregate market value of Eversource Energy's Common Shares, $5.00 par value, held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of Eversource Energy's most recently completed second fiscal quarter (June 30, 2017) was $19,210,596,737 based on a closing market price of $60.71 per share for the 316,432,165 common shares outstanding held by non-affiliates on June 30, 2017.

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:



Company - Class of Stock	Outstanding as of January 31, 2018
Eversource Energy Common Shares, $5.00 par value	316,885,808 shares

The Connecticut Light and Power Company Common Stock, $10.00 par value	6,035,205 shares

NSTAR Electric Company Common Stock, $1.00 par value	200 shares

Public Service Company of New Hampshire Common Stock, $1.00 par value	301 shares

GLOSSARY OF TERMS

The following is a glossary of abbreviations and acronyms that are found in this report:



Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the Company	Eversource Energy and subsidiaries
Eversource parent or ES parent	Eversource Energy, a public utility holding company
ES parent and other companies	ES parent and other companies are comprised of Eversource parent, Eversource Service and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), and the consolidated operations of CYAPC and YAEC, and Aquarion's water business from the date of acquisition on December 4, 2017 through December 31, 2017
CL&P	The Connecticut Light and Power Company
NSTAR Electric	NSTAR Electric Company
PSNH	Public Service Company of New Hampshire ~~Office~~
NSTAR Gas	NSTAR Gas Company
Yankee Gas	Yankee Gas Services Company
Aquarion	Eversource Aquarion Holdings, Inc and its subsidiaries (formerly known as Macquarie Utilities Inc)
NPT	Northern Pass Transmission LLC
Northern Pass	The HVDC and associated alternating-current transmission line project from Canada into New Hampshire
Eversource Service	Eversource Energy Service Company
Bay State Wind	A project being developed jointly by Eversource and Denmark-based Ørsted (formerly known as DONG Energy) to construct an offshore wind farm off the coast of Massachusetts
CYAPC	Connecticut Yankee Atomic Power Company
MYAPC	Maine Yankee Atomic Power Company
YAEC	Yankee Atomic Electric Company
Yankee Companies	CYAPC, YAEC and MYAPC
Electric and Natural Gas Companies	The Eversource electric and natural gas companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric and PSNH, the natural gas distribution businesses of Yankee Gas and NSTAR Gas, NPT, the generation facilities of PSNH, and the solar power facilities of NSTAR Electric
Regulators:
DEEP	Connecticut Department of Energy and ~~Planning, certain members~~Environmental Protection
DOE	U.S. Department of Energy
DOER	Massachusetts Department of Energy Resources
DPU	Massachusetts Department of Public Utilities
EPA	U.S. Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
ISO-NE	ISO New England, Inc., the New England Independent System Operator
MA DEP	Massachusetts Department of Environmental Protection
NHPUC	New Hampshire Public Utilities Commission
PURA	Connecticut Public Utilities Regulatory Authority
SEC	U.S. Securities and Exchange Commission
SJC	Supreme Judicial Court of Massachusetts
Other Terms and Abbreviations:
Access Northeast	A project being developed jointly by Eversource, Enbridge, Inc. ("Enbridge"), and National Grid plc ("National Grid") through Algonquin Gas Transmission, LLC to bring needed additional natural gas pipeline and storage capacity to New England.
ADIT	Accumulated Deferred Income Taxes
AFUDC	Allowance For Funds Used During Construction
AOCL	Accumulated Other Comprehensive Loss
ARO	Asset Retirement Obligation
Bcf	Billion cubic feet
C&LM	Conservation and Load Management
CfD	Contract for Differences
Clean Air Project	The construction of a wet flue gas desulphurization system, known as "scrubber technology," to reduce mercury emissions of the ~~NHPUC staff,~~Merrimack coal-fired generation station in Bow, New Hampshire
CO₂	Carbon dioxide
CPSL	Capital Projects Scheduling List
CTA	Competitive Transition Assessment
CWIP	Construction Work in Progress
EDC	Electric distribution company
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974



ESOP	Employee Stock Ownership Plan
ESPP	Employee Share Purchase Plan
Eversource 2016 Form 10-K	The Eversource Energy and Subsidiaries 2016 combined Annual Report on Form 10-K as filed with the ~~Office~~SEC
Fitch	Fitch Ratings
FMCC	Federally Mandated Congestion Charge
FTR	Financial Transmission Rights
GAAP	Accounting principles generally accepted in the United States of ~~Consumer Advocate, two State Senators,~~America
GSC	Generation Service Charge
GSRP	Greater Springfield Reliability Project
GWh	Gigawatt-Hours
HQ	Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and ~~several other parties. Under~~distribute electricity in Québec, Canada
HVDC	High-voltage direct current
Hydro Renewable Energy	Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP	Independent Power Producers
ISO-NE Tariff	ISO-NE FERC Transmission, Markets and Services Tariff
kV	Kilovolt
kVa	Kilovolt-ampere
kW	Kilowatt (equal to one thousand watts)
kWh	Kilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour)
LBR	Lost Base Revenue
LNG	Liquefied natural gas
LRS	Supplier of last resort service
MMcf	Million cubic feet
MGP	Manufactured Gas Plant
MMBtu	One million British thermal units
Moody's	Moody's Investors Services, Inc.
MW	Megawatt
MWh	Megawatt-Hours
NEEWS	New England East-West Solution
NETOs	New England Transmission Owners (including Eversource, National Grid and Avangrid)
NOx	Nitrogen oxides
OCI	Other Comprehensive Income/(Loss)
PAM	Pension and PBOP Rate Adjustment Mechanism
PBOP	Postretirement Benefits Other Than Pension
PBOP Plan	Postretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance
PCRBs	Pollution Control Revenue Bonds
Pension Plan	Single uniform noncontributory defined benefit retirement plan
PPA	Pension Protection Act
RECs	Renewable Energy Certificates
Regulatory ROE	The average cost of capital method for calculating the terms of the Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. The Agreement provided for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. As part of the Agreement, PSNH agreed to forego recovery of $25 million of thereturn on equity ~~return~~ related to the ~~Clean Air Project. In addition, PSNH will not seek a general~~ distribution ~~rate increase effective before July 1, 2017~~ and ~~will contribute $5 million to create a clean energy fund, which will not be recoverable from its customers. In 2015, PSNH recorded~~generation business segment excluding the ~~$5 million contribution as a long-term liability~~wholesale transmission segment
RNS	Regional Network Service
ROE	Return on Equity
RRB	Rate Reduction Bond or Rate Reduction Certificate
RSUs	Restricted share units
S&P	Standard & Poor's Financial Services LLC
SBC	Systems Benefits Charge
SCRC	Stranded Cost Recovery Charge
SERP	Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SIP	Simplified Incentive Plan
SO₂	Sulfur dioxide
SS	Standard service
TCAM	Transmission Cost Adjustment Mechanism
TSA	Transmission Service Agreement
UI	The United Illuminating Company

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

2017 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS



		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	24

PART II
Item 5.	Market for the ~~balance sheet~~Registrants’ Common Equity, Related Stockholder Matters and ~~an increase to Operations and Maintenance expense on the statement~~Issuer Purchases of ~~income.~~Equity Securities	27 On July 1, 2016, the NHPUC approved the Agreement in an order that, among other things, instructs PSNH to begin the process to divest its generation assets. The NHPUC selected an auction adviser to assist with the divestiture, and a final plan and auction process was approved by the NHPUC in November 2016. In December 2016, certain intervenors asked the NHPUC to reconsider certain aspects of its divestiture plan; the NHPUC rejected that request on December 23, 2016. On January 10, 2017, these intervenors appealed the NHPUC's decision to the New Hampshire Supreme Court, alleging procedural deficiencies, and complaining that the auction schedule and process were unreasonable. PSNH and the New Hampshire Attorney General's office acting on behalf of the NHPUC requested the Court to reject this appeal. On February 10, 2017, the New Hampshire Supreme Court issued an order declining to accept the appeal. We continue to believe the assets will be sold by the end of 2017. As of December 31, 2016, PSNH's energy service rate base subject to divestiture, was approximately $625 million. This rate base will be reduced by the amount of the sales proceeds from the generation assets that are divested and sold. Upon completion of the divestiture process, full recovery of PSNH's generation assets is probable through a combination of cash flows during the remaining operating period, sales proceeds upon divestiture, and recovery of stranded costs via bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers. For further information, see "Regulatory Developments and Rate Matters - New Hampshire - Generation Divestiture" in the accompanying
Item 7, ~~Management's~~6.	Selected Consolidated Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 8.	Financial Statements and Supplementary Data	64
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	139
Item 9A.	Controls and Procedures	139
Item 9B.	Other Information	139

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	140
Item 11.	Executive Compensation	143
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	167
Item 13.	Certain Relationships and Related Transactions, and Director Independence	168
Item 14.	Principal Accountant Fees and Services	169

PART IV
Item 15.	Exhibits and Financial Statement Schedules	170
Item 16.	Form 10-K Summary	170
Signatures		171

iii

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995

cyber breaches and other disruptions to our information technology system that may compromise the confidentiality of our proprietary information and the personal information of our customers,

acts of war, terrorism or grid disturbances that may disrupt our transmission and distribution systems,

ability or inability to successfully commence and complete our major strategic development opportunities,

actions or inaction of local, state and federal regulatory, public policy and taxing bodies,

changes in business conditions, which could include disruptive technology related to our current or future business model,

changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,

fluctuations in weather patterns, including extreme weather due to climate change,

changes in laws, regulations or regulatory policy,

changes in levels or timing of capital expenditures,

disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,

developments in legal or public policy doctrines,

technological developments and alternative energy sources,

changes in accounting standards and financial reporting regulations,

actions of rating agencies, and

other presently unknown or unforeseen factors.

Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

PART I

Item 1.Business

Please refer to the Glossary of Terms for definitions of defined terms and abbreviations used in this combined Annual Report on Form 10-K.

The Connecticut Light and Power Company (CL&P), a regulated electric utility that serves residential, commercial and industrial customers in parts of Connecticut;

NSTAR Gas Company (NSTAR Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Massachusetts; and

Yankee Gas Services Company (Yankee Gas), a regulated natural gas utility that serves residential, commercial and industrial customers in parts of Connecticut.

ELECTRIC DISTRIBUTION SEGMENT

General

Eversource Energy's electric distribution segment consists of the distribution businesses of CL&P, NSTAR Electric and PSNH, which are engaged in the distribution of electricity to retail customers in Connecticut, Massachusetts and New Hampshire, respectively, plus the regulated electric generation facilities of PSNH and solar power facilities of NSTAR Electric.

The following table shows the sources of electric franchise retail revenues for Eversource Energy's electric distribution companies, collectively, based on categories of customers:



(Thousands of Dollars)	2017		2016		2015
Residential	$	3,457,986	$	3,448,043	$	3,608,155
Commercial	2,459,985		2,465,664		2,476,686
Industrial	330,995		328,103		326,564
Other	94,091		139,527		151,195
Total Retail Electric Revenues	$	6,343,057	$	6,381,337	$	6,562,600

A summary of our distribution companies' retail electric GWh sales volumes and percentage changes for 2017, as compared to 2016, is as follows:



	2017	2016	Percentage Change
Residential	20,496	21,002	(2.4	)%
Commercial	26,570	27,206	(2.3	)%
Industrial	5,180	5,434	(4.7	)%
Total	52,246	53,642	(2.6	)%

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

Retail electric sales volumes at our electric utilities with a traditional rate structure (the eastern region of NSTAR Electric and PSNH) were lower in 2017, as compared to 2016, due primarily to the mild summer weather in 2017, as compared to 2016. Cooling degree days in 2017 were 14.7 percent lower in the Boston metropolitan area and 22.7 percent lower in New Hampshire, as compared to 2016. Sales volumes were positively impacted by improved economic conditions across our service territories, but this trend was offset by lower customer usage driven by the impact of increased customer energy conservation efforts.

CL&P and NSTAR Electric (for its western Massachusetts customer rates) reconcile their annual base distribution rate recovery amounts to their pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, respectively, through December 31, 2017. Effective February 1, 2018, NSTAR Electric, operating entirely under decoupled rates, will reconcile its annual base distribution rate recovery to its new baseline of $974.8 million.

ELECTRIC DISTRIBUTION – CONNECTICUT

THE CONNECTICUT LIGHT AND POWER COMPANY

CL&P's distribution business consists primarily of the purchase, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2017, CL&P furnished retail franchise electric service to approximately 1.2 million customers in 149 cities and towns in Connecticut, covering an area of 4,400 square miles. CL&P does not own any electric generation facilities.

The following table shows the sources of CL&P's electric franchise retail revenues based on categories of customers:



	CL&P
(Thousands of Dollars)	2017		2016		2015
Residential	$	1,649,294	$	1,603,351	$	1,641,165
Commercial	883,904		858,965		841,093
Industrial	144,672		139,556		129,544
Other	29,144		47,672		62,704
Total Retail Electric Revenues	$	2,707,014	$	2,649,544	$	2,674,506

A summary of CL&P's retail electric GWh sales volumes and percentage changes for 2017, as compared to 2016, is as follows:



	2017	2016	Percentage Change
Residential	9,642	9,907	(2.7	)%
Commercial	9,161	9,461	(3.2	)%
Industrial	2,146	2,249	(4.6	)%
Total	20,949	21,617	(3.1	)%

Rates

Under Connecticut law, all of CL&P's customers are entitled to choose their energy suppliers, while CL&P remains their electric distribution company. For those customers who do not choose a competitive energy supplier, under SS rates for customers with less than 500 kilowatts of demand (residential customers and small and medium commercial and industrial customers), and LRS rates for customers with 500 kilowatts or more of demand (larger commercial and industrial customers), CL&P purchases power under standard offer contracts and passes the cost of the purchased power to customers through a combined charge on customers' bills.

The rates established by the PURA for CL&P are comprised of the following:

A revenue decoupling adjustment that reconciles the amounts recovered from customers, on an annual basis, to the distribution revenue requirement approved by the PURA in its last rate case, which currently is an annual amount of $1.059 billion.

Distribution Rates: On April 20, 2017, PURA approved the joint request of CL&P, the Connecticut Office of Consumer Counsel ("OCC") and the Connecticut Attorney General to amend the deadline to establish new electric distribution rates in the 2012 Connecticut merger settlement agreement from "no later than December 1, 2017" to "no later than July 1, 2018." On November 22, 2017, CL&P filed its application with PURA, which sought a rate increase of $255.8 million, $45.0 million and $36.0 million effective May 2018, 2019, and 2020, respectively. On December 15, 2017, CL&P, the Prosecutorial Unit of PURA, and the OCC reached a settlement in principle.

On January 11, 2018, CL&P filed the distribution rate case settlement agreement for approval by PURA, which included, among other things, rate increases of $97.1 million, $32.7 million and $24.7 million, effective May 1, 2018, 2019, and 2020, respectively, an authorized regulatory ROE of 9.25 percent, 53 percent common equity in CL&P's capital structure, and a new capital tracker through 2020 for capital additions, system resiliency, and grid modernization. The rate increases associated with the settlement agreement will be reduced by the impact of the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act", which we currently estimate to average approximately $45 million to $50 million per year, while amounts related to ADIT will be addressed in a separate manner. We expect to receive final approval from PURA in the second quarter of 2018.

Sources and Availability of Electric Power Supply

As noted above, CL&P does not own any generation assets and purchases energy supply to serve its SS and LRS loads from a variety of competitive sources through requests for proposals. CL&P continues to supply approximately 42 percent of its customer load at SS or LRS rates while the other 58 percent of its customer load has migrated to competitive energy suppliers. Because this customer migration is only for energy supply service, it has no impact on CL&P's electric distribution business or its operating income.

CL&P periodically enters into full requirements contracts for SS loads for periods of up to one year. CL&P typically enters into full requirements contracts for LRS loads every three months. Currently, CL&P has full requirements contracts in place for 100 percent of its SS loads for the first half of 2018. For the second half of 2018, CL&P has 60 percent of its SS load under full requirements contracts, and intends to purchase an additional 40 percent of full requirements. None of the SS load for 2019 has been procured. CL&P has full requirements contracts in place for its LRS loads through June 2018 and intends to purchase 100 percent of full requirements for the remainder of 2018.

ELECTRIC DISTRIBUTION – MASSACHUSETTS

NSTAR ELECTRIC COMPANY

NSTAR Electric's distribution business consists primarily of the purchase, delivery and sale of electricity to residential, commercial and industrial customers within its franchise service territory. As of December 31, 2017, NSTAR Electric furnished retail franchise electric service to approximately 1.4 million customers in Boston and 139 cities and towns in eastern and western Massachusetts, including Cape Cod, Martha's Vineyard and the greater Springfield metropolitan area, covering an aggregate area of approximately 3,200 square miles. NSTAR Electric does not own any generating facilities used to supply customers and purchases its energy requirements from competitive energy suppliers.

On December 29, 2016, the DPU approved NSTAR Electric's application to develop 62 MW of new solar power facilities. Currently, NSTAR Electric owns 8 MW of solar power facilities on sites in Pittsfield, Springfield, and East Springfield, Massachusetts that were completed from 2010 through 2014. We expect development of the new facilities to be completed in 2018. Similar to NSTAR Electric’s current practice on the existing 8MW of solar power facilities, we expect that NSTAR Electric will sell energy from the new facilities into the ISO-NE market. We estimate our investment in these new facilities will be approximately $180 million.

The following table shows the sources of the electric franchise retail revenues of NSTAR Electric based on categories of customers:



	NSTAR Electric
(Thousands of Dollars)	2017		2016		2015
Residential	$	1,271,253	$	1,322,778	$	1,461,184
Commercial	1,278,739		1,310,743		1,322,674
Industrial	113,952		117,683		120,106
Other	45,347		54,666		53,388
Total Retail Electric Revenues	$	2,709,291	$	2,805,870	$	2,957,352

A summary of NSTAR Electric's retail electric GWh sales volumes and percentage changes for 2017, as compared to 2016, is as follows:



	NSTAR Electric
	2017	2016	Percentage Change
Residential	7,721	7,959	(3.0	)%
Commercial	14,127	14,404	(1.9	)%
Industrial	1,691	1,802	(6.2	)%
Total	23,539	24,165	(2.6	)%

In 2017 and 2016, NSTAR Electric operated under two different rate structures based on its service territory geography. For customers in eastern Massachusetts, including metropolitan Boston, Cape Cod and Martha's Vineyard, NSTAR Electric operated using Traditional rates. For customers in western Massachusetts, including the metropolitan Springfield region, NSTAR Electric operated using Decoupled rates. Effective February 1, 2018, all of NSTAR Electric's distribution revenues were decoupled as a result of the DPU-approved rate decision. See "Regulatory Developments and Rate Matters - Massachusetts - NSTAR Electric Distribution Rate Case Decision" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Rates

NSTAR Electric is subject to regulation by the DPU, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, acquisition of securities, standards of service and construction and operation of facilities. The present general rate structure for NSTAR Electric consists of various rate and service classifications covering residential, commercial and industrial services.

Under Massachusetts law, all customers of NSTAR Electric are entitled to choose their energy suppliers, while NSTAR Electric remains their electric distribution company. NSTAR Electric purchases power from competitive suppliers on behalf of, and passes the related cost through to, its customers who do not choose a competitive energy supplier (basic service). Most of the residential customers of NSTAR Electric have continued to buy their power from NSTAR Electric at basic service rates. Most commercial and industrial customers have switched to a competitive energy supplier.

NSTAR Electric continues to supply approximately 50 percent of its Residential customer load, 41 percent of its Small Commercial and Industrial (C&I) customer load, and 9 percent of its Large C&I customer load at basic service rates. The remainder of its customer load is distributed between Municipal Aggregation and Competitive Supply. Because customer migration is limited to energy supply service, it has no impact on the delivery business or operating income of NSTAR Electric.

The rates established by the DPU for NSTAR Electric are comprised of the following:

A revenue decoupling adjustment that reconciles distribution revenue, on an annual basis, to the amount of distribution revenue approved by the DPU. During 2017 only the western Massachusetts customer rates, including the metropolitan Springfield region,

were decoupled, which resulted in allowed distribution revenues of approximately $132.4 million. Effective February 1, 2018, NSTAR Electric is allowed to collect distribution revenues of $974.8 million annually, which covers its entire service territory.

A renewable energy charge that represents a legislatively-mandated charge to support the Massachusetts Renewable Energy Trust Fund.

An energy efficiency charge that represents a legislatively-mandated charge to collect costs for energy efficiency programs.

Reconciling adjustment charges that recover certain DPU-approved costs, including pension and PBOP benefits, low income customer discounts, lost revenue and credits associated with net-metering facilities installed by customers, costs associated with the solar power facilities, storms, long-term renewable contracts and energy efficiency programs.

As required by regulation, NSTAR Electric, along with two other Massachusetts electric utilities, signed long-term commitments to purchase a combined estimated generating capacity of approximately 334 MW of wind power from two wind farms in Maine over 15 years. One wind farm began operating in late 2015, and the other wind farm began operating in late 2016. In addition, NSTAR Electric previously signed a long-term commitment to purchase an estimated generating capacity of approximately 37.5 MW of wind power from a wind farm in Maine over 15 years that began operating in 2016.

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

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

Among other items, the DPU approved the recovery of previously expensed merger-related costs over a 10-year period and the recovery of previously deferred storm costs with carrying charges at the prime rate, but disallowed certain property taxes. The rate case decision resulted in the recognition of an aggregate $44.1 million pre-tax benefit recorded in 2017.

Service Quality Metrics: NSTAR Electric is subject to service quality ("SQ") metrics that measure safety, reliability and customer service, and could be required to pay to customers a SQ charge of up to 2.5 percent of annual transmission and distribution revenues for failing to meet such metrics. NSTAR Electric will not be required to pay a SQ charge for its 2017 performance as the company achieved results at or above target for all of its SQ metrics in 2017.

Sources and Availability of Electric Power Supply

As noted above, NSTAR Electric does not own any generation assets (other than solar power facilities), and it purchases its energy requirements from a variety of competitive sources through requests for proposals issued periodically, consistent with DPU regulations. NSTAR Electric enters into supply contracts for basic service for 50 percentof its residential and small commercial and industrial customers twice per year for twelve month terms. NSTAR Electric enters into supply contracts for basic service for 100 percentof large commercial and industrial customers every three months.

ELECTRIC DISTRIBUTION – NEW HAMPSHIRE

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

PSNH's distribution business consists primarily of the generation, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2017, PSNH furnished retail franchise electric service to approximately 515,000 retail customers in 211 cities and towns in New Hampshire, covering an area of approximately 5,630 square miles. As of December 31, 2017, PSNH owned and operated approximately 1,200 MW of coal-, natural gas-, oil-fired, and hydro electricity generation facilities. PSNH's distribution business included the activities of its generation facilities.

On October 11, 2017, PSNH entered into a Purchase and Sale Agreement for the sale of its thermal generation facilities and a separate Purchase and Sale Agreement for the sale of its hydroelectric generation facilities. On January 10, 2018, PSNH completed the sale of its thermal generation facilities. The thermal generation facilities included approximately 1,100 MW of coal, natural gas, biomass and oil-fired electricity generation facilities. The sale of the hydroelectric generation facilities is targeted to close by the end of the first quarter of 2018. For further information, see "Generation Divestiture" below.

The following table shows the sources of PSNH's electric franchise retail revenues based on categories of customers:



	PSNH
(Thousands of Dollars)	2017		2016		2015
Residential	$	537,439	$	521,914	$	505,806
Commercial	297,342		295,956		312,918
Industrial	72,371		70,864		76,914
Other	19,600		37,188		35,103
Total Retail Electric Revenues	$	926,752	$	925,922	$	930,741

A summary of PSNH's retail electric GWh sales volumes and percentage changes for 2017, as compared to 2016, is as follows:



	2017	2016	Percentage Change
Residential	3,134	3,136	(0.1	)%
Commercial	3,282	3,342	(1.8	)%
Industrial	1,342	1,382	(2.9	)%
Total	7,758	7,860	(1.3	)%

Rates

PSNH is subject to regulation by the NHPUC, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of securities, standards of service and construction and operation of facilities.

Under New Hampshire law, all of PSNH's customers are entitled to choose competitive energy suppliers. Prior to the Generation Divestiture, PSNH provided default energy service under its ES rate for those customers who did not choose a competitive energy supplier. At the end of 2017, approximately 26 percent of all of PSNH's customers (approximately 56 percent of load) were taking service from competitive energy suppliers, compared to 25 percent of customers (approximately 56 percent of load) at the end of 2016.

The rates established by the NHPUC for PSNH are comprised of the following:

A default energy service charge which recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers. Through March 31, 2018, the default energy service charge recovers the costs of PSNH's generation, as well as purchased power, and includes an allowed ROE of 9.81 percent. Effective April 1, 2018, as a result of the divestiture of its generation assets, PSNH will obtain power for retail customers who have not chosen a competitive supplier through a periodic market solicitation with the rate set to recover the cost of that power and statutorily mandated renewable portfolio standard costs. Effective April 1, 2018, any remaining costs from ownership of generation will be recovered as part of the SCRC described below.

A distribution charge, which includes an energy and/or demand-based charge to recover costs related to the maintenance and operation of PSNH's infrastructure to deliver power to its destination, as well as power restoration and service costs. This includes a customer charge to collect the cost of providing service to a customer; such as the installation, maintenance, reading and replacement of meters and maintaining accounts and records.

An SCRC, which allows PSNH to recover its stranded costs, including above-market expenses incurred under mandated power purchase obligations and other long-term investments and obligations. The stranded costs associated with the sale of the generation facilities, which are targeted to be sold in their entirety by the end of the first quarter of 2018, will be recovered in the SCRC rate charged to PSNH customers.

An SBC, which funds energy efficiency programs for all customers, as well as assistance programs for residential customers within certain income guidelines.

An electricity consumption tax, which is a state mandated tax on electric energy consumption.

The default energy service charge and SCRC rates change semi-annually and are reconciled annually in accordance with the policies and procedures of the NHPUC, with any differences refunded to, or recovered from, customers.

In New Hampshire, PSNH distribution rates were established in a settlement approved by the NHPUC in 2010. Prior to the expiration of that settlement on June 30, 2015, the NHPUC approved the continuation of those rates, and increased funding via rates, of PSNH's reliability enhancement program.

Generation Divestiture

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

On January 10, 2018, PSNH completed the sale of its thermal generation facilities. In accordance with the Purchase and Sale Agreement, the original purchase price of $175 million was adjusted to reflect working capital adjustments, closing date adjustments and proration of taxes and fees prior to closing, totaling $40.9 million, resulting in net proceeds of $134.1 million. We are targeting for PSNH to complete the sale of its hydroelectric generation facilities by the end of the first quarter of 2018 at a sale price of $83 million, subject to adjustment. On January 30, 2018, the NHPUC approved the issuance of rate reduction bonds up to $690 million to recover stranded costs, subject to an audit by the NHPUC Audit Staff. This order is subject to an appeal period of 30 days.

Upon completion of the divestiture, full recovery of PSNH's generation assets and transaction-related costs are expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via the issuance of bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers.

Sources and Availability of Electric Power Supply

During 2017, approximately 47 percent of PSNH's load was met through its own generation, long-term power supply provided pursuant to orders of the NHPUC, and contracts with competitive energy suppliers. The remaining 53 percentof PSNH's load was met by short-term (less than one year) purchases and spot purchases in the competitive New England wholesale power market. Included in the above are PSNH's obligations to purchase power from approximately two dozen IPPs, the output of which it either uses to serve its customer load or sells into the ISO-NE market. With the anticipated completion of the divestiture of its own generation facilities in the first quarter of 2018, PSNH will meet its load requirements in 2018 with purchases of energy requirements from competitive sources through requests for proposals issued periodically, consistent with NHPUC regulations.

~~Sources and Availability of Electric Power Supply~~

During 2016, approximately 48 percent of PSNH's load was met through its own generation, long-term power supply provided pursuant to orders of the NHPUC, and contracts with competitive energy suppliers. The remaining 52 percentof PSNH's load was met by short-term (less than one year) purchases and spot purchases in the competitive New England wholesale power market. PSNH expects to meet its load requirements in 2017 in a similar manner. Included in the 48 percent above are PSNH's obligations to purchase power from approximately two dozen IPPs, the output of which it either uses to serve its customer load or sells into the ISO-NE market.

Merrimack and Schiller Stations have recently operated at lower than historical capacity factors due to moderate regional temperatures. The Hydro stations' annual generation was lower than average due to low river flows. PSNH's Energy Service Rate has been set at 11.17 cents per kWh effective January 1, 2017, which includes full recovery of costs related to the Clean Air Project.

ELECTRIC TRANSMISSION SEGMENT

General

Each of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. Each of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, and 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. Under these arrangements, ISO-NE, a non-profit corporation whose board of directors and staff are independent of all market participants, serves as the regional transmission organization of the New England transmission system.

Wholesale Transmission Revenues

A summary of Eversource Energy's wholesale transmission revenues is as follows:


(Thousands of Dollars)	2016		2017		2016		2015
CL&P	$	575,735	$	609,880	$	575,735	$	513,025
NSTAR Electric	337,947		514,151		483,050		428,743
PSNH	151,354		177,821		151,354		127,509
WMECO	145,103
Total Wholesale Transmission Revenues	$	1,210,139	$	1,301,852	$	1,210,139	$	1,069,277

Wholesale Transmission Rates

Wholesale transmission revenues are recovered through ~~FERC approved~~FERC-approved formula rates. Annual transmission revenue requirements include recovery of transmission costs and include a return on equity applied to transmission rate base. Transmission revenues are collected from New England customers, including distribution customers of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO.~~PSNH. The transmission rates provide for ~~the~~an annual ~~reconciliation~~true-up of estimated to actual costs. The financial impacts of differences between actual and estimated costs are deferred for future recovery from, or refunded to, transmission customers.

FERC Base ROE Complaints

Four separate complaints have been filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other ~~parties. Each complaint challenges~~parties (collectively the "Complainants"). In each of the first three

complaints, the Complainants challenged the NETOs' ~~previous~~ base ROE of 11.14 percent ~~or current~~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 15-month complaint periods arising from the separate complaints. In the

fourth complaint, the Complainants challenged the NETOs' base ROE of 10.57 percent and ~~seeks~~the maximum ROE for transmission incentive ("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable. In response to ~~reduce it both for~~appeals of the ~~four separate 15-month~~FERC decision in the first complaint ~~periods~~filed by the NETOs and ~~prospectively.~~the Complainants, the D.C. Circuit Court of Appeals issued a decision on April 14, 2017 vacating and remanding the FERC's decision. For further information, see "FERC Regulatory Issues - FERC ROE Complaints" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

~~FERC Order No. 1000~~

On August 15, 2014, the D.C. Circuit Court of Appeals upheld the FERC's authority to order major changes to transmission planning and cost allocation in FERC Order No. 1000 and Order No. 1000-A, including transmission planning for public policy needs, and the requirement that utilities remove from their transmission tariffs their rights of first refusal to build transmission, to allow for competition. ISO-NE and the NETOs, including CL&P, NSTAR Electric, PSNH and WMECO made compliance filings to address this policy, which included exemption from competition for certain transmission solutions previously evaluated by ISO-NE, and the NETOs' rights to retain use and control of existing right of ways. This compliance was accepted by the FERC on December 14, 2015. At the same time, the NETOs filed an appeal to the D.C. Circuit Court of Appeals, challenging FERC's removal of the right of first refusal. State regulators have also filed an appeal, challenging the FERC's

determination that ISO-NE should select public policy transmission projects after a competitive process. Oral arguments were heard by the Court on January 13, 2017, and the Court is expected to resolve the appeals in 2017.

Transmission Projects

During ~~2016,~~2017, we were involved in the planning, development and construction of a series of electric transmission projects, including the Greater Hartford Central Connecticut ~~solutions;~~projects and the Greater Boston Reliability Solutions, ~~which are a series of new transmission projects over~~that will be built within the next five years and that will enhance system reliability and improve capacity. We were also involved in the planning and development of Northern Pass which is our planned HVDC transmission line from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire; and the Seacoast Reliability ~~Project, a transmission line within several~~Project. On February 1, 2018, the New Hampshire ~~communities, which proposes~~Site Evaluation Committee ("NHSEC") voted to ~~use a combination~~deny Northern Pass’ siting application. Consistent with Eversource’s and HQ’s long-term relationship to bring clean energy into New England, Eversource and HQ continue to support Northern Pass and the many benefits this project will bring to our customers and region. Eversource intends to seek reconsideration of ~~overhead, underground~~the NHSEC’s decision and ~~underwater line design~~ to ~~help meet the growing demand~~review all options for ~~electricity in the Seacoast region.~~moving this critical clean energy project forward. For further information, see "Business Development and Capital Expenditures - Electric Transmission Business" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Transmission Rate Base

Transmission rate base under our FERC-approved tariff primarily consists of our investment in transmission net utility plant less accumulated deferred income taxes.

Under our FERC-approved tariff, and with the exception of transmission projects that received specific FERC approval to include CWIP in rate base, transmission projects generally enter rate base after they are placed in commercial operation. At the end of ~~2016,~~2017, our estimated transmission rate base was approximately ~~$5.7~~$6 billion, including approximately ~~$2.5~~$2.7 billion at CL&P, ~~$1.5~~$2.5 billion at NSTAR Electric, ~~$698~~and $765 million at ~~PSNH, and $722 million at WMECO.~~PSNH.

NATURAL GAS DISTRIBUTION SEGMENT

NSTAR Gas distributes natural gas to approximately ~~289,000~~292,000 customers in 51 communities in central and eastern Massachusetts covering 1,067 square miles, and Yankee Gas distributes natural gas to approximately ~~229,000~~232,000 customers in 72 cities and towns in Connecticut covering 2,187 square miles. Total throughput (sales and transportation) in ~~2016~~2017 was approximately ~~63,186 MMBtu~~69.4 Bcf for NSTAR Gas and ~~55,679 MMBtu~~56.0 Bcf for Yankee Gas. Our natural gas businesses provide firm natural gas sales service to retail customers who require a continuous natural gas supply throughout the year, such as residential customers who rely on natural gas for heating, hot water and cooking needs, and commercial and industrial customers who choose to purchase natural gas from Eversource Energy's natural gas distribution companies. A portion of the storage of natural gas supply for NSTAR Gas during the winter heating season is provided by Hopkinton LNG Corp., an indirect, wholly-owned subsidiary of Eversource Energy. NSTAR Gas has access to Hopkinton LNG Corp. facilities in Hopkinton, Massachusetts consisting of a LNG liquefaction and vaporization plant and three above-ground cryogenic storage tanks having an aggregate capacity of 3.0 Bcf of liquefied natural gas. NSTAR Gas also has access to Hopkinton LNG Corp. facilities in Acushnet, Massachusetts that include additional storage capacity of 0.5 Bcf and additional vaporization capacity.

Yankee Gas owns a 1.2 Bcf LNG facility in Waterbury, Connecticut, which is used primarily to assist Yankee Gas in meeting its supplier-of-last-resort obligations and also enables it to provide economic supply and make economic refill of natural gas typically during periods of low demand.

NSTAR Gas and Yankee Gas generate revenues primarily through the sale and/or transportation of natural gas. Predominantly all residential customers in the NSTAR Gas service territory buy natural gas supply and delivery from NSTAR Gas while all customers may choose their natural gas suppliers. Retail natural gas service in Connecticut is partially unbundled: residential customers in Yankee Gas' service territory buy natural gas supply and delivery only from Yankee Gas while commercial and industrial customers may choose their natural gas suppliers. NSTAR Gas offers firm transportation service to all customers who purchase natural gas from sources other than NSTAR Gas while Yankee Gas offers firm transportation service to its commercial and industrial customers who purchase natural gas from sources other than Yankee Gas. In addition, both natural gas distribution companies offer interruptible transportation and interruptible natural gas sales service to those high volume commercial and industrial customers, generally during the colder months, that have the capability to switch from natural gas to an alternative fuel on short notice, for whom NSTAR Gas and Yankee Gas can interrupt service during peak demand periods or at any other time to maintain distribution system integrity.

The following table shows the sources of the ~~2016~~ total Eversource Energy natural gas franchise retail revenues based on categories of customers:


(Thousands of Dollars, except percentages)	2016		% of Total
(Thousands of Dollars)					2017		2016		2015
Residential	$	446,052	55		$	500,229	$	446,052	$	497,873
Commercial	279,001		35		312,034		279,001		327,439
Industrial	80,093		10		90,024		80,093		93,378
Total Retail Natural Gas Revenues	$	805,146	100	%	$	902,287	$	805,146	$	918,690

A summary of our firm natural gas sales volumes in million cubic feet and percentage changes for ~~2016,~~2017, as compared to ~~2015,~~2016, is as follows:


	2016	2015	Percentage Change		2017	2016	Percentage Change
Residential	35,734	38,455	(7.1	)%	37,421	35,734	4.7	%
Commercial	41,895	43,006	(2.6	)%	42,992	41,895	2.6	%
Industrial	20,413	21,538	(5.2	)%	20,613	20,413	1.0	%
Total	98,042	102,999	(4.8	)%	101,026	98,042	3.0	%
Total, Net of Special Contracts⁽¹⁾	93,346	98,458	(5.2	)%	96,617	93,346	3.5	%

⁽¹⁾ Special contracts are unique to the customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage.

Our firm natural gas sales volumes are subject to many of the same influences as our retail electric sales volumes. In addition, they have benefited from customer growth in both of our natural gas distribution companies. ~~In 2016, our consolidated~~Consolidated firm natural gas sales volumes were ~~lower,~~higher in 2017, as compared to ~~2015. The~~ 2016, ~~firm natural gas sales volumes were negatively impacted by warmer than normal~~due primarily to colder winter weather in the ~~first~~fourth quarter of ~~2016,~~2017, as compared to ~~the much colder than normal temperatures~~2016. Heating degree days in ~~the first quarter of 2015, throughout~~2017 were 2.5 percent higher in Connecticut, as compared to 2016. Sales volumes were also positively impacted by improved economic conditions across our natural gas service territories. ~~Heating degree days for 2016 were five percent lower in Connecticut, as compared to 2015.~~

For NSTAR Gas, the DPU approved a distribution revenue decoupling mechanism effective January 1, 2016. Natural gas distribution revenues are decoupled from their customer sales volumes, where applicable, which breaks the relationship between sales volumes and revenues recognized. As a result, fluctuations in natural gas sales volumes in Massachusetts do not impact earnings.

Rates

NSTAR Gas and Yankee Gas are subject to regulation by the DPU and the PURA, respectively, which, among other things, have jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities. Both of Eversource Energy's natural gas companies are entitled under their respective state law to charge rates that are sufficient to allow them an opportunity to recover their reasonable operating and capital costs, in order to attract needed capital and maintain their financial integrity, while also protecting relevant public interests.

Retail natural gas delivery and supply rates are established by the DPU and the PURA and are comprised of:

A distribution charge consisting of a fixed customer charge and a demand and/or energy charge that collects the costs of building and expanding the natural gas infrastructure to deliver natural gas supply to its customers. This also includes collection of ongoing operating ~~costs;~~costs.

A seasonal cost of gas adjustment clause ("CGAC") at NSTAR Gas that collects natural gas supply costs, pipeline and storage capacity costs, costs related to charge-offs of uncollected energy costs and working capital related costs. The CGAC is reset semi-annually. In addition, NSTAR Gas files interim changes to its CGAC factor when the actual costs of natural gas supply vary from projections by more than five ~~percent; and~~percent.

A local distribution adjustment clause ("LDAC") at NSTAR Gas that collects all energy efficiency and related program costs, environmental costs, pension and PBOP related costs, attorney general consultant costs, and costs associated with low income customers. The LDAC is reset annually and provides for the recovery of certain costs applicable to both sales and transportation customers.

Purchased Gas Adjustment ("PGA") clause, which allows Yankee Gas to recover the costs of the procurement of natural gas for its firm and seasonal customers. Differences between actual natural gas costs and collection amounts on August 31st of each year are deferred and then recovered from or refunded to customers during the following year. Carrying charges on outstanding balances are calculated using Yankee Gas' weighted average cost of capital in accordance with the directives of the PURA.

Conservation Adjustment Mechanism ("CAM") at Yankee Gas, which allows 100 percent recovery of conservation costs through this mechanism including program incentives to promote energy efficiency, as well as recovery of any lost revenues associated with implementation of energy conservation measures. A reconciliation of CAM revenues to expenses is performed annually with any difference being recovered from or refunded to customers, with carrying charges, during the following year.

NSTAR Gas purchases financial contracts based on the New York Mercantile Exchange ("NYMEX") natural gas futures in order to reduce cash flow variability associated with the purchase price for approximately one-third of its normal winter season natural gas supplies. These purchases are made under a program approved by the DPU in 2006. This practice attempts to minimize the impact of fluctuations in natural gas prices to NSTAR Gas' firm natural gas customers. These financial contracts do not procure natural gas supply. All costs incurred or benefits realized when these contracts are settled are included in the CGAC.

NSTAR Gas is subject to SQ metrics that measure safety, reliability and customer service and could be required to pay to customers a SQ charge of up to 2.5 percent of annual distribution revenues for failing to meet such metrics. NSTAR Gas will not be required to pay a SQ charge for its ~~2016~~2017 performance as it achieved results at or above target for all of its SQ metrics in ~~2016.~~2017.

~~On October 30, 2015, the DPU issued its order in the~~ NSTAR Gas distribution rates were set in its 2015 DPU approved rate case, which ~~approved~~included an annualized base rate increase of $15.8 million, plus other increases of approximately $11.5 million, mostly relating to recovery of pension and PBOP expenses and the Hopkinton Gas Service Agreement, effective January 1, 2016. In the order, the DPU also approved an authorized regulatory ROE of 9.8 percent, the establishment of a revenue decoupling mechanism, the recovery of certain bad debt expenses, and a 52.1 percent equity component of its capital structure. On November 19, 2015, NSTAR Gas filed a motion for reconsideration of the order with the DPU seeking the correction of mathematical errors and other plant and cost of service items, which motion remains pending.

Yankee Gas' last rate case proceeding was in 2011, which approved an allowed ROE of 8.83 percent and allowed for a substantial increase in annual spending for bare steel and cast iron pipeline replacement. In 2015, Yankee Gas entered into a settlement agreement with the PURA staff pursuant to which Yankee Gas provided a $1.5 million rate credit to firm customers beginning in December 2015, and established an earnings sharing mechanism whereby Yankee Gas and its customers will share equally in any earnings exceeding a 9.5 percent ROE in a twelve month period commencing with the period from April 1, 2015 through March 31, 2016. As of December 31, ~~2016,~~2017, Yankee Gas had not triggered any of the earnings sharing thresholds.

Massachusetts Natural Gas Replacement and Expansion

On July 7, 2014, Massachusetts enacted "An Act Relative to Natural Gas Leaks" (the "Act"). The Act ~~establishes~~established a uniform natural gas leak classification standard for all Massachusetts natural gas utilities and a program that accelerates the replacement of aging natural gas infrastructure. The program ~~will enable~~enabled companies, including NSTAR Gas, to better manage the scheduling and costs of replacement. The Act ~~also calls~~called for the DPU to authorize natural gas utilities to design and offer programs to customers that will increase the availability, affordability and feasibility of natural gas service for new customers.

In October 2014, pursuant to the Act, NSTAR Gas filed the Gas System Enhancement Program ("GSEP") with the DPU. NSTAR Gas' program accelerates the replacement of certain natural gas distribution facilities in the system to within 25 years. The GSEP includes a new tariff effective January 1, 2016 that provides NSTAR Gas an opportunity to collect the costs for the program on an annual basis through a newly designed reconciling factor. On April 30, 2015, the DPU approved the GSEP. We expect capital expenditures of approximately ~~$255~~$374.4 million for the period 2016 through ~~2019~~2020 for the GSEP.

Connecticut Natural Gas Expansion Plan

In 2013, in accordance with Connecticut law and regulations, the PURA approved a comprehensive joint natural gas infrastructure expansion plan (the "Expansion Plan") filed by Yankee Gas and other Connecticut natural gas distribution companies. The Expansion Plan described how Yankee Gas expects to add approximately 82,000 new natural gas heating customers over a 10-year period. Yankee Gas estimates that its portion of the Expansion Plan will cost approximately $700 million over 10 years. In January 2015, the PURA approved a joint settlement agreement proposed by Yankee Gas and other Connecticut natural gas distribution companies and regulatory agencies that clarified the procedures and oversight criteria applicable to the Expansion Plan. On November 30, 2016, Yankee Gas received PURA approval of its initial 2014 System Expansion Reconciliation as well as its 2015 Reconciliation after a combined review of the reconciliations by PURA. ~~The~~Yankee Gas filed its 2016 System Expansion Reconciliation in March 2017, which was approved by PURA ~~approval allowed for the recovery of the 2014 and 2015 combined deficiency balance of $3.65 million.~~on September 13, 2017.

Sources and Availability of Natural Gas Supply

NSTAR Gas maintains a flexible resource portfolio consisting of natural gas supply contracts, transportation contracts on interstate pipelines, market area storage and peaking services. NSTAR Gas purchases transportation, storage, and balancing services from Tennessee Gas Pipeline Company and Algonquin Gas Transmission Company, as well as other upstream pipelines that transport gas from major gas producing regions in the U.S., including the Gulf Coast, Mid-continent region, and Appalachian Shale supplies to the final delivery points in the NSTAR Gas service area. NSTAR Gas purchases all of its natural gas supply under a firm portfolio management contract with a term of one ~~year, which has a maximum quantity of approximately 154,700 MMBtu/day of firm flowing natural gas supplies and 76,700 MMBtu/day of firm natural gas storage supplies.~~

year. In addition to the firm transportation and natural gas storage supplies mentioned above, NSTAR Gas utilizes contracts for underground storage and LNG facilities to meet its winter peaking demands. The LNG facilities, described below, are located within NSTAR Gas' distribution system and are used to liquefy and store pipeline natural gas during the warmer months for vaporization and use during the heating season. During the summer injection season, excess pipeline capacity and supplies are used to deliver and store natural gas in market area underground storage facilities located in the New York and Pennsylvania regions. Stored natural gas is withdrawn during the winter season to supplement flowing pipeline supplies in order to meet firm heating demand. NSTAR Gas has firm underground storage contracts and total storage capacity entitlements of approximately 6.6 Bcf.

A portion of the storage of natural gas supply for NSTAR Gas during the winter heating season is provided by Hopkinton LNG Corp., which owns an LNG liquefaction and vaporization plant and three above-ground cryogenic storage tanks having an aggregate capacity of 3.0 Bcf of liquefied natural gas. NSTAR Gas also has access to Hopkinton LNG Corp. facilities that include additional storage capacity of 0.5 Bcf and additional vaporization capacity.

The PURA requires that Yankee Gas meet the needs of its firm customers under all weather conditions. Specifically, Yankee Gas must structure its supply portfolio to meet firm customer needs under a design day scenario (defined as the coldest day in 30 years) and under a design year scenario (defined as the average of the four coldest years in the last 30 years). Yankee Gas' on-system stored LNG and underground storage supplies help to meet consumption needs during the coldest days of winter. Yankee Gas obtains its interstate capacity from the three interstate pipelines that

directly serve Connecticut: the Algonquin, Tennessee and Iroquois ~~Pipelines. Yankee Gas has long-term firm contracts for capacity on TransCanada~~ Pipelines, Limited Pipeline, Vector Pipeline, L.P., Tennessee Gas Pipeline, Iroquois Gas Transmission Pipeline, Algonquin Pipeline, Union Gas Limited, Dominion Transmission, Inc., National Fuel Gas Supply Corporation, Transcontinental Gas Pipeline Company,which connect to other upstream pipelines that transport gas from major gas producing regions, including the Gulf Coast, Mid-continent, Canadian regions and ~~Texas Eastern Transmission, L.P. pipelines.~~ Appalachian Shale supplies.

Based on information currently available regarding projected growth in demand and estimates of availability of future supplies of pipeline natural gas, NSTAR Gas and Yankee Gas each believes that participation in planned and anticipated pipeline and storage expansion projects will be required in order for it to meet current and future sales growth opportunities.

~~NATURAL GAS PIPELINE EXPANSION~~WATER BUSINESS

Eversource Water Ventures, Inc., a Connecticut corporation, through its wholly-owned subsidiary, Eversource Aquarion Holdings, Inc. (Aquarion), operates regulated water utilities in Connecticut (Aquarion Water Company of Connecticut, or “AWC-CT”), Massachusetts (Aquarion Water Company of Massachusetts, or “AWC -MA”) and New Hampshire (Aquarion Water Company of New Hampshire, or “AWC-NH”). These regulated companies provide water services to approximately 226,000 residential, commercial, industrial, municipal and fire protection and other customers, in 59 towns and cities in Connecticut, Massachusetts and New Hampshire. As of December 31, 2017, approximately 87 percent of Aquarion’s customers were based in Connecticut.

For the period from December 4, 2017, the date Aquarion was acquired by Eversource, through December 31, 2017, water franchise retail revenues based on categories of customers for residential, commercial, municipal and fire protection, industrial and other totaled $9.9 million, $2.3 million, $2.5 million, $0.2 million and $1.0 million, respectively.

Rates

Aquarion's water utilities are subject to regulation by the PURA, the DPU and the NHPUC in Connecticut, Massachusetts and New Hampshire, respectively. These regulatory agencies, have jurisdiction over, among other things, rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities.

Aquarion’s general rate structure consists of various rate and service classifications covering residential, commercial, industrial, and municipal and fire protection services.

The rates established by the PURA, DPU and NHPUC are comprised of the following:

A base rate, which is comprised of fixed charges based on meter/fire connection sizes, as well as volumetric charges based on the amount of water sold. Together these charges are designed to recover the full cost of service resulting from a general rate proceeding.

A revenue adjustment mechanism (“RAM”) that reconciles earned revenues, with certain allowed adjustments, on an annual basis, to the revenue requirement approved by the PURA in AWC-CT’s last rate case (2013), which is an annual amount of $178.0 million.

The water infrastructure conservation adjustment (“WICA”) charge, which is applied between rate case proceedings and seeks recovery of allowed costs associated with WICA-eligible capital projects placed in-service. The WICA is updated semiannually in Connecticut and annually in New Hampshire.

Treatment plant surcharges, which are a series of three surcharges in Massachusetts (one fixed and two volumetric in nature) that are designed to recover certain operating costs and the costs of the lease of the treatment plant located in Hingham. These surcharges are applicable only to customers in Hingham, Hull and Cohasset.

Sources and Availability of Water Supply

Our water utilities obtain their water supplies from owned surface water sources (reservoirs) and groundwater supplies (wells) with a total supply yield of approximately 131 million gallons per day, as well as water purchased from other water suppliers. Approximately 98 percent of our annual production is self-supplied and processed at 10 surface water treatment plants and numerous well stations, which are all located in Connecticut, Massachusetts, and New Hampshire.

The capacities of Aquarion’s sources of supply, and water treatment, pumping and distribution facilities, are considered sufficient to meet the present requirements of Aquarion’s customers under normal conditions. On occasion, drought declarations are issued for portions of Aquarion’s service territories in response to extended periods of dry weather conditions.

OFFSHORE WIND PROJECT

Bay State Wind is a proposed offshore wind project being jointly developed by Eversource and Denmark-based Ørsted. Bay State Wind will be located in a 300-square-mile area approximately 25 miles off the coast of Massachusetts that has the ultimate potential to generate more than 2,000 MW of clean, renewable energy. Eversource and Ørsted each hold a 50 percent ownership interest in Bay State Wind.

~~Access Northeast is a natural gas pipeline~~For more information regarding the clean energy legislation, see "Regulatory Developments and storage project being developed jointly by Eversource, Spectra Energy Partners, LP and National Grid plc, through Algonquin Gas Transmission, LLC. Access Northeast is expected to enhance the Algonquin and Maritimes & Northeast pipeline systems using existing routes and is expected to include two new LNG storage tanks and liquefaction and vaporization facilities in Acushnet,Rate Matters – Massachusetts ~~that are currently expected to be connected to the Algonquin natural gas pipeline. For further information, see "Business Development and Capital Expenditures~~ – ~~Access Northeast"~~Massachusetts RFPs" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

~~OFF-SHORE WIND PROJECT~~

Bay State Wind is a proposed off-shore wind project being jointly developed by Eversource and Denmark-based DONG Energy. Bay State Wind will be located in a 300-square-mile area approximately 15 to 25 miles south of Martha's Vineyard that has the ultimate potential to generate at least 2,000 MW of wind power energy. Both Eversource and DONG Energy have a 50 percent ownership interest in Bay State Wind. In August 2016, Massachusetts passed clean energy legislation that requires EDCs to jointly solicit RFPs and enter into long-term contracts for off-shore wind, creating contracting opportunities for projects like Bay State Wind. The initial RFP is due to be released by June 30, 2017 and Bay State Wind will be bid into that RFP.

PROJECTED CAPITAL EXPENDITURES

We project to make capital expenditures of approximately ~~$9.6~~$10.8 billion from ~~2017~~2018 through ~~2020,~~2021, of which we expect approximately ~~$5.3~~$5.7 billion to be in our electric and natural gas distribution segments, ~~and~~ approximately ~~$3.9~~$4.1 billion to be in our electric transmission ~~segment.~~segment and $0.4 billion to be in our water utility business. We also project to invest approximately ~~$0.4~~$0.5 billion in information technology and facilities upgrades and enhancements. These projections do not include any expected investments related to ~~either Access Northeast or~~ Bay State Wind.

FINANCING

Our credit facilities and indentures require that Eversource ~~Energy~~ parent and certain of its subsidiaries, including CL&P, NSTAR Electric, PSNH, NSTAR Gas, ~~PSNH, WMECO~~ and Yankee Gas, and Aquarion comply with certain financial and non-financial covenants as are customarily included in such agreements, including maintaining a ratio of consolidated debt to total capitalization of no more than 65 percent. All of these companies currently are, and expect to remain, in compliance with these covenants.

NUCLEAR FUEL STORAGE

CL&P, NSTAR Electric, PSNH, ~~WMECO~~ and several other New England electric utilities are stockholders in three inactive regional nuclear generation companies, CYAPC, MYAPC and YAEC (collectively, the Yankee Companies). The Yankee Companies have completed the physical decommissioning of their respective generation facilities and are now engaged in the long-term storage of their spent nuclear fuel. The Yankee Companies have completed collection of their decommissioning and closure costs through the proceeds from the spent nuclear fuel litigation against the DOE and has refunded amounts to its member companies. These proceeds were used by the Yankee Companies to offset the decommissioning and closure cost amounts due from their member companies or to decrease the wholesale FERC-approved rates charged under power purchase agreements with CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH and several other New England utilities. The decommissioning rates charged by the Yankee Companies have been reduced to zero. CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH can recover these costs from, or refund proceeds to, their customers through state regulatory commission-approved retail rates.

We consolidate the assets and obligations of CYAPC and YAEC on our consolidated balance sheet because we own more than 50 percent of these companies.

For information on the DOE proceeds received related to the spent nuclear fuel litigation, see Note 11C, "Commitments and Contingencies – Spent Nuclear Fuel Obligations – Yankee Companies," in the accompanying Item 8, ~~Financial Statements and Supplementary Data~~.

OTHER REGULATORY AND ENVIRONMENTAL MATTERS

General

We are regulated in virtually all aspects of our business by various federal and state agencies, including FERC, the SEC, and various state and/or local regulatory authorities with jurisdiction over the industry and the service areas in which each of our companies operates, including the PURA, which has jurisdiction over CL&P, ~~and~~ Yankee Gas, and Aquarion, the NHPUC, which has jurisdiction over PSNH and Aquarion, and the DPU, which has jurisdiction over NSTAR Electric, NSTAR Gas, and ~~WMECO.~~Aquarion.

Environmental Regulation

We are subject to various federal, state and local requirements with respect to water quality, air quality, toxic substances, hazardous waste and other environmental matters. Additionally, major generation and transmission facilities may not be constructed or significantly modified without a review of the environmental impact of the proposed construction or modification by the applicable federal or state agencies.

Water Quality Requirements

The Clean Water Act requires every "point source" discharger of pollutants into navigable waters to obtain a National Pollutant Discharge Elimination System ("NPDES") permit from the EPA or state environmental agency specifying the allowable quantity and characteristics of its effluent. States may also require additional permits for discharges into state waters. ~~We are in the process of maintaining or renewing all required NPDES or state discharge permits in effect for PSNH's generation facilities.~~

In 1997, PSNH filed in a timely manner for a renewal of the NPDES permit for the Merrimack Station. As a result, the existing permit was administratively continued. In 2011, the EPA issued a draft renewal NPDES permit for PSNH's Merrimack Station for public review and comment. The proposed permit contains many significant conditions to future operation. The proposed permit would require PSNH to install a closed-cycle cooling system (including cooling towers) at the station. The EPA estimated that the net present value cost to install this system and operate it over a 20-year period would be approximately $112 million. PSNH and other electric utility groups filed thousands of pages of comments contesting EPA's draft permit requirements. PSNH stated that the data and studies supplied to the EPA demonstrate the fact that a closed-cycle cooling system is not warranted. On April 18, 2015 EPA issued a revised section of the draft NPDES permit for Merrimack Station. The revised portion of the draft permit deals solely with the treatment of wastewater from the flue gas desulfurization system. On August 18, 2015 PSNH again submitted comments. The EPA does not have a set deadline to consider comments and to issue a final permit. Merrimack Station is permitted to continue to operate under its present permit pending issuance of the final permit and subsequent resolution of matters appealed by PSNH and other parties. Due to the site specific characteristics of PSNH's other coal- and oil-fired electric generating stations, we believe it is unlikely that they would face similar permitting determinations.

Air Quality Requirements

The Clean Air Act Amendments ("CAAA"), as well as New Hampshire law, impose stringent requirements on emissions of SO₂ and NO_X for the purpose of controlling acid rain and ground level ozone. In addition, the CAAA address the control of toxic air pollutants. Requirements for the installation of continuous emissions monitors and expanded permitting provisions also are included. Following the completion of the sale of PSNH’s thermal generation facilities on January 10, 2018, we no longer own facilities subject to the provisions of the CAAA.

~~In 2011, the EPA finalized the Mercury and Air Toxic~~

Renewable Portfolio Standards ("MATS") that require the reduction of emissions of hazardous air pollutants from new and existing coal- and oil-fired electric generating stations. Previously referred to as the Utility MACT (maximum achievable control technology) rules, it establishes emission limits for mercury, arsenic and other hazardous air pollutants from coal- and oil-fired electric generating stations. MATS is the first implementation of a nationwide emissions standard for hazardous air pollutants across all electric generating units and provides utility companies with up to five years to meet the requirements. PSNH owns and operates approximately 1,000 MW of coal- and oil-fired electric generating stations subject to MATS, including the two units at Merrimack Station, Newington Station and the two coal units at Schiller Station. The Clean Air Project at our Merrimack Station, together with existing equipment, has enabled the facility to meet the MATS requirements. In 2016, additional controls were also installed at the two coal-fired units at Schiller Station.

Each of the states in which we do business also has Renewable Portfolio Standards ("RPS") requirements, which generally require fixed percentages of our energy supply to come from renewable energy sources such as solar, wind, hydropower, landfill gas, fuel cells and other similar sources.

New Hampshire's RPS provision requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable sources. In ~~2016,~~2017, the total RPS obligation was ~~9.0~~17.6 percent and it will ultimately reach ~~24.8~~25.2 percent in 2025. Energy suppliers, like PSNH, must possess sufficient quantities of RECs to satisfy the RPS requirements. PSNH owns renewable sources and uses a portion of internally generated RECs to meet its RPS obligations and sells other internally generated RECs when it is economically beneficial to do so. To the extent that a supplier, like PSNH, does not possess sufficient RECs to satisfy its RPS requirements, it makes up any shortfall by making an alternative compliance payment at a rate per REC established by law. The costs of ~~both~~ the RECs ~~and alternative compliance payments~~ are recovered by PSNH through ~~its default energy service~~ rates charged to customers.

Similarly, Connecticut's RPS statute requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable sources. In ~~2016,~~2017, the total RPS obligation was ~~21.0~~22.5 percent and will ultimately reach 2728 percent in 2020. CL&P is permitted to recover any costs incurred in complying with RPS from its customers through its GSC rate.

Massachusetts' RPS program also requires electricity suppliers to meet renewable energy standards. For ~~2016,~~2017, the requirement was ~~21.03~~22.34 percent, and will ultimately reach ~~22.1~~26.1 percent in 2020. NSTAR Electric ~~and WMECO are~~is permitted to recover any costs incurred in complying with RPS from its customers through rates. ~~WMECO~~NSTAR Electric also owns renewable solar ~~generation resources.~~power facilities. The RECs generated from ~~WMECO's~~NSTAR Electric's solar ~~units~~power facilities are sold to other energy suppliers, and the proceeds from these sales are credited back to customers.

Hazardous Materials Regulations

We have recorded a liability for what we believe, based upon currently available information, is our reasonably estimable environmental investigation, remediation, and/or Natural Resource Damages costs for waste disposal sites for which we have probable liability. Under federal and state law, government agencies and private parties can attempt to impose liability on us for recovery of investigation and remediation costs at hazardous waste sites. As of December 31, ~~2016,~~2017, the liability recorded for our reasonably estimable and probable environmental remediation costs for known sites needing investigation and/or remediation, exclusive of recoveries from insurance or from third parties, was ~~approximately $65.8~~$54.9 million, representing 6159 sites. These costs could be significantly higher if additional remediation becomes necessary or when additional information as to the extent of contamination becomes available.

The most significant liabilities currently relate to future clean-up costs at former MGP facilities. These facilities were owned and operated by our predecessor companies from the mid-1800's to mid-1900's. By-products from the manufacture of gas using coal resulted in fuel oils, hydrocarbons, coal tar, purifier wastes, metals and other waste products that may pose risks to human health and the environment. We currently have partial or full ownership responsibilities at former MGP sites that have a reserve balance of ~~$59.0~~$49.0 million of the total ~~$65.8~~$54.9 million as of December 31, ~~2016.~~2017. MGP costs are recoverable through rates charged to our customers.

Electric and Magnetic Fields

For more than twenty years, published reports have discussed the possibility of adverse health effects from electric and magnetic fields ("EMF") associated with electric transmission and distribution facilities and appliances and wiring in buildings and homes. Although weak health risk associations reported in some epidemiology studies remain unexplained, most researchers, as well as numerous scientific review panels, considering all significant EMF epidemiology and laboratory studies, have concluded that the available body of scientific information does not support the conclusion that EMF affects human health.

In accordance with recommendations of various regulatory bodies and public health organizations, we reduce EMF associated with new transmission lines by the use of designs that can be implemented without additional cost or at a modest cost. We do not believe that other capital expenditures are appropriate to minimize unsubstantiated risks.

Global Climate Change and Greenhouse Gas Emission Issues

Global climate change and greenhouse gas emission issues have received an increased focus from state governments and the federal government. The EPA initiated a rulemaking addressing greenhouse gas emissions and, on December 7, 2009, issued a finding that concluded that greenhouse gas emissions are "air pollution" that endangers public health and welfare and should be regulated. The largest source of greenhouse gas emissions in the U.S. is the electricity generating sector. The EPA has mandated greenhouse gas emission reporting beginning in 2011 for emissions for certain aspects of our business including stationary combustion, volume of gas supplied to large customers and fugitive emissions of SF6 gas and methane.

We are continually evaluating the regulatory risks and regulatory uncertainty presented by climate change concerns. Such concerns could potentially lead to additional rules and regulations that impact how we operate our business, both in terms of the generating facilities we own and operate as well as general utility operations. These could include federal "cap and trade" laws, carbon taxes, fuel and energy taxes, or regulations requiring additional capital expenditures at our generating facilities. We expect that any costs of these rules and regulations would be recovered from customers.

Connecticut, New Hampshire and Massachusetts are each members of the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort by nine northeastern and mid-Atlantic states, to develop a regional program for stabilizing and reducing CO₂ emissions from coal- and oil-fired electric generating plants. Because CO₂ allowances issued by any participating state are usable across all nine RGGI state programs, the individual state CO₂ trading programs, in the aggregate, form one regional compliance market for CO₂ emissions. The third three-year control period took effect on January 1, 2015 and ~~extends~~extended through December 31, 2017. In this control period, each regulated power plant must hold CO₂ allowances equal to 50 percent of its emissions during each of the first two years of the three-year period, and hold CO₂ allowances equal to 100 percent of its remaining emissions for the three-year control period at the end of the period.

~~PSNH anticipates that its generating units will emit between one million and three million tons of CO~~₂ per year, depending on the capacity factor and the utilization of the respective generation plant, excluding emissions from the operation of PSNH's Northern Wood Power Project, which emissions are an offset. PSNH satisfied its RGGI requirements by purchasing CO₂ allowances at auction. The cost of complying with RGGI requirements is recoverable from PSNH customers. Current legislation provides that the portion of the RGGI auction proceeds in excess of $1 per allowance will be refunded to customers.

~~Because none of Eversource Energy's other subsidiaries, CL&P, NSTAR Electric or WMECO, currently owns any generating assets (other than WMECO's solar photovoltaic facilities that do not emit CO~~₂~~), none of them is required to acquire CO~~₂ ~~allowances. However, the CO~~₂ allowance costs borne by the generating facilities that are utilized by wholesale energy suppliers to satisfy energy supply requirements to CL&P, NSTAR Electric and WMECO are likely to be included in the overall wholesale rates charged, which costs are then recoverable through rates charged to our customers.

FERC Hydroelectric Project Licensing

Federal Power Act licenses may be issued for hydroelectric projects for terms of 30 to 50 years as determined by the FERC. Upon the expiration of an existing license, (i) the FERC may issue a new license to the existing licensee, (ii) the United States may take over the project, or (iii) the FERC may issue a new license to a new licensee, upon payment to the existing licensee of the lesser of the fair value or the net investment in the project, plus severance damages, less certain amounts earned by the licensee in excess of a reasonable rate of return.

PSNH currently owns nine hydroelectric ~~generating stations~~generation facilities with a current claimed capability representing winter rates of approximately 71 MW, eight of which are licensed by the FERC under long-term ~~licenses that expire on varying dates from 2017 through 2047.~~licenses. PSNH and its hydroelectric ~~projects~~facilities are subject to conditions set forth in such licenses, the Federal Power Act and related FERC regulations, including provisions related to the condemnation of a project upon payment of just compensation, amortization of project investment from excess project earnings, possible takeover of a project after expiration of its license upon payment of net investment and severance damages and other matters. We are targeting for PSNH ~~is currently completing~~to close on the ~~relicensing application for~~sale of its ~~6.5 MW Eastman Falls Hydro Station,~~hydroelectric generation facilities by the ~~license for which expires in 2017.~~end of the first quarter of 2018.

EMPLOYEES

As of December 31, ~~2016,~~2017, Eversource Energy employed a total of ~~7,762~~8,084 employees, excluding temporary employees, of which ~~1,258~~1,270 were employed by CL&P, ~~1,627~~1,922 were employed by NSTAR Electric, ~~928~~and 918 were employed by ~~PSNH, and 297 were employed by WMECO.~~PSNH. Approximately 50 percent of our employees are members of the International Brotherhood of Electrical Workers, the Utility Workers Union of America or The United Steelworkers, and are covered by 11 collective bargaining agreements.

INTERNET INFORMATION

Our website address is www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource Energy's, CL&P's, NSTAR Electric's ~~PSNH's~~ and ~~WMECO's~~PSNH's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this Annual Report on Form 10-K. Printed copies of these reports may be obtained free of charge by writing to our Investor Relations Department at Eversource Energy, 107 Selden Street, Berlin, CT 06037.

Item 1A. Risk Factors

In addition to the matters set forth under "Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995" included immediately prior to Item 1, Business, above, we are subject to a variety of significant risks. Our susceptibility to certain risks, including those discussed in detail below, could exacerbate other risks. These risk factors should be considered carefully in evaluating our risk profile.

~~Cyber attacks~~Cyberattacks could severely impair operations, negatively impact our business, lead to the disclosure of confidential information and adversely affect our reputation.

A successful ~~cyber attack~~cyberattack on the information technology systems that control our transmission and distribution systems ~~generation facilities~~ or other assets could impair or prevent us from managing these systems and facilities, operating our systems effectively, or properly managing our data, networks and programs. The breach of certain information technology systems could adversely affect our ability to correctly record, process and report financial information. A major cyber incident could result in significant expenses to investigate and to repair system damage or security breaches and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation.

We have instituted safeguards to protect our information technology systems and assets. We devote substantial resources to network and application security, encryption and other measures to protect our computer systems and infrastructure from unauthorized access or misuse and interface with numerous external entities to improve our cybersecurity situational awareness. The FERC, through the North American Electric Reliability Corporation, requires certain safeguards to be implemented to deter ~~cyber attacks.~~cyberattacks. These safeguards may not always be effective due to the evolving nature of ~~cyber attacks.~~cyberattacks.

Any such ~~cyber breaches~~cyberattacks could result in loss of service to customers and a significant decrease in revenues, which could have a material adverse impact on our financial position, results of operations or cash flows.

Acts of war or terrorism, both threatened and actual, or physical attacks could adversely affect our ability to operate our systems and could adversely affect our financial results and liquidity.

Acts of war or terrorism, both threatened and actual, or actual physical attacks that damage our transmission and distribution systems ~~generation facilities~~ or other assets could negatively impact our ability to transmit or distribute ~~or generate~~ energy, distribute water, or operate our systems efficiently or at all. Because our electric transmission systems ~~and generation facilities~~ are part of an interconnected regional grid, we face the risk of blackout due to grid disturbances or disruptions on a neighboring interconnected system. If our assets were physically damaged and were not recovered in a timely manner, it could result in a loss of service to customers and a significant decrease in ~~revenues.~~revenues

Any such acts of war or terrorism, physical attacks or grid disturbances could result in a significant decrease in revenues, significant expense to repair system damage, costs associated with governmental actions in response to such attacks, and liability claims, all of which could have a material adverse impact on our financial position, results of operations and cash flows.

Strategic development opportunities may not be successful and projects may not commence operation as scheduled or be completed, which could have a material adverse effect on our business prospects.

We are pursuing broader strategic development investment opportunities that will benefit the New England region related to the construction of electric ~~and natural gas~~ transmission facilities, off-shore wind electric generation facilities, interconnections to generating resources and other investment opportunities. The development ~~construction and expansion~~ of ~~electric transmission and generation facilities and natural gas transmission facilities~~these activities involve numerous risks. Various factors could result in increased costs or result in delays or cancellation of these projects. Risks include regulatory approval processes, new legislation, economic events or factors, environmental and community concerns, design and siting issues, difficulties in obtaining required rights of way, competition from incumbent utilities and other entities, and actions of strategic partners. Should any of these factors result in such delays or cancellations, our financial position, results of operations, and cash flows could be adversely affected or our future growth opportunities may not be realized as anticipated.

As a result of legislative and regulatory changes, ~~during 2015,~~ the states in which we provide service have implemented new procedures to select for construction new major electric transmission, ~~and~~ natural gas pipeline, off-shore wind and other clean energy facilities. These procedures require the review of competing projects and permit the selection of only those projects that are expected to provide the greatest benefit to customers. If the projects in which we have invested are not selected for construction, or even if our projects are selected, other legislative or regulatory actions could result in our projects not being probable of entering the construction phase, it could have a material adverse effect on our future financial position, results of operations and cash flows.

After being selected as the winning bidder in the Massachusetts clean energy RFP in January 2018, on February 1, 2018, the NHSEC voted to deny the siting application for our Northern Pass project. Following the NHSEC's decision, the Massachusetts EDCs, in coordination with the DOER and the independent evaluator, notified NPT that the EDCs will continue contract negotiations, with the option of discontinuing discussions and terminating its conditional selection by March 27, 2018.

The actions of regulators and legislators can significantly affect our earnings, liquidity and business activities.

The rates that our electric, ~~and~~ natural gas and water companies charge their customers are determined by their state regulatory commissions and by the FERC. These commissions also regulate the companies' accounting, operations, the issuance of certain securities and certain other matters. The FERC also regulates the transmission of electric energy, the sale of electric energy at wholesale, accounting, issuance of certain securities and certain other matters.

Under state and federal law, our electric, ~~and~~ natural gas and water companies are entitled to charge rates that are sufficient to allow them an opportunity to recover their reasonable operating and capital costs and a reasonable ROE, to attract needed capital and maintain their financial integrity, while also protecting relevant public interests. Each of these companies prepares and submits periodic rate filings with their respective regulatory commissions for review and approval.

The FERC has jurisdiction over our transmission costs recovery and ~~the~~our allowed ROE. ~~The ROE has been contested by outside parties as unjust and unreasonable.~~ Certain outside parties have filed four complaints against all electric companies under the jurisdiction of ISO-NE alleging that ~~the~~our allowed ROE is unjust and unreasonable. ~~The first complaint, which was concluded~~An adverse decision in ~~2015, resulted in a decrease~~any of ~~the allowed ROE. The second and third~~these four complaints ~~are currently under review with the FERC. The fourth complaint period currently has not concluded. The FERC has initiated a review~~could adversely affect our financial position, results of the regional and local transmission rates due to a lack of adequate transparency. The FERC also found that the formula rates generally lacked sufficient details to determine how costs are derived and recovered in rates.operations or cash flows.

~~A federal appeals court decision~~FERC's policy has ~~upheld the FERC's authority to order major changes to~~encouraged competition for transmission planning and cost allocation in FERC Order No. 1000 and Order No. 1000-A, including transmission planning for public policy needs, and the requirement that utilities remove from their transmission tariffs their rightsprojects, even within existing service territories of first refusal to build transmission. Additionally, the FERC affirmed that it can eliminate our right of first refusal to build transmission in New England even though the FERC previously approved and granted special protections to these rights.electric companies. Implementation of FERC's goals, ~~in New England,~~ including within our service territories, may expose us to competition for construction of transmission projects, additional regulatory considerations, and potential delay with respect to future transmission projects, which may adversely affect our results of operation.

There is no assurance that the commissions will approve the recovery of all costs incurred by our electric, ~~and~~ natural gas and water companies, including costs for construction, operation and maintenance, as well as a reasonable return on their respective regulated assets. The amount of costs incurred by the companies, coupled with increases in fuel and energy prices, could lead to consumer or regulatory resistance to the timely recovery of such costs, thereby adversely affecting our financial position, results of operations or cash flows.

We outsource certain business functions to third-party suppliers and service providers, and substandard performance by those third parties could harm our business, reputation and results of operations.

We outsource certain services to third parties in areas including information technology, transaction processing, human resources, payroll and payroll processing and other areas. Outsourcing of services to third parties could expose us to substandard quality of service delivery or substandard deliverables, which may result in missed deadlines or other timeliness issues, non-compliance (including with applicable legal requirements and industry standards) or reputational harm, which could negatively impact our results of operations. We also continue to pursue enhancements to standardize our systems and processes. If any difficulties in the operation of these systems were to occur, they could adversely affect our results of operations, or adversely affect our ability to work with regulators, unions, customers or employees.

~~New technology, energy conservation measures and distributed generation could adversely affect our operations and financial results.~~

~~Advances in technology that reduce the costs~~The effects of alternative methods of producing electric energy to a level that is competitive with that of current electric production methods, could result in loss of market share and customers, and may require us to make significant expenditures to remain competitive. These changes in technology could also alter the channels through which electric customers buy or utilize energy, which could reduce our revenues or increase our expenses. Economic downturns or periods of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency and self-generation by customers. Customers' increased use of energy efficiency measures, distributed generation and energy storage technology could result in lower demand. Reduced demand due to energy efficiency measures and the use of distributed generation, to the extent not substantially offset through ratemaking or decoupling mechanisms, could have a material adverse impact on our financial condition, results of operations and cash flows.

Our transmission, distribution and generation systems may not operate as expected, and could require unplanned expenditures, which could adversely affect our financial position, results of operations and cash flows.

Our ability to properly operate our transmission, distribution and generation systems is critical to the financial performance of our business. Our transmission, distribution and generation businesses face several operational risks,climate change, including the breakdown, failure of, or damage to operating equipment, information technology systems, or processes, especially due to age; labor disputes; disruptions in the delivery of electricity and natural gas, including impacts on us or our customers; increased capital expenditure requirements, including those due to environmental regulation; catastrophic events such as fires, explosions, or other similar occurrences; extreme weather conditions beyond equipment and plant design capacity; other unanticipated operations and maintenance expenses and liabilities; and potential claims for property damage or personal injuries beyond the scope of our insurance coverage. Many of our transmission projects are expected to alleviate identified reliability issues and reduce customers' costs. However, if the in-service date for one or more of these projects is delayed due to economic events or factors, or regulatory or other delays, the risk of failures in the electricity transmission system may increase. Any failure of our transmission, distribution and generation systems to operate as planned may result in increased capital costs, reduced earnings or unplanned increases in operation and maintenance costs. Outages at generating stations may be deemed imprudent by the NHPUC resulting in disallowance of replacement power and repair costs. Such costs that are not recoverable from our customers would have an adverse effect on our financial position, results of operations and cash flows.

~~Severe~~severe storms, could cause significant damage to any of our facilities requiring extensive expenditures, the recovery for which is subject to approval by regulators.

Climate change creates physical and financial risks. Physical risks from climate change may include an increase in sea levels and changes in weather conditions, such as changes in precipitation and extreme weather events including drought. Customers’ energy needs vary with weather conditions, primarily temperature and humidity. For residential customers, heating and cooling represent their largest energy use. For water customers, conservation measures imposed by the communities we serve could impact water usage. To the extent weather conditions are affected by climate change, customers’ energy and water usage could increase or decrease depending on the duration and magnitude of the changes.

Severe weather, such as ice and snow storms, hurricanes and other natural disasters, may cause outages and property damage, which may require us to incur additional costs that may not be recoverable from customers. The cost of repairing damage to our operating subsidiaries' facilities and the potential disruption of their operations due to storms, natural disasters or other catastrophic events could be substantial, particularly as regulators and customers demand better and quicker response times to outages. If, upon review, any of our state regulatory authorities finds that our actions were imprudent, some of those restoration costs may not be recoverable from customers. The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations and cash flows.

Our transmission and distribution systems may not operate as expected, and could require unplanned expenditures, which could adversely affect our financial position, results of operations and cash flows.

Our ability to properly operate our transmission and distribution systems is critical to the financial performance of our business. Our transmission and distribution businesses face several operational risks, including the breakdown, failure of, or damage to operating equipment, information technology systems, or processes, especially due to age; labor disputes; disruptions in the delivery of electricity, natural gas and water, including impacts on us or our customers; increased capital expenditure requirements, including those due to environmental regulation; catastrophic events such as fires, explosions, or other similar occurrences; extreme weather conditions beyond equipment and plant design capacity; other unanticipated operations and maintenance expenses and liabilities; and potential claims for property damage or personal injuries beyond the scope of our insurance coverage. Many of our transmission projects are expected to alleviate identified reliability issues and reduce customers' costs. However, if the in-service date for one or more of these projects is delayed due to economic events or factors, or regulatory or other delays, the risk of failures in the electricity transmission system may increase. Any failure of our transmission and distribution systems to operate as planned may result in increased capital costs, reduced earnings or unplanned increases in operation and maintenance costs. The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations and cash flows

New technology, conservation measures and alternative energy sources could adversely affect our operations and financial results.

Advances in technology that reduce the costs of alternative methods of producing electric energy to a level that is competitive with that of current electric production methods, could result in loss of market share and customers, and may require us to make significant expenditures to remain competitive. These changes in technology could also alter the channels through which electric customers buy or utilize energy, which could reduce

our revenues or increase our expenses. Economic downturns or periods of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency and self-generation by customers. Customers' increased use of energy efficiency measures, distributed generation and energy storage technology could result in lower demand. Similarly, mandatory water conservation imposed due to drought conditions could result in lower demand for water. Reduced demand for electricity due to energy efficiency measures and the use of distributed generation, and reduced demand for water due to mandatory or voluntary conservation efforts, to the extent not substantially offset through ratemaking or decoupling mechanisms, could have a material adverse effect on our financial condition, results of operations and cash flows.

The unauthorized access to and the misappropriation of confidential and proprietary customer, employee, financial or system operating information could adversely affect our business operations and adversely impact our reputation.

In the regular course of business, we maintain sensitive customer, employee, financial and system operating information and are required by various federal and state laws to safeguard this information. Cyber intrusions, security breaches, theft or loss of this information by cybercrime or otherwise could lead to the release of critical operating information or confidential customer or employee information, which could adversely affect our business operations or adversely impact our reputation, and could result in significant costs, fines and litigation. We maintain limited privacy protection liability insurance to cover limited damages and defense costs arising from unauthorized disclosure of, or failure to protect, private information, as well as costs for notification to, or for credit card monitoring of, customers, employees and other persons in the event of a breach of private information. This insurance covers amounts paid to avert, prevent or stop a network attack or the disclosure of personal information, and costs of a qualified forensics firm to determine the cause, source and extent of a network attack or to investigate, examine and analyze our network to find the cause, source and extent of a data breach. While we have implemented measures designed to prevent cyberattacks and mitigate their effects should they occur, these measures may not be effective due to the continually evolving nature of efforts to access confidential information.

Contamination of our water supplies, the failure of dams on reservoirs providing water to our customers, or requirements to repair, upgrade or dismantle any of these dams, may disrupt our ability to distribute water to our customers and result in substantial additional costs, which could adversely affect our financial condition, and results of operations.

Our water supplies, including water provided to our customers, are subject to possible contamination from naturally occurring compounds or man-made substances.

Our water systems include impounding dams and reservoirs of various sizes. Although we believe our dams are structurally sound and well-maintained, significant damage to these facilities, or a significant decrease in the water in our reservoirs, could adversely affect our ability to provide water to our customers until the facilities and a sufficient amount of water in our reservoirs can be restored. A failure of a dam could result in personal injuries and downstream property damage for which we may be liable. The failure of a dam would also adversely affect our ability to supply water in sufficient quantities to our customers. Any losses or liabilities incurred due to a failure of one of our dams may not be covered by existing insurance, may exceed such insurance coverage limits, or may not be recoverable in rates. Any such losses may make it difficult for us to obtain insurance at acceptable rates in the future, and may have a material adverse effect on our financial condition, results of operations and cash flows.

Our goodwill is valued and recorded at an amount that, if impaired and written down, could adversely affect our future operating results and total capitalization.

We have a significant amount of goodwill on our consolidated balance sheet, which, as of December 31, ~~2016,~~2017, totaled ~~$3.5~~$4.4 billion. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date. We test our goodwill balances for impairment on an annual basis or whenever events occur or circumstances change that would indicate a potential for impairment. A determination that goodwill is deemed to be impaired would result in a non-cash charge that could materially adversely affect our financial position, results of operations and total capitalization. The annual goodwill impairment test in ~~2016~~2017 resulted in a conclusion that our goodwill was not impaired.

Eversource Energy and its utility subsidiaries are exposed to significant reputational risks, which make them vulnerable to increased regulatory oversight or other sanctions.

Because utility companies, including our electric, ~~and~~ natural gas and water utility subsidiaries, have large customer bases, they are subject to adverse publicity focused on the reliability of their distribution services and the speed with which they are able to respond to electric outages, natural gas leaks and similar interruptions caused by storm damage or other unanticipated events. Adverse publicity of this nature could harm the reputations of Eversource Energy and its subsidiaries; may make state legislatures, utility commissions and other regulatory authorities less likely to view them in a favorable light; and may cause them to be subject to less favorable legislative and regulatory outcomes or increased regulatory oversight. Unfavorable regulatory outcomes can include more stringent laws and regulations governing our operations, such as reliability and customer service quality standards or vegetation management requirements, as well as fines, penalties or other sanctions or requirements. The imposition of any of the foregoing could have a material adverse effect on the business, financial position, results of operations and cash flows of Eversource Energy and each of its utility subsidiaries.

Limits on our access to and increases in the cost of capital may adversely impact our ability to execute our business plan.

We use short-term debt and the long-term capital markets as a significant source of liquidity and funding for capital requirements not obtained from our operating cash flow. If access to these sources of liquidity becomes constrained, our ability to implement our business strategy could be

adversely affected. In addition, higher interest rates would increase our cost of borrowing, which could adversely impact our results of operations. A downgrade of our credit ratings or events beyond our control, such as a disruption in global capital and credit markets, could increase our cost of borrowing and cost of capital or restrict our ability to access the capital markets and negatively affect our ability to maintain and to expand our businesses.

Our counterparties may not meet their obligations to us or may elect to exercise their termination rights, which could adversely affect our earnings.

We are exposed to the risk that counterparties to various arrangements who owe us money, have contracted to supply us with energy, coal, or other commodities or services, or who work with us as strategic partners, including on significant capital projects, will not be able to perform their obligations, will terminate such arrangements or, with respect to our credit facilities, fail to honor their commitments. Should any of these counterparties fail to perform their obligations or terminate such arrangements, we might be forced to replace the underlying commitment at higher market prices and/or have to delay the completion of, or cancel a capital project. Should any lenders under our credit facilities fail to perform, the level of borrowing capacity under those arrangements could decrease. In any such events, our financial position, results of operations, or cash flows could be adversely affected.

In the regular course of business we maintain sensitive customer, employee, financial and system operating information and are required by various federal and state laws to safeguard this information. Cyber intrusions, security breaches, theft or loss of this information by cyber crime or otherwise could lead to the release of critical operating information or confidential customer or employee information, which could adversely affect our business operations or adversely impact our reputation, and could result in significant costs, fines and litigation. We maintain limited privacy protection liability insurance to cover limited damages and defense costs arising from unauthorized disclosure of, or failure to protect, private information, as well as costs for notification to, or for credit card monitoring of, customers, employees and other persons in the event of a breach of private information. This insurance covers amounts paid to avert, prevent or stop a network attack or the disclosure of personal information, and costs of a qualified forensics firm to determine the cause, source and extent of a network attack or to investigate, examine and analyze our network to find the cause, source and extent of a data breach. While we have implemented measures designed to prevent cyber attacks and mitigate their effects should they occur, these measures may not be effective due to the continually evolving nature of efforts to access confidential information.

Costs of compliance with ~~regulations, including~~ environmental ~~regulations~~laws and ~~climate change legislation,~~regulations may increase and have an adverse effect on our business and results of operations.

Our subsidiaries' operations are subject to extensive federal, state and local environmental statutes, rules and regulations that govern, among other things, air emissions, water quality, water discharges, and the management of hazardous and solid waste. Compliance with these requirements requires us to incur significant costs relating to environmental monitoring, maintenance and upgrading of facilities, remediation and permitting. The costs of compliance with existing legal requirements or legal requirements not yet adopted may increase in the future. An increase in such costs, unless promptly recovered, could have an adverse impact on our business and our financial position, results of operations or cash flows.

In addition, global climate change issues have received an increased focus from federal and state government agencies. Although we would expect that any costs of these rules and regulations would be recovered from customers, their impact on energy use by customers and the ultimate impact on our business would be dependent upon the specific rules and regulations adopted and cannot be determined at this time. The impact of these additional costs to customers could lead to a further reduction in energy consumption resulting in a decline in electricity and gas sales in our service territories, which would have an adverse impact on our business and financial position, results of operations or cash flows. Any failure by us to comply with environmental laws and regulations, even if due to factors beyond our control, or reinterpretations of existing requirements, could also increase costs. Existing environmental laws and regulations may be revised or new laws and regulations seeking to protect the environment may be adopted or become applicable to us. Revised or additional laws could result in significant additional expense and operating restrictions on our facilities or increased compliance costs, which may not be fully recoverable in distribution company rates. The cost impact of any such laws, rules or regulations would be dependent upon the specific requirements adopted and cannot be determined at this time. For further information, see Item 1, Business - Other Regulatory and Environmental Matters, included in this Annual Report on Form 10-K.

Market performance or changes in assumptions may require us to make significant contributions to our pension and other postretirement benefit plans.

We provide a defined benefit pension plan and other postretirement benefits for a substantial number of employees, former employees and retirees. Our future pension obligations, costs and liabilities are highly dependent on a variety of factors beyond our control. These factors include estimated investment returns, interest rates, discount rates, health care cost trends, benefit changes, salary increases and the demographics of plan participants. If our assumptions prove to be inaccurate, our future costs could increase significantly. In addition, various factors, including underperformance of plan investments and changes in law or regulation, could increase the amount of contributions required to fund our pension plan in the future. Additional large funding requirements, when combined with the financing requirements of our construction program, could impact the timing and amount of future financings and negatively affect our financial position, results of operations or cash flows. For further information, see Note 9A, "Employee Benefits - Pensions and Postretirement Benefits Other Than Pensions," to the financial statements.

The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business, financial position and results of operations.

Our operations depend on the continued efforts of our employees. Retaining key employees and maintaining the ability to attract new employees are important to both our operational and financial performance. We cannot guarantee that any member of our management or any key employee at the Eversource parent or subsidiary level will continue to serve in any capacity for any particular period of time. In addition, a significant portion of our workforce in our subsidiaries, including many workers with specialized skills maintaining and servicing the ~~electrical~~electric, gas and water infrastructure, will be eligible to retire over the next five to ten years. Such highly skilled individuals cannot be quickly replaced due to the technically complex work they perform. We have developed strategic workforce plans to identify key functions and proactively implement plans to assure a ready and qualified workforce, but cannot predict the impact of these plans on our ability to hire and retain key employees.

As a holding company with no revenue-generating operations, Eversource parent's liquidity is dependent on dividends from its subsidiaries, its commercial paper program, and its ability to access the long-term debt and equity capital markets.

Eversource parent is a holding company and as such, has no revenue-generating operations of its own. Its ability to meet its debt service obligations and to pay dividends on its common shares is largely dependent on the ability of its subsidiaries to pay dividends to or repay borrowings from Eversource parent, and/or Eversource parent's ability to access its commercial paper program or the long-term debt and equity capital markets. Prior to funding Eversource parent, the subsidiary companies have financial obligations that must be satisfied, including among others, their operating expenses, debt service, preferred dividends of certain subsidiaries, and obligations to trade creditors. Additionally, the subsidiary companies could retain their free cash flow to fund their capital expenditures in lieu of receiving equity contributions from Eversource parent. Should the subsidiary companies not be able to pay dividends or repay funds due to Eversource parent, or if Eversource parent cannot access its commercial paper programs or the long-term debt and equity capital markets, Eversource parent's ability to pay interest, dividends and its own debt obligations would be restricted.

Item 1B. Unresolved Staff Comments

We do not have any unresolved SEC staff comments.

Item 2. Properties

Transmission and Distribution System

As of December 31, ~~2016,~~2017, Eversource and our electric operating subsidiaries owned the following:


	Electric Distribution	Electric Transmission	Electric Distribution	Electric Transmission
Eversource	Electric Distribution	Electric Transmission	Electric Distribution	Electric Transmission
Number of substations owned	510	70	508	74
Transformer capacity (in kVa)	42,516,000	16,346,000	42,810,000	17,012,000
Overhead lines (in circuit miles)	40,321	3,939	40,532	3,947
Capacity range of overhead transmission lines (in kV)	N/A	69 to 345	N/A	69 to 345
Underground lines (distribution in circuit miles and transmission in cable miles)	17,043	402	17,438	405
Capacity range of underground transmission lines (in kV)	N/A	69 to 345	N/A	69 to 345


	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH
	Distribution	Transmission	Distribution	Transmission	Distribution	Transmission	Distribution	Transmission	Distribution	Transmission	Distribution	Transmission	Distribution	Transmission
Number of substations owned	182	19	134	26	151	18	43	7	182	20	178	34	148	20
Transformer capacity (in kVa)	19,874,000	3,633,000	11,658,000	6,716,000	5,372,000	5,905,000	5,612,000	92,000	19,965,000	3,633,000	17,535,000	7,465,000	5,310,000	5,914,000
Overhead lines (in circuit miles)	16,947	1,662	7,985	750	11,977	1,046	3,412	481	16,955	1,673	11,404	1,233	12,173	1,041
Capacity range of overhead transmission lines (in kV)	N/A	69 to 345	N/A	115 to 345	N/A	115 to 345	N/A	69 to 345	N/A	69 to 345	N/A	69 to 345	N/A	115 to 345
Underground lines (distribution in circuit miles and transmission in cable miles)	6,586	136	7,533	255	1,850	1	1,074	10	6,639	137	8,875	267	1,924	1
Capacity range of underground transmission lines (in kV)	N/A	69 to 345	N/A	115 to 345	N/A	115	N/A	115	N/A	69 to 345	N/A	115 to 345	N/A	115


	Eversource	CL&P	NSTAR Electric	PSNH	WMECO	Eversource	CL&P	NSTAR Electric	PSNH
Underground and overhead line transformers in service	621,123	289,174	126,566	162,433	42,950	624,472	289,986	170,383	164,103
Aggregate capacity (in kVa)	35,539,546	15,496,087	11,546,818	6,313,118	2,183,523	36,140,835	15,684,715	13,996,195	6,459,925

Electric Generating Plants

As of December 31, ~~2016,~~2017, PSNH owned the following electric generating plants:


Type of Plant	Number of Units	Year Installed	Claimed Capability* (kilowatts)	Number of Units	Year Installed	Claimed Capability* (kilowatts)
Steam Plants	5	1952-74	935,343	5	1952-74	934,940
Hydro	20	1901-83	58,115	20	1901-83	58,951
Internal Combustion	5	1968-70	101,869	5	1968-70	101,535
Biomass	1	2006	42,594	1	2006	42,594
Total PSNH Generating Plant	31		1,137,921	31		1,138,020


*	Claimed capability represents winter ratings as of December 31, ~~2016.~~2017. The combined nameplate capacity of the generating plants is approximately 1,200 MW.

On January 10, 2018, Eversource and PSNH completed the sale of PSNH's thermal generation assets, including the steam, internal combustion and biomass units, above. See Note 12, "Assets Held for Sale," in the accompanying Item 8, Financial Statements and Supplementary Data for further information.

As of December 31, ~~2016, WMECO~~2017, NSTAR Electric owned the following ~~electric generating plants:~~solar power facilities:


**	Claimed capability represents the direct current nameplate capacity of the plant.

CL&P ~~and NSTAR Electric do~~does not own any electric generating plants.

Natural Gas Distribution System

As of December 31, ~~2016,~~2017, Yankee Gas owned 28 active gate stations, ~~202~~197 district regulator stations, and approximately ~~3,345~~3,362 miles of natural gas main pipeline. Yankee Gas also owns a liquefaction and vaporization plant and above ground storage tank with a storage capacity equivalent of 1.2 Bcf of natural gas in Waterbury, Connecticut.

As of December 31, ~~2016,~~2017, NSTAR Gas owned 21 active gate stations, 166 district regulator stations, and approximately ~~3,272~~3,292 miles of natural gas main pipeline. Hopkinton, another subsidiary of Eversource, owns a satellite vaporization plant and above ground storage tanks in Acushnet, MA. In addition, Hopkinton owns a liquefaction and vaporization plant with above ground storage tanks in Hopkinton, MA. Combined, the two plants' tanks have an aggregate storage capacity equivalent to 3.5 Bcf of natural gas that is provided to NSTAR Gas under contract.

Water Distribution System

Aquarion’s properties consist of water transmission and distribution mains and associated valves, hydrants and service lines, water treatment plants, pumping facilities, wells, tanks, meters, dams, reservoirs, buildings, and other facilities and equipment used for the operation of our systems, including the collection, treatment, storage, and distribution of water.

As of December 31, 2017, Aquarion owned and operated sources of water supply with a combined yield of approximately 131 million gallons per day; 3,614 miles of transmission and distribution mains; 10 surface water treatment plants; 31 dams; and 106 wellfields.

Franchises

CL&P Subject to the power of alteration, amendment or repeal by the General Assembly of Connecticut and subject to certain approvals, permits and consents of public authority and others prescribed by statute, CL&P has, subject to certain exceptions not deemed material, valid franchises free from burdensome restrictions to provide electric transmission and distribution services in the respective areas in which it is now supplying such service.

In addition to the right to provide electric transmission and distribution services as set forth above, the franchises of CL&P include, among others, limited rights and powers, as set forth under Connecticut law and the special acts of the General Assembly constituting its charter, to manufacture, generate, purchase and/or sell electricity at retail, including to provide Standard Service, Supplier of Last Resort service and backup service, to sell electricity at wholesale and to erect and maintain certain facilities on public highways and grounds, all subject to such consents and approvals of public authority and others as may be required by law. The franchises of CL&P include the power of eminent domain. Connecticut law prohibits an electric distribution company from owning or operating generation assets. However, under "An Act Concerning Electricity and Energy Efficiency," enacted in 2007, an electric distribution company, such as CL&P, is permitted to purchase an existing electric generating plant located in Connecticut that is offered for sale, subject to prior approval from the PURA and a determination by the PURA that such purchase is in the public interest.

NSTAR Electric ~~and NSTAR Gas~~Through ~~their charters,~~its charter, which ~~are~~is unlimited in time, NSTAR Electric ~~and NSTAR Gas have~~has the right to engage in the business of delivering and selling electricity ~~and natural gas~~ within ~~their~~its respective service ~~territories,~~territory, and ~~have powers~~has the power incidental thereto and ~~are~~is entitled to all the rights and privileges of and subject to the duties imposed upon electric ~~and natural gas~~ companies under Massachusetts laws. The locations in public ways for electric transmission and distribution lines ~~and natural gas distribution pipelines~~ are obtained from municipal and other state authorities who, in granting these locations, act as agents for the state. In some cases, the actions of these authorities are subject to appeal to the DPU. The rights to these locations are not limited in time and are subject to the action of these authorities and the legislature. Under Massachusetts law, with the exception of municipal-owned utilities, no other entity may provide electric ~~or natural gas~~ delivery service to retail customers within ~~NSTAR's~~NSTAR Electric service territory without the written consent of NSTAR ~~Electric and/or NSTAR Gas.~~Electric. This consent must be filed with the DPU and the municipality so affected. The franchises of NSTAR Electric include the power of eminent domain.

The Massachusetts restructuring legislation defines service territories as those territories actually served on July 1, 1997 and following municipal boundaries to the extent possible. The restructuring legislation further provides that until terminated by law or otherwise, distribution companies shall have the exclusive obligation to serve all retail customers within their service territories and no other person shall provide distribution service within such service territories without the written consent of such distribution companies. Pursuant to the Massachusetts restructuring legislation, the DPU (then, the Department of Telecommunications and Energy) was required to define service territories for each distribution company, including NSTAR Electric. The DPU subsequently determined that there were advantages to the exclusivity of service territories and issued a report to the Massachusetts Legislature recommending against, in this regard, any changes to the restructuring legislation.

PSNH The NHPUC, pursuant to statutory requirements, has issued orders granting PSNH exclusive franchises to distribute electricity in the respective areas in which it is now supplying such service.

In addition to the right to distribute electricity as set forth above, the franchises of PSNH include, among others, rights and powers to manufacture, generate, purchase, and transmit electricity, to sell electricity at wholesale to other utility companies and municipalities and to erect and maintain certain facilities on certain public highways and grounds, all subject to such consents and approvals of public authority and others as may be required by law. PSNH's status as a public utility gives it the ability to petition the NHPUC for the right to exercise eminent domain for distribution services and for transmission eligible for regional cost allocation.

PSNH is also subject to certain regulatory oversight by the Maine Public Utilities Commission and the Vermont Public ~~Service Board.~~Utility Commission.

~~WMECO~~NSTAR Gas ~~WMECO is authorized by~~Through its charter, which is unlimited in time, NSTAR Gas has the right to ~~conduct its electric business~~engage in the ~~territories served by it,~~business of delivering and ~~has locations in the public highways for transmission~~selling natural gas within its respective service territory, and distribution lines. Such locations are granted pursuant to the laws of Massachusetts by the Department of Public Works of Massachusetts or local municipal authorities and are of unlimited duration, but the rights thereby granted are not vested. Such locations are for specific lines only and for extensions of lines in public highways. Further similar locations must be obtained from the Department of Public Works of Massachusetts or the local municipal authorities. In addition, WMECO has been granted easements for its lines in the Massachusetts Turnpike by the Massachusetts Turnpike Authority and pursuant to state laws, has the power incidental thereto and is entitled to all the rights and privileges of ~~eminent domain.~~

and subject to the duties imposed upon natural gas companies under Massachusetts laws. The locations in public ways for natural gas distribution pipelines are obtained from municipal and other state authorities who, in granting these locations, act as agents for the state. In some cases, the actions of these authorities are subject to appeal to the DPU. The rights to these locations are not limited in time and are subject to the action of these authorities and the legislature. Under Massachusetts ~~restructuring legislation applicable~~law, with the exception of municipal-owned utilities, no other entity may provide natural gas delivery service to retail customers within the NSTAR ~~Electric (described above) is also applicable to WMECO.~~Gas service territory without the written consent of NSTAR Gas. This consent must be filed with the DPU and the municipality so affected.

Yankee Gas Yankee Gas holds valid franchises to sell natural gas in the areas in which Yankee Gas supplies natural gas service, which it acquired either directly or from its predecessors in interest. Generally, Yankee Gas holds franchises to serve customers in areas designated by those franchises as well as in most other areas throughout Connecticut so long as those areas are not occupied and served by another natural gas utility under a valid franchise of its own or are not subject to an exclusive franchise of another natural gas utility or by consent. Yankee Gas' franchises are perpetual but remain subject to the power of alteration, amendment or repeal by the General Assembly of the State of Connecticut, the power of

revocation by the PURA and certain approvals, permits and consents of public authorities and others prescribed by statute. Generally, Yankee Gas' franchises include, among other rights and powers, the right and power to manufacture, generate, purchase, transmit and distribute natural gas and to erect and maintain certain facilities on public highways and grounds, and the right of eminent domain, all subject to such consents and approvals of public authorities and others as may be required by law.

Aquarion Water Company of ConnecticutAWC-CT derives its rights and franchises to operate from special acts of the Connecticut General Assembly and subject to certain approvals, permits and consents of public authority and others prescribed by statute and by its charter, AWC-CT has, with minor exceptions, solid franchises free from burdensome restrictions and unlimited as to time, and is authorized to sell potable water in the towns (or parts thereof) in which water is now being supplied by AWC-CT.

In addition to the right to sell water as set forth above, the franchises of AWC-CT include rights and powers to erect and maintain certain facilities on public highways and grounds, all subject to such consents and approvals of public authority and others as may be required by law. Under the Connecticut General Statutes, AWC-CT may, upon payment of compensation, take and use such lands, springs, streams or ponds, or such rights or interests therein as the Connecticut Superior Court, upon application, may determine is necessary to enable AWC-CT to supply potable water for public or domestic use in its franchise areas.

Aquarion Water Company of MassachusettsThrough its charters, which are unlimited in time, AWC-MA has the right to engage in the business of distributing and selling water within its service territories, and has the power incidental thereto and is entitled to all the rights and privileges of and subject to the duties imposed upon water companies under Massachusetts laws. AWC-MA has the right to construct and maintain its mains and distribution pipes in and under any public ways and to take and hold water within its respective service territories. Subject to DPU regulation, AWC-MA has the right to establish and fix rates for use of the water distributed and to establish reasonable regulations regarding same. Certain of the towns within our service area have the right, at any time, to purchase the corporate property and all rights and privileges of AWC-MA according to pricing formulas and procedures specifically described in AWC-MA's respective charters and in compliance with Massachusetts law.

Aquarion Water Company of New HampshireThe NHPUC, pursuant to statutory law, has issued orders granting and affirming AWC-NH’s exclusive franchise to own, operate, and manage plant and equipment and any part of the same, for the conveyance of water for the public located within its franchise territory. That franchise territory encompasses the towns of Hampton, North Hampton and Rye. Subject to NHPUC’s regulations, AWC-NH has the right to establish and fix rates for use of the water distributed and to establish reasonable regulations regarding the same.

In addition to the right to provide water supply, the franchise also allows AWC-NH to sell water at wholesale to other water utilities and municipalities and to construct plant and equipment and maintain such plant and equipment on certain public highways and grounds, all subject to such consents and approvals of public authority and others as may be required by law.

AWC-NH's status as a regulated public utility gives it the ability to petition the NHPUC for the right to exercise eminent domain for the establishment of plant and equipment. It can also petition the NHPUC for exemption from the operation of any local ordinance when certain utility structures are reasonably necessary for the convenience or welfare of the public and the local conditions, and, if the purpose of the structure relates to water supply withdrawal, the exemption is recommended by the New Hampshire Department of Environmental Services.

Item 3. Legal Proceedings

1. Yankee Companies v. U.S. Department of Energy

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

In January 2013, the proceeds from the DOE Phase I Damages Claim were received by the Yankee Companies and transferred to each Yankee Company's respective decommissioning trust.

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

On September 17, 2014, in accordance with the MYAPC refund plan, MYAPC returned a portion of the DOE Phase I Damages proceeds to the member companies, including CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO,~~PSNH, in the amount of $3.2 million, ~~$1.1 million, $1.4~~$1.9 million and ~~$0.8~~$1.4 million, respectively.

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

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

DOE Phase III Damages - In August 2013, the Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred in the years 2009 through 2012 ("DOE Phase III"). The DOE Phase III trial concluded on July 1, 2015, followed by a post-trial briefing that concluded on October 4, 2015. On March 25, 2016, the court issued its decision and awarded CYAPC, YAEC and MYAPC damages of $32.6 million, $19.6 million and $24.6 million, respectively. In total, the Yankee Companies were awarded $76.8 million of the $77.9 million in damages sought in the DOE Phase III. The decision became final on July 18, 2016, and the Yankee Companies received the awards from the DOE on October 14, 2016. The Yankee Companies received FERC approval of their proposed distribution of certain amounts of the awarded damages proceeds to member companies, including CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO,~~PSNH, which CYAPC and MYAPC made in December 2016. MYAPC also refunded $56.5 million from its spent nuclear fuel trust, a portion of which was also refunded to the Eversource utility subsidiaries. In total, Eversource received $26.1 million, of which CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH received $13.6 million, ~~$5.0~~$8.6 million and $3.9 million, ~~and $3.6 million,~~ respectively. ~~These amounts will be refunded to the customers~~All refunds under these proceedings have been disbursed.

DOE Phase IV Damages - On May 22, 2017, each of the ~~respective Eversource utility subsidiaries.~~Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal Claims seeking monetary damages totaling approximately $100 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (“DOE Phase IV”). The DOE Phase IV trial is expected to begin in 2018.

2. Other Legal Proceedings

For further discussion of legal proceedings, see Item 1, Business: "– Electric Distribution Segment," "– Electric Transmission Segment," and "– Natural Gas Distribution Segment" for information about various state and federal regulatory and rate proceedings, civil lawsuits related thereto, and information about proceedings relating to power, transmission and pricing issues; "– Nuclear Fuel Storage" for information related to nuclear waste; and "– Other Regulatory and Environmental Matters" for information about proceedings involving water and air quality requirements, toxic substances and hazardous waste, electric and magnetic fields, and other matters. In addition, see Item 1A, Risk Factors, for general information about several significant risks.

Item 4. Mine Safety Disclosures

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the executive officers of Eversource Energy as of February ~~22, 2017.~~23, 2018. All of the Company's officers serve terms of one year and until their successors are elected and qualified:



Name	Age	Title
James J. Judge	6162	President and Chief Executive Officer
Philip J. Lembo	6162	Executive Vice President and Chief Financial Officer ~~and Treasurer~~
Gregory B. Butler	5960	Executive Vice President and General Counsel
Christine M. Carmody	5455	Executive Vice President-Human Resources and Information Technology
Joseph R. Nolan, Jr.	5354	Executive Vice President-Customer and Corporate Relations
Leon J. Olivier	6970	Executive Vice President-Enterprise Energy Strategy and Business Development
Werner J. Schweiger	5758	Executive Vice President and Chief Operating Officer
Jay S. Buth	4748	Vice President, Controller and Chief Accounting Officer

James J. Judge. Mr. Judge has served as Chairman of the Board, President and Chief Executive Officer ~~and~~of Eversource Energy since May 3, 2017; as a Trustee of Eversource Energy and as Chairman of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH since May 4, 2016; and as Chairman, President and Chief Executive Officer of Eversource Service and Chairman of NSTAR Gas and Yankee Gas since May 9, ~~2016; and~~2016. Mr. Judge has served as a Director of CL&P, PSNH, ~~WMECO,~~ Yankee Gas and Eversource Service since April 10, ~~2012,~~2012; and of NSTAR Electric and NSTAR Gas since September 27, 1999. Previously, Mr. Judge ~~previously~~ served as President and Chief Executive Officer of Eversource Energy from May 4, 2016 until May 3, 2017; as Chairman of WMECO from May 4, 2016 until December 31, 2017; as a Director of WMECO from April 10, 2012 until December 31, 2017; and as Executive Vice President and Chief Financial Officer of Eversource Energy, CL&P, NSTAR Electric, PSNH and WMECO from April 10, 2012 until May 4, ~~2016, and~~2016; of NSTAR Gas, Yankee Gas and Eversource Service from April 10, 2012 until May 9, 2016. Mr. Judge serves as a director of Analogic Corporation and as chairman of its audit committee. He ~~was Senior Vice President~~serves on the Board of Directors of the Edison Electric Institute and ~~Chief Financial Officer~~the Massachusetts Competitive Partnership. He has also served on the Board of ~~NSTAR, NSTAR Electric~~Directors of the United Way of Massachusetts Bay and ~~NSTAR Gas from 1999 until April 10, 2012.~~Merrimack Valley. Mr. Judge has served as Chairman of the Board of Eversource Energy Foundation, Inc. since May 9, ~~2016~~2016; and as a Director since April 10, 2012. He ~~was~~previously served as Treasurer of the Eversource Energy Foundation, Inc. from ~~April~~May 10, 2012 tountil May 9, 2016. He has served as a Trustee of the NSTAR Foundation since December 12, 1995.

Philip J. Lembo. Mr. Lembo has served as Executive Vice President and Chief Financial Officer ~~and Treasurer~~ of Eversource Energy since May 3, 2017; and of CL&P, NSTAR Electric, ~~PSNH, WMECO,~~ NSTAR Gas, PSNH, Yankee Gas and Eversource Service since ~~August 8, 2016;~~March 31, 2017. Mr. Lembo has served as a Director of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH since May 4, ~~2016,~~2016; and of NSTAR Gas, Yankee Gas and Eversource Service since May 9, 2016. Mr. Lembo previously served as Executive Vice President and Chief Financial Officer of WMECO from May 3, 2017 until December 31, 2017; as a Director of WMECO from May 4, 2016 until December 31, 2017; as Executive Vice President, Chief Financial Officer and Treasurer of Eversource Energy from August 8, 2016 until May 3, 2017; of CL&P, NSTAR Electric, PSNH, WMECO, NSTAR Gas, Yankee Gas and Eversource Service from August 8, 2016 until March 31, 2017; as Senior Vice President, Chief Financial Officer and Treasurer of Eversource Energy, CL&P, NSTAR Electric, PSNH and WMECO from May 4, 2016 until August 8, ~~2016,~~2016; and of NSTAR Gas, Yankee Gas and Eversource Service from May 9, 2016 until August 8, ~~2016. He was~~2016; as Vice President and Treasurer of Eversource Energy, CL&P, PSNH and WMECO from April 10, 2012 until May 4, ~~2016,~~2016; and of Yankee Gas and Eversource Service from April 10, 2012 until May 9, 2016. Mr. Lembo ~~was~~served as Vice President and Treasurer of NSTAR Electric ~~from March 29, 2006 until May 4, 2016, of~~and NSTAR Gas from March 29, 2006 until May ~~9, 2016, and of NSTAR from March 29, 2006 until April 10, 2012.~~4, 2016. Mr. Lembo has served as a Director ~~and as Treasurer~~ of Eversource Energy Foundation, Inc. since May 9, 2016. He previously served as Treasurer of Eversource Energy Foundation, Inc. from May 9, 2016 until March 31, 2017. He has served as a Trustee of the NSTAR Foundation since May 9, 2016.

Gregory B. Butler. Mr. Butler has served as Executive Vice President and General Counsel of Eversource Energy, CL&P, NSTAR Electric, ~~PSNH, WMECO,~~ NSTAR Gas, PSNH, Yankee Gas and Eversource Service since August 8, ~~2016;~~2016. Mr. Butler has served as a Director of NSTAR Electric and NSTAR Gas since April 10, ~~2012,~~2012; of Eversource Service since November 27, ~~2012,~~2012; and of CL&P, PSNH ~~WMECO~~ and Yankee Gas since April 22, 2009. Mr. Butler previously served as Executive Vice President and General Counsel of WMECO from August 8, 2016 until December 31, 2017; as a Director of WMECO from April 22, 2009 until December 31, 2017; as Senior Vice President and General Counsel of Eversource Energy from May 1, 2014 until August 8, ~~2016,~~2016; of NSTAR Electric and NSTAR Gas from April 10, 2012 until August 8, ~~2016, and~~2016; of CL&P, PSNH, WMECO, Yankee Gas and Eversource Service from March 9, 2006 until August 8, ~~2016. He was~~2016; and as Senior Vice President, General Counsel and Secretary of Eversource Energy from April 10, 2012 until May 1, ~~2014; and Senior Vice President and General Counsel of Eversource Energy from December 1, 2005 until April 10, 2012. Mr. Butler~~2014. He has served as a Director of Eversource Energy Foundation, Inc. since December 1, 2002. He has been a Trustee of the NSTAR Foundation since April 10, 2012.

Christine M. Carmody. Ms. Carmody has served as Executive Vice President-Human Resources and Information Technology of Eversource Energy and Eversource Service since August 8, ~~2016, and~~2016. Ms. Carmody has served as a Director of Eversource Service since November 27, 2012. Previously Ms. Carmody ~~previously~~ served as Senior Vice President-Human Resources of Eversource Energy from May 4, 2016 until August 8, ~~2016,~~2016; of Eversource Service from April 10, 2012 until August 8, ~~2016,~~2016; as Senior Vice President-Human Resources of CL&P, PSNH, WMECO and Yankee Gas from November 27, 2012 until September 29, ~~2014, and~~2014; of NSTAR Electric and NSTAR Gas from August 1, 2008 until September 29, ~~2014. She was~~2014; and as a Director of CL&P, PSNH, WMECO and Yankee Gas from April 10, 2012 until September 29, ~~2014,~~2014; and of NSTAR Electric and NSTAR Gas from November 27, 2012 until September 29, 2014. ~~Ms. Carmody was Vice President-Organizational Effectiveness of NSTAR, NSTAR Electric and NSTAR Gas from June 2006 until August 2008.~~ Ms. Carmody has served as a Director of Eversource Energy Foundation, Inc. since April 10, 2012. She has served as a Trustee of the NSTAR Foundation since August 1, 2008.

2014. ~~He was Senior Vice President-Customer & Corporate Relations of NSTAR, NSTAR Electric and NSTAR Gas from 2006 until April 10, 2012.~~ Mr. Nolan has served as a Director of Eversource Energy Foundation, Inc. since April 10, 2012, and as Executive Director of Eversource Energy Foundation, Inc. since October 15, 2013. He has served as a Trustee of the NSTAR Foundation since October 1, 2000.

Leon J. Olivier. Mr. Olivier has served as Executive Vice President-Enterprise Energy Strategy and Business Development of Eversource Energy since September 2, ~~2014~~2014; and of Eversource Service since August 11, ~~2014, and~~2014. Mr. Olivier has served as a Director of Eversource Service since January 17, 2005. Mr. Olivier previously served as Executive Vice President and Chief Operating Officer of Eversource Energy from May 13, 2008 until September 2, ~~2014, and~~2014; of Eversource Service from May 13, 2008 until August 11, ~~2008. He was~~2008; as Chief Executive Officer of NSTAR Electric and NSTAR Gas from April 10, 2012 until August 11, ~~2014,~~2014; of CL&P, PSNH, WMECO and Yankee Gas from January 15, 2007 until August 11, ~~2014,~~2014; and of CL&P from September 10, 2001 until September 29, ~~2014. He was~~2014; as a Director of NSTAR Electric and NSTAR Gas from November 27, 2012 until September 29, ~~2014,~~2014; of PSNH, WMECO and Yankee Gas from January 17, 2005 until September 29, ~~2014,~~2014; and of CL&P from September 10, 2001 until September 29, 2014. ~~Mr. Olivier was Executive Vice President-Operations of Eversource Energy from February 13, 2007 until May 12, 2008, and of Eversource Service from January 15, 2007 until May 12, 2008.~~ He has served as a Director of Eversource Energy Foundation, Inc. since April 1, 2006. Mr. Olivier has served as a Trustee of the NSTAR Foundation since April 10, 2012.

Werner J. Schweiger. Mr. Schweiger has served as Executive Vice President and Chief Operating Officer of Eversource Energy since September 2, ~~2014, and~~2014; of Eversource Service since August 11, 2014; and as Chief Executive Officer of CL&P, NSTAR Electric, ~~PSNH, WMECO,~~ NSTAR Gas, PSNH and Yankee Gas since August 11, ~~2014;~~2014. Mr. Schweiger has served as a Director of Eversource Service, NSTAR Gas and Yankee Gas since September 29, ~~2014,~~2014; and of CL&P, ~~NSTAR Electric,~~ PSNH and ~~WMECO~~NSTAR Electric since May 28, 2013. He ~~was~~previously served as Chief Executive Officer of WMECO from August 11, 2014 until December 31, 2017; as a Director of WMECO from May 28, 2013 until December 31, 2017; as President of CL&P from June 2, 2015 until June 27, 2016; as President of NSTAR Gas and Yankee Gas from September 29, 2014 until November 10, 2014; ~~and~~as President-Electric Distribution of Eversource Service from January 16, 2013 until August 11, ~~2014. Mr. Schweiger was~~2014; as President of NSTAR Electric from April 10, 2012 until January 16, 2013; and as a Director of NSTAR Electric from November 27, 2012 until January 16, 2013. ~~He was Senior Vice President-Operations of NSTAR Electric and NSTAR Gas from February 27, 2002 until April 10, 2012.~~ Mr. Schweiger has served as a Director of Eversource Energy Foundation, Inc. since September 29, 2014. He has served as a Trustee of the NSTAR Foundation since September 29, 2014.

Jay S. Buth. Mr. Buth has served as Vice President, Controller and Chief Accounting Officer of Eversource Energy, CL&P, NSTAR Electric, ~~PSNH, WMECO,~~ NSTAR Gas, PSNH, Yankee Gas and Eversource Service since April 10, 2012. Previously, Mr. Buth ~~previously~~ served as Vice President, Controller and Chief Accounting Officer of WMECO from April 10, 2012 until December 31, 2017; and as Vice President-Accounting and Controller of Eversource Energy, CL&P, PSNH, WMECO, Yankee Gas and Eversource Service from June 9, 2009 until April 10, 2012. Mr. Buth was Vice President and Controller for New Jersey Resources Corporation, an energy services holding company that provides natural gas and wholesale energy services, including transportation, distribution and asset management, from June 2006 through January 2009.

PART II

Item 5. Market for the Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information and (c) Dividends

Eversource. Our common shares are listed on the New York Stock Exchange. The ticker symbol is "ES." The high and low sales prices of our common shares and the dividends declared, for the past two years, by quarter, are shown below.


Year	Quarter	High		Low		Dividends Declared		Quarter	High		Low		Dividends Declared
2017								First	$	60.36	$	54.08	$	0.4750
								Second	63.34		58.11		0.4750
								Third	64.19		59.55		0.4750
								Fourth	66.15		59.59		0.4750

2016	First	$	58.81	$	50.01	$	0.4450	First	$	58.81	$	50.01	$	0.4450
	Second	59.95		53.90		0.4450		Second	59.95		53.90		0.4450
	Third	60.44		53.08		0.4450		Third	60.44		53.08		0.4450
	Fourth	55.74		50.56		0.4450		Fourth	55.74		50.56		0.4450

2015	First	$	56.83	$	48.54	$	0.4175
	Second	51.42		45.20		0.4175
	Third	52.15		44.64		0.4175
	Fourth	52.85		48.18		0.4175

Information with respect to dividend restrictions for us, CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO~~PSNH is contained in Item 8, Financial Statements and Supplementary Data, in the Combined Notes to Financial Statements, within this Annual Report on Form 10-K.

There is no established public trading market for the common stock of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO.~~PSNH. All of the common stock of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH is held solely by Eversource.

Common stock dividends approved and paid to Eversource during the year were as follows:


	For the Years Ended December 31,				For the Years Ended December 31,
(Millions of Dollars)	2016		2015		2017		2016
CL&P	$	199.6	$	196.0	$	254.8	$	199.6
NSTAR Electric	278.3		198.0		272.0		316.3
PSNH(1)	77.6		106.0		23.9		77.6
WMECO	38.0		37.2

⁽¹⁾ The 2017 amount does not include $150.0 million of dividends declared but not paid as of December 31, 2017.

(b) Holders

As of January 31, ~~2017,~~2018, there were ~~39,191~~37,428 registered common shareholders of our company on record. As of the same date, there were a total of 316,885,808 shares issued.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

For information regarding securities authorized for issuance under equity compensation plans, see Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, included in this Annual Report on Form 10-K.

(e) Performance Graph

The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in ~~2011~~2012 in Eversource Energy common stock, as compared with the S&P 500 Stock Index and the EEI Index for the period 2012 through ~~2016,~~2017, assuming all dividends are reinvested.

													December 31,
	2011	2012	2013	2014	2015	2016	2012	2013	2014	2015	2016	2017
Eversource Energy	$100	$112	$126	$164	$162	$181	$100	$112	$147	$145	$161	$190
EEI Index	$100	$102	$115	$149	$143	$168	$100	$113	$146	$140	$164	$184
S&P 500	$100	$116	$154	$175	$177	$198	$100	$132	$151	$153	$171	$208

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below. The common shares purchased consist of open market purchases made by the Company or an independent agent. These share transactions related to shares awarded under the Company's Incentive Plan and Dividend Reinvestment Plan and matching contributions under the Eversource 401k Plan.

Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as
Part of Publicly Announced Plans or Programs

Approximate Dollar
Value of Shares that
May Yet Be Purchased Under the Plans and Programs (at month end)
October 1 - October 31, 2016 434,477
$ 52.98
—
—
November 1 - November 30, 2016 10,465
53.55
—
—
December 1 - December 31, 2016 102,302
55.36
—
—
Total 547,244
$ 53.44
—
—



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end)
October 1 - October 31, 2017	101,737	$	60.52	—	—
November 1 - November 30, 2017	6,411	64.22		—	—
December 1 - December 31, 2017	190,873	62.86		—	—
Total	299,021	$	62.09	—	—

Item 6. Selected Consolidated Financial Data

Eversource Selected Consolidated Financial Data (Unaudited)


(Thousands of Dollars, except percentages and common share information)	2016			2015			2014			2013			2012 (a)			2017		2016		2015		2014		2013
Balance Sheet Data:
Property, Plant and Equipment, Net	$	21,350,510		$	19,892,441		$	18,647,041		$	17,576,186		$	16,605,010		$	23,617,463	$	21,350,510	$	19,892,441	$	18,647,041	$	17,576,186
Total Assets	32,053,173			30,580,309			29,740,387			27,760,315			28,269,780			36,220,386		32,053,173		30,580,309		29,740,387		27,760,315
Total Capitalization^{(b) (c)}	20,470,539			19,542,240			18,946,395			18,042,052			17,323,068
Obligations Under Capital Leases^(b)	8,924			8,222			9,434			10,744			11,071
Common Shareholders' Equity																11,086,242		10,711,734		10,352,215		9,976,815		9,611,528
Noncontrolling Interest - Preferred Stock of Subsidiaries																155,570		155,568		155,568		155,568		155,568
Long-Term Debt ^(a)																12,325,520		9,603,237		9,034,457		8,851,600		8,310,179
Obligations Under Capital Leases^(a)																9,898		8,924		8,222		9,434		10,744
Income Statement Data:
Operating Revenues	$	7,639,129		$	7,954,827		$	7,741,856		$	7,301,204		$	6,273,787		$	7,751,952	$	7,639,129	$	7,954,827	$	7,741,856	$	7,301,204
Net Income	$	949,821		$	886,004		$	827,065		$	793,689		$	533,077		$	995,515	$	949,821	$	886,004	$	827,065	$	793,689
Net Income Attributable to Noncontrolling Interests	7,519			7,519			7,519			7,682			7,132			7,519		7,519		7,519		7,519		7,682
Net Income Attributable to Common Shareholders	$	942,302		$	878,485		$	819,546		$	786,007		$	525,945		$	987,996	$	942,302	$	878,485	$	819,546	$	786,007
Common Share Data:
Net Income Attributable to Common Shareholders:
Basic Earnings Per Common Share	$	2.97		$	2.77		$	2.59		$	2.49		$	1.90		$	3.11	$	2.97	$	2.77	$	2.59	$	2.49
Diluted Earnings Per Common Share	$	2.96		$	2.76		$	2.58		$	2.49		$	1.89		$	3.11	$	2.96	$	2.76	$	2.58	$	2.49
Weighted Average Common Shares Outstanding:
Basic	317,650,180			317,336,881			316,136,748			315,311,387			277,209,819
Diluted	318,454,239			318,432,687			317,417,414			316,211,160			277,993,631
Dividends Declared Per Common Share	$	1.78		$	1.67		$	1.57		$	1.47		$	1.32		$	1.90	$	1.78	$	1.67	$	1.57	$	1.47
Market Price - Closing (high)^(d)	$	59.26		$	54.52		$	56.15		$	45.33		$	40.57
Market Price - Closing (low) ^(d)	$	48.94		$	44.63		$	41.52		$	38.67		$	33.53
Market Price - Closing (end of year) ^(d)	$	55.23		$	51.07		$	53.52		$	42.39		$	39.08
Market Price - Closing (end of year) ^(b)																$	63.18	$	55.23	$	51.07	$	53.52	$	42.39
Book Value Per Common Share (end of year)	$	33.80		$	32.64		$	31.47		$	30.49		$	29.41		$	34.98	$	33.80	$	32.64	$	31.47	$	30.49
Tangible Book Value Per Common Share (end of year) ^(e)	$	22.70		$	21.54		$	20.37		$	19.32		$	18.21
Rate of Return Earned on Average Common Equity (%) ^(f)	9.0			8.7			8.4			8.3			7.9
Market-to-Book Ratio (end of year) ^(g)	1.6			1.6			1.7			1.4			1.3
Capitalization:
Total Equity	52		%	53		%	53		%	53		%	53		%
Preferred Stock Not Subject to Mandatory Redemption	1			1			1			1			1
Long-Term Debt ^{(b) (c)}	47			46			46			46			46
	100		%	100		%	100		%	100		%	100		%
Tangible Book Value Per Common Share (end of year) ^(c)																$	21.00	$	22.70	$	21.54	$	20.37	$	19.32
Rate of Return Earned on Average Common Equity (%) ^(d)																9.1		9.0		8.7		8.4		8.3
Market-to-Book Ratio (end of year) ^(e)																1.8		1.6		1.6		1.7		1.4


CL&P Selected Financial Data (Unaudited)	CL&P Selected Financial Data (Unaudited)										CL&P Selected Financial Data (Unaudited)
(Thousands of Dollars)	2016		2015		2014		2013		2012		2017		2016		2015		2014		2013
Balance Sheet Data:
Property, Plant and Equipment, Net											$	8,271,030	$	7,632,392	$	7,156,809	$	6,809,664	$	6,451,259
Total Assets											10,630,246		10,035,044		9,592,957		9,344,400		8,965,906
Common Stockholder's Equity											3,587,127		3,470,387		3,140,717		2,936,767		2,702,494
Preferred Stock Not Subject to Mandatory Redemption											116,200		116,200		116,200		116,200		116,200
Long-Term Debt ^(a)											3,059,135		2,766,010		2,763,682		2,841,951		2,741,208
Obligations Under Capital Leases^(a)											5,711		6,767		7,624		8,439		9,309
Income Statement Data:
Operating Revenues	$	2,805,955	$	2,802,675	$	2,692,582	$	2,442,341	$	2,407,449	2,887,359		2,805,955		2,802,675		2,692,582		2,442,341
Net Income	334,254		299,360		287,754		279,412		209,725		376,726		334,254		299,360		287,754		279,412
Common Stock Data:
Cash Dividends on Common Stock	199,599		196,000		171,200		151,999		100,486		254,800		199,599		196,000		171,200		151,999
Property, Plant and Equipment, Net	7,632,392		7,156,809		6,809,664		6,451,259		6,152,959
Total Assets	10,035,044		9,592,957		9,344,400		8,965,906		9,127,602
Total Capitalization^(b)	6,352,597		6,020,599		5,879,210		5,545,307		5,502,832
Preferred Stock Not Subject to Mandatory Redemption	116,200		116,200		116,200		116,200		116,200
Obligations Under Capital Leases^(b)	6,767		7,624		8,439		9,309		9,960

^(a)~~The 2012 results include the operations of NSTAR beginning April 10, 2012.~~

^(b)Includes portions due within one year.

^{(c )}~~Excludes RRBs.~~

^(d)(b)Market price information reflects closing prices as reflected by the New York Stock Exchange.

^(e)(c)Common Shareholders' Equity adjusted for goodwill and intangibles divided by total common shares outstanding.

^(f)(d)Net Income Attributable to Common Shareholders divided by average Common Shareholders' Equity.

^(g)(e)The closing market price divided by the book value per share.

See the Combined Notes to ~~Consolidated~~ Financial Statements in this Annual Report on Form 10-K for a description of the acquisition of Aquarion on December 4, 2017, the classification as held for sale of PSNH's thermal and hydroelectric generating assets as result of generation divestiture, and any accounting changes materially affecting the comparability of the information reflected in the tables above.

Eversource Selected Consolidated Sales Statistics
2016 2015 2014 2013 2012 (a)
Revenues:  (Thousands)

   Residential $ 3,448,043
$ 3,608,155
$ 3,288,313
$ 3,073,181
$ 2,731,951
   Commercial 2,465,664
2,476,686
2,471,440
2,387,535
1,604,661
   Industrial 328,103
326,564
348,698
339,917
753,974
   Wholesale 426,171
411,749
447,899
486,515
357,223
   Other and Eliminations 93,235
110,013
97,090
56,547
130,137
Total Electric 6,761,216
6,933,167
6,653,440
6,343,695
5,577,946
Natural Gas 854,528
993,662
1,002,880
855,601
572,857
Total - Regulated Companies 7,615,744
7,926,829
7,656,320
7,199,296
6,150,803
   Other and Eliminations 23,385
27,998
85,536
101,908
122,984
Total $ 7,639,129
$ 7,954,827
$ 7,741,856
$ 7,301,204
$ 6,273,787
Regulated Companies - Sales Volumes:

Electric (GWh)

Residential 21,002
21,441
21,317
21,896
19,719
Commercial 27,206
27,598
27,449
27,787
24,537
Industrial 5,434
5,577
5,676
5,648
5,462
Wholesale 3,750
3,215
3,018
855
2,154
Total Electric 57,392
57,831
57,460
56,186
51,872
Natural Gas (million cubic feet)
98,042
102,999
104,191
98,258
69,894
Regulated Companies - Customers: (Average)

   Residential 2,768,657
2,747,679
2,734,047
2,718,727
2,711,407
   Commercial 377,229
374,552
373,511
371,897
370,389
   Industrial 7,777
7,868
8,016
8,109
8,279
Total Electric 3,153,663
3,130,099
3,115,574
3,098,733
3,090,075
Natural Gas 513,683
506,175
499,186
493,563
483,770
Total - Regulated Companies 3,667,346
3,636,274
3,614,760
3,592,296
3,573,845

~~(a) The 2012 results include the operations of NSTAR beginning April 10, 2012.~~

CL&P Selected Sales Statistics
2016 2015 2014 2013 2012
Revenues:  (Thousands)

   Residential $ 1,603,351
$ 1,641,165
$ 1,474,181
$ 1,294,160
$ 1,263,845
   Commercial 858,965
841,093
879,343
780,585
732,620
   Industrial 139,556
129,544
149,220
129,557
126,165
   Wholesale 156,411
128,169
146,787
219,367
214,807
   Other 47,672
62,704
43,051
18,672
70,012
Total $ 2,805,955
$ 2,802,675
$ 2,692,582
$ 2,442,341
$ 2,407,449
Sales Volumes: (GWh)

   Residential 9,907
10,094
10,026
10,314
9,978
   Commercial 9,461
9,635
9,643
9,770
9,705
   Industrial 2,249
2,342
2,377
2,320
2,426
   Wholesale 787
712
736
851
1,155
Total 22,404
22,783
22,782
23,255
23,264
Customers: (Average)

   Residential 1,125,415
1,117,778
1,111,467
1,105,417
1,103,397
   Commercial 109,796
109,339
109,093
108,735
108,589
   Industrial 3,127
3,163
3,213
3,247
3,301
Total 1,238,338
1,230,280
1,223,773
1,217,399
1,215,287

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

EVERSOURCE ENERGY AND SUBSIDIARIES

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related combined notes included in this combined Annual Report on Form 10-K. References in this Annual Report on Form 10-K to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per-share amounts are reported on a diluted basis. The consolidated financial statements of Eversource, NSTAR Electric and PSNH and the financial statements of CL&P ~~and WMECO~~ are herein collectively referred to as the "financial statements."

Refer to the Glossary of Terms included in this combined Annual Report on Form 10-K for abbreviations and acronyms used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business but rather represent a direct interest in our assets and liabilities, as a whole. EPS by business is a financial measure not recognized under GAAP that is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. The discussion below also includes non-GAAP financial measures referencing our 2015 ~~and 2014~~ earnings and EPS excluding certain integration costs incurred by Eversource parent and our ~~Regulated~~Electric and Natural Gas companies. We use these non-GAAP financial measures to evaluate and to provide details of earnings by business and to more fully compare and explain our 2017, 2016 ~~2015~~ and ~~2014~~2015 results without including the impact of these items. Due to the nature and significance of these items on Net Income Attributable to Common Shareholders, we believe that the non-GAAP presentation is ~~more representative~~a meaningful representation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance by business. These non-GAAP financial measures should not be considered as an alternative to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as an indicator of operating performance.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures of consolidated diluted EPS and Net Income Attributable to Common Shareholders are included under "Financial Condition and Business Analysis – Overview – Consolidated" and "Financial Condition and Business Analysis – Overview – ~~Regulated~~Electric and Natural Gas Companies" in this Management's Discussion and Analysis of Financial Condition and Results of Operations, herein.

The results of Aquarion and its subsidiaries, hereinafter referred to as "Aquarion," are included from the date of the acquisition, December 4, 2017, through December 31, 2017 throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Financial Condition and Business Analysis

Executive Summary

Results and Future Outlook:

We earned $988.0 million, or $3.11 per share, in 2017, compared with $942.3 million, or $2.96 per share, in ~~2016, compared with $878.5 million, or $2.76 per share, in 2015.~~2016.

Our electric distribution segment, which includes generation results, earned $497.4 million, or $1.57 per share, in 2017, compared with $462.8 million, or $1.46 per share, in ~~2016, compared with $507.1 million, or $1.59 per share, in 2015.~~2016. Our electric transmission segment earned $391.9 million, or $1.23 per share, in 2017, compared with $370.8 million, or $1.16 per share, in ~~2016, compared with $304.5 million, or $0.96 per share, in 2015.~~2016. Our natural gas distribution segment earned $74.6 million, or $0.23 per share, in 2017, compared with $77.7 million, or $0.24 per share, in ~~2016, compared with $72.4 million, or $0.23 per share, in 2015.~~2016.

Eversource parent and other companies earned $24.1 million, or $0.08 per share, in 2017, compared with $31.0 million, or $0.10 per share, in ~~2016, compared with a net loss of $5.5 million, or $0.02 per share, in 2015.~~2016.

We currently project ~~2017~~2018 earnings of between ~~$3.05~~$3.20 per ~~diluted~~ share and ~~$3.20~~$3.30 per ~~diluted~~ share.

Liquidity:

Cash flows provided by operating activities totaled $2.0 billion in 2017, compared with $2.2 billion in ~~2016, compared with $1.4 billion in 2015.~~2016. Investments in property, plant and equipment totaled $2.3 billion in 2017 and $2.0 billion in ~~2016 and $1.7 billion in 2015.~~2016. Cash and cash equivalents totaled $38.2 million as of December 31, 2017, compared with $30.3 million as of December 31, ~~2016, compared with $23.9 million as of December 31, 2015.~~2016.

In ~~2016,~~2017, we issued ~~$800 million~~$2.5 billion of new long-term debt, consisting of ~~$500 million~~$1.2 billion by Eversource parent, ~~$250~~$700 million by NSTAR Electric, ~~and $50~~$525 million by ~~WMECO.~~CL&P and $75 million by Yankee Gas. Proceeds from these new issuances were used primarily to pay short-term borrowings and repay long-term debt at maturity. In ~~2016,~~2017, Eversource, NSTAR Electric, CL&P, PSNH and NSTAR Gas repaid, at maturity, ~~$200~~$745 million, $400 million, $250 million, $70 million and $25 million, respectively, of ~~existing~~previously issued long-term debt.

In ~~2016,~~2017, we paid cash dividends on common shares of ~~$564.5~~$602.1 million, compared with ~~$529.8~~$564.5 million in ~~2015.~~2016. On February ~~2, 2017,~~7, 2018, our Board of Trustees approved a common share dividend of ~~$0.475~~$0.505 per share, payable on March ~~31, 2017~~30, 2018 to shareholders of record as of March ~~2, 2017.~~6, 2018. The ~~2017~~2018 dividend represents an increase of ~~6.7~~6.3 percent over the dividend paid in December ~~2016,~~2017, and is the equivalent to dividends on common shares of ~~$602.1~~approximately $640 million on an annual basis.

We project to make capital expenditures of ~~approximately $9.6~~$10.8 billion from ~~2017~~2018 through ~~2020,~~2021, of which we expect ~~approximately $5.3~~$5.7 billion to be in our electric and natural gas distribution segments, ~~and approximately $3.9~~$4.1 billion to be in our electric transmission ~~segment.~~segment and $0.4 billion to be in our water utility business. We also project to invest ~~approximately $0.4~~$0.5 billion in information technology and facilities upgrades and enhancements. These projections do not include any expected investments related to ~~either Access Northeast or~~ Bay State Wind.

Strategic Items:

On January 25, 2018, Northern Pass was selected from the 46 proposals submitted as the winning bidder in the Massachusetts clean energy request for proposal ("RFP"), which successfully positioned Northern Pass to provide a firm delivery of hydropower to Massachusetts. Northern Pass is Eversource's planned 1,090 MW HVDC transmission line from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. On February 1, 2018, the New Hampshire Site Evaluation Committee ("NHSEC") voted to deny Northern Pass’ siting application. We intend to seek reconsideration of the NHSEC’s decision and to review all options for moving this critical clean energy project forward. As of December 31, 2017, we have approximately $277 million in capitalized costs associated with Northern Pass.

On December 20, 2017, Bay State Wind submitted two proposals, one for 400 MW and the other for 800 MW, in response to the Massachusetts clean energy RFP.

Legislative, Regulatory, Policy and Other Items:

On ~~October 14, 2016,~~November 30, 2017, the ~~NHPUC granted NPT public utility status, conditional on final project permitting.~~DPU issued its decision in the NSTAR Electric distribution rate case, which approved an annual distribution rate increase of $37 million, with rates effective February 1, 2018. As a result of this decision, we recognized an aggregate $44.1 million pre-tax benefit to earnings in 2017. On January ~~31, 2017,~~3, 2018, NSTAR Electric filed a motion to reflect a revenue requirement reduction of $56 million due to the ~~New Hampshire Supreme Court upheld a lower court's ruling that NPT has~~decrease in the ~~right to install underground transmission lines under existing public highway easements in New Hampshire with approval~~federal corporate income tax rate, as part of the ~~New Hampshire Department~~"Tax Cuts and Jobs Act", resulting in an annual net decrease in rates of ~~Transportation.~~

On ~~August 8, 2016, Massachusetts legislation was enacted that requires EDCs to jointly solicit RFPs~~January 11, 2018, CL&P filed a distribution rate case settlement agreement for approval with PURA, which included, among other things, rate increases of $97.1 million, $32.7 million and ~~enter into long-term contracts for offshore wind~~$24.7 million, effective May 1, 2018, 2019, and ~~clean energy, such as hydropower, land-based wind or solar, provided that reasonable proposals have been received.~~2020, respectively, an authorized regulatory ROE of 9.25 percent, and 53 percent common equity in CL&P's capital structure. The RFP for clean energy, such as hydropower, is due to be released by April 1, 2017. The initial RFP for no less than 400 MW of off-shore wind is due to be released by June 30, 2017. Northern Pass and Bay State Wind, respectively,rate increases associated with the settlement agreement will be ~~bid into these RFPs.~~reduced by the impact of the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act", which we currently estimate to average approximately $45 million to $50 million per year.

~~Eversource, Spectra~~On December 22, 2017, the "Tax Cuts and ~~National Grid~~Jobs Act" (the "Act") became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, the Act reduced the federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. As of December 31, 2017, we estimated approximately $2.9 billion of provisional regulated excess ADIT liabilities that we expect to benefit our customers in future periods. The ultimate amount and timing of when certain income tax benefits resulting from the Act benefit our customers will vary by jurisdiction.

On January 10, 2018, PSNH completed the sale of its thermal generation facilities. In accordance with the Purchase and Sale Agreement, the original purchase price of $175 million was adjusted to reflect working capital adjustments, closing date adjustments and proration of taxes and fees prior to closing, totaling $40.9 million, resulting in net proceeds of $134.1 million. We are ~~currently evaluating a series~~targeting for PSNH to complete the sale of ~~options surrounding~~its hydroelectric generation facilities by the ~~Access Northeast project as a result~~end of recent state regulatory and judicial decisions in New England regarding EDCs entering into long-term natural gas capacity contracts. These options include state infrastructure legislation changes and LDC contracts in order to help bring needed additional natural gas pipeline and storage capacity to New England. As a result, the ~~final design, cost, and in-service date~~first quarter of ~~Access Northeast will continue to be refined.~~2018.

Overview

Consolidated: Below is a summary of our earnings by business, which also reconciles the non-GAAP financial ~~measures~~measure of EPS by business to the most directly comparable GAAP ~~measures~~measure of diluted EPS, for the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014.~~2015. Also included in the summary for the ~~years~~year ended December 31, 2015, ~~and 2014,~~ is a reconciliation of the non-GAAP financial measure of consolidated non-GAAP earnings to the most directly comparable GAAP measure of consolidated Net Income Attributable to Common Shareholders.


	For the Years Ended December 31,																For the Years Ended December 31,
	2016				2015						2014						2017				2016				2015
(Millions of Dollars, Except Per Share Amounts)	Amount		Per Share		Amount			Per Share			Amount			Per Share			Amount		Per Share		Amount		Per Share		Amount			Per Share
Net Income Attributable to Common Shareholders (GAAP)	$	942.3	$	2.96	$	878.5		$	2.76		$	819.5		$	2.58		$	988.0	$	3.11	$	942.3	$	2.96	$	878.5		$	2.76
Regulated Companies	$	911.3	$	2.86	$	884.8		$	2.78		$	830.1		$	2.61
Electric and Natural Gas Companies																	$	963.9	$	3.03	$	911.3	$	2.86	$	884.8		$	2.78
Eversource Parent and Other Companies	31.0		0.10		9.5			0.03			11.5			0.04			24.1		0.08		31.0		0.10		9.5			0.03
Non-GAAP Earnings	N/A		N/A		894.3			2.81			841.6			2.65			N/A		N/A		N/A		N/A		894.3			2.81
Integration Costs (after-tax) ⁽¹⁾	—		—		(15.8		)	(0.05		)	(22.1		)	(0.07		)	—		—		—		—		(15.8		)	(0.05		)
Net Income Attributable to Common Shareholders (GAAP)	$	942.3	$	2.96	$	878.5		$	2.76		$	819.5		$	2.58		$	988.0	$	3.11	$	942.3	$	2.96	$	878.5		$	2.76

(1)⁽¹⁾The 2015 ~~and 2014~~ integration costs were associated with our branding efforts and severance costs.

~~Regulated~~Electric and Natural Gas Companies: Our ~~Regulated~~electric and natural gas companies consist of the electric distribution (including PSNH's generation facilities and NSTAR Electric's solar power facilities), electric transmission and natural gas distribution segments. ~~Generation activities of PSNH and WMECO are included in our electric distribution segment.~~ A summary of our segment earnings and EPS is as follows:


	For the Years Ended December 31,													For the Years Ended December 31,
	2016				2015					2014				2017				2016				2015
(Millions of Dollars, Except Per Share Amounts)	Amount		Per Share		Amount			Per Share		Amount		Per Share		Amount		Per Share		Amount		Per Share		Amount			Per Share
Electric Distribution	$	462.8	$	1.46	$	507.9		$	1.59	$	462.4	$	1.45	$	497.4	$	1.57	$	462.8	$	1.46	$	507.9		$	1.59
Electric Transmission	370.8		1.16		304.5			0.96		295.4		0.93		391.9		1.23		370.8		1.16		304.5			0.96
Natural Gas Distribution	77.7		0.24		72.4			0.23		72.3		0.23		74.6		0.23		77.7		0.24		72.4			0.23
Non-GAAP Earnings	N/A		N/A		884.8			2.78		830.1		2.61		N/A		N/A		N/A		N/A		884.8			2.78
Integration Costs (after-tax) ⁽¹⁾	—		—		(0.8		)	—		—		—		—		—		—		—		(0.8		)	—
Net Income - Regulated Companies	$	911.3	$	2.86	$	884.0		$	2.78	$	830.1	$	2.61
Net Income - Electric and Natural Gas Companies														$	963.9	$	3.03	$	911.3	$	2.86	$	884.0		$	2.78

⁽¹⁾ The 2015 ~~Regulated companies'~~Electric and Natural Gas Companies' integration costs include severance in connection with cost saving initiatives.

Our electric distribution segment earnings ~~decreased $44.3~~increased $34.6 million in ~~2016,~~2017, as compared to ~~2015. The decrease was~~2016, due primarily to the absence in 2016 of the resolution of NSTAR Electric's basic service bad debt adder mechanism recorded in 2015 ($14.5 million), the absence in 2016 of the favorable impact associated with the NSTAR Electric Comprehensive Settlement Agreement recorded in 2015 ($13.0 million), and higher depreciation expense. In addition, earnings decreased due to highera lower effective tax rate, lower non-tracked operations and maintenance expense, ~~(primarily related to the absence of a $6.3 million regulatory benefit related to certain uncollectible hardship accounts receivable that was recorded in 2015~~higher lost base revenues at NSTAR Electric and higher distribution revenues at CL&P due in part to a higher rate base for the system resiliency program, partially offset by higher depreciation expense, lower sales volumes primarily driven by the mild summer weather in 2017, as ~~well as higher storm restoration costs, higher vegetation management costs~~compared to 2016 (primarily at NSTAR Electric), and ~~the write-off of software design costs),~~ higher property tax expense, and lower non-decoupled retail electric sales volumes due primarily to increased customer energy conservation efforts. These unfavorable earnings impacts were partially offset by increased CL&P distribution revenues primarily as a result of higher rate base and the absence of a required ROE reduction, as stipulated in the PURA 2014 rate case decision, and higher generation earnings.expense.

Our electric transmission segment earnings increased ~~$66.3~~$21.1 million in ~~2016,~~2017, as compared to ~~2015,~~2016, due primarily to a higher transmission rate base as a result of ~~increased investments~~our continued investment in our transmission infrastructure, partially offset by the absence in 2017 of the FERC-allowed recovery of certain previously expensed merger-related costs in 2016, ~~($16.5 million),~~ and a lower benefit in the ~~absence in 2016~~second quarter of ~~reserve charges in 2015 associated~~2017 related to the annual billing and cost reconciliation filing with the ~~FERC ROE complaint proceedings ($12.4 million).~~FERC.

Our natural gas distribution segment earnings ~~increased $5.3~~decreased $3.1 million in ~~2016,~~2017, as compared to ~~2015,~~2016, due primarily to ~~the impact of the NSTAR Gas base distribution rate increase effective January 1,~~higher depreciation expense, lower demand revenues in Connecticut driven by lower peak usage in 2017, as compared to 2016, ~~the~~ higher ~~return earned on the NSTAR Gas System Enhancement Program ("GSEP") capital tracker mechanism effective in 2016, and lower~~non-tracked operations and maintenance ~~expense. These favorable earnings impacts were~~expense, and higher property tax expense, partially offset by ~~lower non-decoupled firm natural gas~~higher sales volumes driven by ~~the warmer than normal~~colder winter weather in the ~~first~~fourth quarter of ~~2016,~~2017, as compared to ~~the much colder than normal weather in the first quarter of 2015, higher property tax expense, and higher interest expense.~~2016.

Eversource Parent and Other Companies: Eversource parent and other companies ~~had earnings of~~earned $24.1 million in 2017, compared with $31.0 million in ~~2016, compared with a net loss of $5.5 million~~2016. The decrease in ~~2015. The~~ earnings ~~increase~~ was due primarily to ~~lower income~~a higher effective tax rate, higher interest expense ~~as a result of recognizing tax benefits from executive deferred compensation payments, which resulted from the adoption of a new accounting standard,~~ and the absence in ~~2016~~2017 of ~~integration costs,~~the earnings and gain on the sale of an unregulated business in 2016. These decreases were partially offset by ~~higher interest expense.~~the 2017 DPU-allowed recovery of certain previously expensed merger-related costs in NSTAR Electric's distribution rates, and increased gains on investments recorded in 2017.

Electric and Natural Gas Sales Volumes: Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts electric sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than are electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.

Fluctuations in retail electric sales volumes at ~~NSTAR Electric and PSNH~~certain of our electric utilities impact earnings ("Traditional" in the table below). For ~~CL&P and WMECO,~~others, fluctuations in retail electric sales volumes do not impact earnings due to their ~~respective~~ regulatory commission approved distribution revenue decoupling mechanisms ("Decoupled" in the table below). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.

DPU-approved rate decision. See "Regulatory Developments and Rate Matters - Massachusetts - NSTAR Electric Distribution Rate Case Decision" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

CL&P and ~~WMECO reconcile~~NSTAR Electric (for its western Massachusetts customer rates) reconciled their annual base distribution rate recovery amounts to their ~~respective~~ pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, ~~respectively.~~respectively, through December 31, 2017. Effective February 1, 2018, NSTAR Electric, operating entirely under decoupled rates, will reconcile its annual base distribution rate recovery to its new baseline of $974.8 million. Any difference between the allowed level of distribution revenue and the actual amount ~~incurred~~realized during a 12-month period is adjusted through rates in the following period.

Fluctuations in natural gas sales volumes in Connecticut impact earnings ("Traditional" in the table below). In Massachusetts, fluctuations in natural gas sales volumes do not impact earnings due to the DPU-approved natural gas distribution revenue decoupling mechanism approved in the last rate case decision ("Decoupled" in the table below). ~~Natural gas~~These distribution revenues are decoupled from their customer sales volumes, ~~where applicable,~~ which breaks the relationship between sales volumes and revenues recognized.

A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in ~~million cubic feet (Mcf)~~MMcf and percentage changes is as follows:


	Electric					Firm Natural Gas						Electric							Firm Natural Gas
	For the Year Ended December 31, 2016 Compared to 2015					For the Year Ended December 31, 2016 Compared to 2015						For the Year Ended December 31, 2017 Compared to 2016							For the Year Ended December 31, 2017 Compared to 2016
	Sales Volumes (GWh)		Percentage Decrease			Sales Volumes (Mcf)				Percentage Increase/(Decrease)		Sales Volumes (GWh)				Percentage Decrease			Sales Volumes (MMcf)				Percentage Increase/(Decrease)
	2016	2015			2016		2015		2017				2016		2017				2016				Percentage Increase/(Decrease)
Traditional:			Percentage Decrease							Percentage Increase/(Decrease)
Residential	9,654	9,882	(2.3	)%		15,118		15,712		(3.8	)%	9,453		9,654		Percentage Decrease	(2.1	)%		15,502		15,118		2.5	%
Commercial	16,267	16,486	(1.3	)%		19,846		20,478		(3.1	)%	15,958		16,267		(1.9	)%		20,649		19,846		4.0	%
Industrial	2,558	2,614	(2.1	)%		10,350		11,410		(9.3	)%	2,444		2,558		(4.5	)%		10,806		10,350		4.4	%
Total - Traditional	28,479	28,982	(1.7	)%		45,314		47,600		(4.8	)%	27,855		28,479		(2.2	)%		46,957		45,314		3.6	%

Decoupled:
Residential	11,347	11,559	(1.8	)%		20,616		22,743		(9.4	)%	11,043		11,347		(2.7	)%		21,919		20,616		6.3	%
Commercial	10,940	11,112	(1.5	)%		21,583		22,082		(2.3	)%	10,612		10,940		(3.0	)%		21,859		21,583		1.3	%
Industrial	2,876	2,963	(2.9	)%		5,833		6,033		(3.3	)%	2,736		2,876		(4.9	)%		5,882		5,833		0.8	%
Total - Decoupled	25,163	25,634	(1.8	)%		48,032		50,858		(5.6	)%	24,391		25,163		(3.1	)%		49,660		48,032		3.4	%
Special Contracts⁽¹⁾	N/A	N/A	N/A			4,696		4,541		3.4	%	N/A		N/A		N/A			4,409		4,696		(6.1	)%
Total - Decoupled and Special Contracts	25,163	25,634	(1.8	)%		52,728		55,399		(4.8	)%	24,391		25,163		(3.1	)%		54,069		52,728		2.5	%
Total Sales Volumes	53,642	54,616	(1.8	)%		98,042		102,999		(4.8	)%	52,246		53,642		(2.6	)%		101,026		98,042		3.0	%


⁽¹⁾	Special contracts are unique to the natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage.

~~For 2016, retail~~Retail electric sales volumes at our electric utilities with a traditional rate structure ~~(NSTAR~~(the eastern region of NSTAR Electric and PSNH) were lower in 2017, as compared to ~~2015,~~2016, due primarily to the mild summer weather in 2017, as compared to 2016. Cooling degree days in 2017 were 14.7 percent lower in the Boston metropolitan area and 22.7 percent lower in New Hampshire, as compared to 2016. Sales volumes were positively impacted by improved economic conditions across our service territories, but this trend was offset by lower customer usage driven by the impact of increased customer energy conservation ~~efforts, including those resulting from company-sponsored energy efficiency programs.~~efforts.

On January 28, 2016, Eversource received approval of a three-year energy efficiency plan in Massachusetts, which ~~includes~~included recovery of LBR atin the NSTAR Electric eastern Massachusetts service territory until it ~~is operating~~was covered under a decoupled rate ~~structure.~~structure, which occurred on February 1, 2018. NSTAR Electric ~~earns~~recorded LBR related to reductions in sales volume as a result of successful energy efficiency programs. LBR iswas recovered from retail customers through ~~current~~ rates. NSTAR Electric recognized LBR of $73.7 million and $60.7 million in 2017 and ~~$60.6 million in~~ 2016, ~~and 2015,~~ respectively.

Our firm natural gas sales volumes are subject to many of the same influences as our retail electric sales volumes. In addition, they have benefited from customer growth in both of our natural gas distribution companies. ~~In 2016, our traditional~~Consolidated firm natural gas sales volumes were ~~lower,~~higher in 2017, as compared to ~~2015. The~~ 2016, ~~traditional firm natural gas sales volumes were negatively impacted by warmer than normal~~due primarily to colder winter weather in the ~~first~~fourth quarter of ~~2016,~~2017, as compared to ~~the much colder than normal temperatures~~2016. Heating degree days in ~~the first quarter of 2015, throughout~~2017 were 2.5 percent higher in Connecticut, as compared to 2016. Sales volumes were also positively impacted by improved economic conditions across our natural gas service territories. ~~Heating degree days for 2016 were five percent lower in Connecticut, as compared to 2015.~~

Liquidity

Consolidated: Cash and cash equivalents totaled $38.2 million as of December 31, 2017, compared with $30.3 million as of December 31, ~~2016, compared with $23.9 million as of December 31, 2015.~~2016.

Long-Term Debt Issuances and Repayments:~~In March 2016, Eversource parent issued $250 million of 2.50 percent Series I Senior Notes, due to mature in 2021,~~The following table summarizes long-term debt issuances and $250 million of 3.35 percent Series J Senior Notes, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings under the Eversource parent commercial paper program.repayments:



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

In May 2016, NSTAR Electric repaid at maturity $200 million variable rate debentures using short-term borrowings. Also in May 2016, NSTAR Electric issued $250 million of 2.70 percent debentures, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings under the NSTAR Electric commercial paper program and fund capital expenditures and working capital.

~~In June 2016, WMECO issued $50 million of 2.75 percent Series H Senior Notes, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings.~~

~~Debt Issuance Authorizations:~~ On November 3, 2016, FERC authorized NPT to issue up to an aggregate of $800 million in short-term and long-term debt through December 31, 2018. On January 4, 2017, PURA approved CL&P's request for authorization to issue up to $1.325 billion in long-term debt through December 31, 2020.


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


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


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


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


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

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

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. On December 8, 2017, NSTAR Electric increased its commercial paper program from $450 million to $650 million. NSTAR Electric is also a party to a five-year $650 million revolving credit facility. On December 8, 2017, NSTAR Electric amended and ~~2015,~~restated the revolving credit facility, increasing it from $450 million to $650 million. The amended and restated revolving credit facility terminates on December 8, 2022 and serves to backstop NSTAR Electric's $650 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2017 or 2016.

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



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

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

Amounts outstanding under the commercial paper programs and revolving credit facility are included in Notes Payable for Eversource and NSTAR Electric and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time. As a result of the Eversource parent ~~had approximately $1.0 billion and approximately $1.1 billion, respectively, in~~long-term debt issuances on January 8, 2018, the net proceeds of which were used to repay short-term borrowings

outstanding under its commercial paper program, $201.2 million of commercial paper borrowings under the Eversource parent commercial paper program ~~leaving $428.0 million and $351.5 million of available borrowing capacity~~were reclassified to Long-Term Debt as of December 31, ~~2016 and 2015, respectively. The weighted-average interest rate on these borrowings as~~2017.

As of December 31, ~~2016~~2017, there were intercompany loans from Eversource parent of $69.5 million to CL&P and ~~2015 was 0.88 percent and 0.72 percent, respectively.~~$262.9 million to PSNH. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to ~~WMECO. As of December 31, 2015, there were~~NSTAR Electric. These intercompany loans from Eversource parent ~~of $277.4 million~~are included in Notes Payable to ~~CL&P, $231.3 million to PSNH~~Eversource Parent and ~~$143.4 million to WMECO.~~are classified in current liabilities on the respective subsidiary's balance sheets. Intercompany loans from Eversource parent ~~CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas~~ are parties to a five-year $1.45 billion revolving credit facility. Effective September 26, 2016, the revolving credit facility's termination date was extended for one additional year to September 4, 2021. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstandingeliminated in consolidation on ~~the revolving credit facility as of December 31, 2016 or 2015.~~

NSTAR Electric has a $450 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of December 31, 2016 and 2015, NSTAR Electric had $126.5 million and $62.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $323.5 million and $387.5 million of available borrowing capacity as of December 31, 2016 and 2015, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 and 2015 was 0.71 percent and 0.40 percent, respectively. NSTAR Electric is a party to a five-year $450 million revolving credit facility. Effective September 26, 2016, the revolving credit facility's termination date was extended for one additional year to September 4, 2021. The revolving credit facility serves to backstop NSTAR Electric's $450 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2016 or 2015.Eversource's balance sheets.

Cash Flows: Cash flows provided by operating activities totaled $2.0 billion in 2017, compared with $2.2 billion in ~~2016, compared with $1.4 billion in 2015.~~2016. The ~~increase~~decrease in operating cash flows was due primarily to the ~~absence~~$166.3 million net unfavorable impact as a result of the change in ~~2016 of $302 million in~~income tax payments made, or refunds received, in 2017 when compared to 2016. This unfavorable impact was primarily the result of the December 2015 ~~by CL&P and WMECO~~legislation, which extended the accelerated deduction of depreciation from 2015 to ~~fully satisfy~~2019. The legislation resulted in a significant refund of approximately $275 million, which we received in the ~~obligation with the DOE for costs associated with the disposal~~first quarter of ~~spent nuclear fuel and high-level radioactive waste at previously owned generation facilities. In addition,~~2016. Additionally, there was an increase of ~~$226.0~~$84.1 million in ~~regulatory recoveries, primarily at NSTAR Electric, due to $98.1 million of collections from customers~~Pension and PBOP Plan cash contributions made in excess of purchased power costs, the favorable impact associated with the December 2015 legislation that extended tax bonus depreciation, which resulted in a $145.8 million decrease in income tax payments in 2016,2017, as compared to ~~2015, and an increase~~2016, a decrease of ~~$55.2~~$59.8 million related to the absence in 2017 of the Yankee Companies' DOE Damages ~~and other proceeds~~ received in 2016, ~~as compared~~and the unfavorable impact related to ~~2015.~~the timing of regulatory recoveries, which were significantly impacted by NSTAR Electric’s timing of collections of purchased power and transmission costs. Partially offsetting these ~~favorable~~unfavorable impacts was the benefit related to the timing of collections and payments ~~related to~~of our working capital ~~items.~~items, including accounts payable.

In ~~2016,~~2017, we paid cash dividends of $602.1 million, or $1.90 per common share, compared with $564.5 million, or $1.78 per common share ~~compared with $529.8 million, or $1.67 per common share~~ in ~~2015.~~2016. Our quarterly common share dividend payment was ~~$0.445~~$0.475 per share, in ~~2016,~~2017, as compared to ~~$0.4175~~$0.445 per common share in ~~2015.~~2016. On February ~~2, 2017,~~7, 2018, our Board of Trustees approved a common share dividend of ~~$0.475~~$0.505 per share, payable on March ~~31, 2017~~30, 2018 to shareholders of record as of March ~~2, 2017.~~6, 2018. The ~~2017~~2018 dividend represents an increase of ~~6.7~~6.3 percent over the dividend paid in December ~~2016,~~2017, and is the equivalent to dividends on common shares of ~~$602.1~~approximately $640 million on an annual basis.

In ~~2016,~~2017, CL&P, NSTAR Electric and PSNH ~~and WMECO~~ paid ~~$199.6~~$254.8 million, ~~$278.3 million, $77.6~~$272.0 million and ~~$38.0~~$23.9 million, respectively, in common stock dividends to Eversource parent.

Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. In ~~2016,~~2017, investments for Eversource, CL&P, NSTAR Electric and PSNH ~~and WMECO~~ were ~~$2.0~~$2.3 billion, ~~$612.0~~$824.4 million, ~~$524.3 million, $305.4~~$719.6 million and ~~$140.6~~$312.7 million, respectively.

~~Each~~Eversource completed the acquisition of Aquarion from Macquarie Infrastructure Partners on December 4, 2017 for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed debt.

Eversource, CL&P, NSTAR Electric and PSNH ~~and WMECO~~each use its available capital resources to fund its respective construction expenditures, meet debt requirements, pay operating costs, including storm-related costs, pay dividends and fund other corporate obligations, such as pension contributions. Eversource's ~~Regulated~~regulated companies recover their electric and natural gas distribution construction expenditures as the related project costs are depreciated over the life of the assets. This impacts the timing of the revenue stream designed to fully recover the total investment plus a return on the equity and debt used to finance the investments. The current growth in Eversource's construction expenditures utilizes a significant amount of cash for projects that have a long-term return on investment and recovery period, totaling approximately $2$2.3 billion in cash capital spend in ~~2016.~~2017. In addition, ~~new~~ growth in Eversource's key business initiatives in ~~2016~~2017 required cash contributions of ~~approximately $190~~$32.6 million, which are recognized as long-term assets. These factors have resulted in current liabilities exceeding current assets by ~~approximately $1.2~~$1.1 billion, ~~$135.3~~$338.1 million, ~~$409.2~~$137.5 million, and ~~$27.2~~$183.1 million at Eversource, CL&P, NSTAR Electric and ~~WMECO,~~PSNH, respectively, as of December 31, ~~2016.~~2017.

As of December 31, ~~2016, a total of $745~~2017, $961.0 million of Eversource's long-term debt, ~~is classified as current liabilities, $250~~including $450.0 million, ~~$400~~$300.0 million, ~~$70~~$110.0 million, $100.0 million and ~~$25~~$1 million for Eversource parent, CL&P, ~~NSTAR Electric,~~ PSNH, Yankee Gas and ~~NSTAR Gas,~~Aquarion, respectively, ~~and~~ will be paid inwithin the next 12 months. ~~The remaining $28.9 million~~Included in the current portion of ~~Eversource's~~ long-term debt ~~classified as current liabilities relates~~is $35.4 million related to fair value adjustments from ~~the merger~~our business combinations that will be amortized inwithin the next 12 months and have no cash flow impact. Eversource, with its strong credit ratings, has several options available in the financial markets to repay or refinance these maturities with the issuance of new long-term debt. Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH will reduce their short-term borrowings with operating cash flows or with the issuance of new long-term debt, determined by considering capital requirements and maintenance of Eversource's credit rating and profile. We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, along with the access to financial markets, will be sufficient to meet any future operating requirements and capital investment forecasted opportunities.

Credit Ratings: On ~~May 26, 2016, Moody's~~December 5, 2017, S&P upgraded ~~WMECO's~~Eversource and its subsidiaries' corporate credit rating ~~and senior unsecured debt credit rating by one level~~to A+ and changed the outlook from positive to stable. On July 6, 2016, Fitch upgraded the corporate credit ratings by one level and changed the outlooks from positive to stable for CL&P, PSNH and WMECO. Also on July 6, 2016, Fitch changed the outlook on Eversource parent from stable to positive. On July 12, 2016, S&P changed its outlook on Eversource and its subsidiaries from stable to positive. On July 19, 2016, Moody's upgraded PSNH's corporate credit rating by one level and changed the outlook from positive to stable.

A summary of our corporate credit ratings and outlooks by Moody's, S&P and Fitch is as follows:



	Moody's		S&P		Fitch
	Current	Outlook	Current	Outlook	Current	Outlook
Eversource Parent	Baa1	Stable	AA+	~~Positive~~Stable	BBB+	Positive
CL&P	Baa1	Stable	AA+	~~Positive~~Stable	A-	Stable
NSTAR Electric	A2	Stable	AA+	~~Positive~~Stable	A	Stable
PSNH	A3	Stable	A	~~Positive~~	A-A+	Stable
~~WMECO~~	A2	~~Stable~~	A	~~Positive~~	A-	Stable

A summary of the current credit ratings and outlooks by Moody's, S&P and Fitch for senior unsecured debt of Eversource parent and NSTAR Electric, ~~and WMECO~~ and senior secured debt of CL&P and PSNH is as follows:



	Moody's		S&P		Fitch
	Current	Outlook	Current	Outlook	Current	Outlook
Eversource Parent	Baa1	Stable	A-A	~~Positive~~Stable	BBB+	Positive
CL&P	A2	Stable	A+AA-	~~Positive~~Stable	A+	Stable
NSTAR Electric	A2	Stable	AA+	~~Positive~~Stable	A+	Stable
PSNH	A1	Stable	A+	~~Positive~~	A+	~~Stable~~
~~WMECO~~	A2AA-	Stable	A	~~Positive~~	AA+	Stable

Business Development and Capital Expenditures

Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized portions of pension expense (all of which are non-cash factors), totaled $2.5 billion in 2017, $2.2 billion in 2016, and $1.9 billion in ~~2015, and $1.7 billion in 2014.~~2015. These amounts included $165.9 million in 2017, $137.7 million in 2016, and $102.0 million in 2015 ~~and $58.3 million in 2014~~ related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.

~~Access Northeast~~:Aquarion: ~~Access Northeast~~On December 4, 2017, Eversource acquired Aquarion (formerly Macquarie Utilities Inc.) from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. As a result, Aquarion became a wholly-owned subsidiary of Eversource. Aquarion is a natural gas pipeline and storage project being developed jointly by Eversource, Spectra Energy Partners, LP ("Spectra") and National Grid plc ("National Grid"), through Algonquin Gas Transmission, LLC ("AGT"). This project is expected to enhance the Algonquin and Maritimes & Northeast pipeline systems using existing routes and is expected to include two new LNG storage tanks and liquefaction and vaporization facilitiesregulated water utility holding company that operates three separate regulated water utilities in Acushnet, Massachusetts that are currently expected to be connected to the Algonquin natural gas pipeline. Access Northeast is expected to be capable of delivering approximately 900 million cubic feet of additional natural gas per day to New England on peak demand days. Eversource and Spectra each own a 40 percent interest in the project, with the remaining 20 percent interest owned by National Grid. The project is subject to FERC and other federal and state regulatory approvals. Its initial proposed configuration was expected to cost $3 billion to construct, with Eversource Energy's investment share at $1.2 billion. As of December 31, 2016, we have invested $30.9 million in this project.

~~In 2015 and 2016, AGT sought to secure long-term natural gas pipeline capacity contracts with EDCs in Massachusetts,~~ Connecticut, ~~New Hampshire, Maine, and Rhode Island. Subsequently, in~~ Massachusetts and New ~~Hampshire, it was ruled that state statutes precluded the state regulatory agencies from approving those contracts. For further information on the state~~Hampshire. Aquarion collects, treats and ~~regulatory agency actions taken in the New England states over the course of 2016, see "Regulatory Developments~~distributes water to residential, commercial and ~~Rate Matters – General – New England Natural Gas Pipeline Capacity" in this~~ ~~Management's Discussion~~industrial customers, to other utilities for resale, and ~~Analysis of Financial Condition~~for private and ~~Results of Operations~~municipal fire protection..

Eversource, Spectra and National Grid are currently evaluating a series of options surrounding Access Northeast, including state infrastructure legislation changes and LDC contracts, in order to help bring needed additional natural gas pipeline and storage capacity to New England. As a result, the final design, cost, and in-service date of Access Northeast will continue to be refined.

Bay State Wind: Bay State Wind is a proposed ~~off-shore~~offshore wind project being jointly developed by Eversource and Denmark-based ~~DONG Energy.~~Ørsted. Bay State Wind will be located in a 300-square-mile area approximately ~~15 to~~ 25 miles ~~south~~off the coast of ~~Martha's Vineyard~~Massachusetts that has the ultimate potential to generate ~~at least~~more than 2,000 MW of ~~wind power~~clean, renewable energy. ~~Both~~ Eversource and ~~DONG Energy have~~Ørsted each hold a 50 percent ownership interest in Bay State Wind.

On June 29, 2017, the Bureau of Ocean Energy Management ("BOEM") approved the project’s Site Assessment Plan ("SAP"), the first BOEM approval of an offshore wind SAP in the U.S.

In August 2016, Massachusetts passed clean energy legislation that requires EDCs to jointly solicit RFPs and enter into long-term contracts for ~~off-shore~~offshore wind, creating RFP opportunities for projects like Bay State Wind. ~~The initial~~On June 29, 2017, the Massachusetts RFP was issued, seeking bids for ~~no less than~~a minimum of 400 MW of ~~off-shore~~offshore wind ~~is due~~capacity. The RFP stated that bids of up to 800 MW would be ~~released by June 30,~~considered, provided they demonstrated significant net economic benefits to customers. On December 20, 2017, ~~and~~ Bay State Wind ~~will be bid into that~~submitted two proposals, one for 400 MW and the other for 800 MW, in response to the Massachusetts clean energy RFP.

For more information regarding the clean energy legislation, see ~~"Legislative~~"Regulatory Developments and ~~Policy~~Rate Matters – ~~Massachusetts"~~Massachusetts – Massachusetts RFPs" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Electric Transmission Business:

Our consolidated electric transmission business capital expenditures increased by ~~$90.3~~$35.4 million in ~~2016,~~2017, as compared to ~~2015.~~2016. A summary of electric transmission capital expenditures by company is as follows:


	For the Years Ended December 31,						For the Years Ended December 31,
(Millions of Dollars)	2016		2015		2014		2017		2016		2015
CL&P	$	338.3	$	252.9	$	259.2	$	431.5	$	338.3	$	252.9
NSTAR Electric	299.7		238.2		223.8		301.9		398.7		354.2
PSNH	119.0		161.2		120.8		155.6		119.0		161.2
WMECO	99.0		116.0		68.5
NPT	40.9		38.3		28.3		43.3		40.9		38.3
Total Electric Transmission Segment	$	896.9	$	806.6	$	700.6	$	932.3	$	896.9	$	806.6

~~GHCC~~: The Greater Hartford Central Connecticut ("GHCC") solutions, which have been approved by ISO-NE, consist of 27 projects with an expected investment of approximately $350 million that are expected to be placed in service through 2018. Ten projects have been placed in service, and nine projects are in active construction. As of December 31, 2016, CL&P had capitalized $117.2 million in costs associated with GHCC.

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

Northern Pass has achieved several key milestones, including the following:

Receiving NHPUC approval on February 12, 2018 for the proposed lease of certain land and easement rights from PSNH to NPT, concluding that the lease is in the public interest;

Receiving the U.S. Forest Service Record of Decision on January 5, 2018, which allows NPT to install approximately 11 miles of underground transmission lines in areas along existing roads through the White Mountain National Forest;

Receiving the Province of Québec permit granted to HQ on December 21, 2017 to construct the hydroelectric transmission line that will ~~interconnect~~connect at the border of New Hampshire;

Receiving the DOE Record of Decision and Presidential Permit on November 16, 2017, which will allow construction of transmission facilities at the Québec-New Hampshire ~~border with a planned HQ HVDC transmission line. On July 21, 2015,~~border; and

Receiving the DOE ~~issued the draft~~final Environmental Impact Statement ~~("EIS") for~~issued on August 10, 2017, which concluded that the proposed Northern Pass ~~representing a key milestone in~~route is the ~~permitting process. The DOE completed the comment period on the draft EIS on April 4, 2016, and is expected to issue the final EIS in the third quarter of 2017.~~preferred alternative, providing substantial benefits with only minimal impacts.

On ~~August 18, 2015,~~January 25, 2018, Northern Pass was selected from the 46 proposals submitted as the winning bidder in the Massachusetts clean energy request for proposal ("RFP"), which successfully positioned Northern Pass to provide a firm delivery of hydropower to Massachusetts. On February 1, 2018, the NHSEC voted to deny Northern Pass’ siting application. On February 14, 2018, pursuant to the NHSEC’s decision, the Massachusetts EDCs, in coordination with the DOER and an independent evaluator, notified NPT ~~announced~~that the ~~Forward NH Plan, including a commitment~~EDCs will continue contract negotiations, with the option of discontinuing discussions and terminating its conditional selection by March 27, 2018.

Consistent with Eversource’s and HQ’s long-term relationship to ~~contribute $200~~bring clean energy into New England, Eversource and HQ continue to support Northern Pass and the many benefits this project will bring to our customers and region. We intend to seek reconsideration of the NHSEC’s decision and to review all options for moving this critical clean energy project forward.

As of December 31, 2017, we have approximately $277 million ~~to projects~~in capitalized costs associated with ~~economic development, tourism, community betterment and clean energy innovations~~Northern Pass. We continue to benefit the state of New Hampshire. On June 28, 2016, PSNH filed a power purchase agreement ("PPA") with the NHPUC. The PPA with HQ, combined with the Forward NH Plan, is expected to deliver substantial energy cost savings and other benefits to New Hampshire. The Forward NH Plan and the PPA are both commitmentsbelieve that ~~are contingent upon~~ the Northern Pass ~~transmission line going into commercial operation.~~

~~On October 14, 2016, the NHPUC approved a settlement agreement between NPT and the NHPUC staff and granted NPT public utility status, conditional on final~~ project ~~permitting.~~

~~The Society for the Protection~~is probable of ~~New Hampshire Forests ("SPNHF") filed a lawsuit against NPT~~being placed in November 2015 alleging that NPT does not have the right to install underground transmission lines next to property the SPNHF owns along public highways. On January 31, 2017, the New Hampshire Supreme Court upheld a lower court's ruling that NPT has the right to install underground transmission lines along and beneath public highways in New Hampshire with approval of the New Hampshire Department of Transportation.

~~The New Hampshire Site Evaluation Committee ("NH SEC") is currently~~service. If in the ~~process of formal siting~~future, events and ~~is expected to issue an order on~~changes in circumstances indicate that the Northern Pass ~~no later than September 30, 2017. The DOE is expected to act~~project's capitalized costs may not be fully recoverable, we will then evaluate those costs for impairment. Should we conclude that these capitalized costs are impaired, this would have a significant negative impact on ~~a Presidential Permit for Northern Pass after the final NH SEC order is released~~our financial position, results of operations, and ~~is expected to issue an approval before the end of 2017. Northern Pass is expected to be completed by the end of 2019.~~cash flows.

In August 2016, Massachusetts passed clean energy legislation that requires EDCs to jointly solicit RFPs and enter into long-term contracts for a large quantity of clean energy, such as hydropower. The solicitation is due to be released by April 1, 2017, and Northern Pass will be bid into that RFP. For more information regarding the Massachusetts clean energy ~~legislation,~~RFP, see ~~"Legislative~~"Regulatory Developments and ~~Policy~~Rate Matters – ~~Massachusetts"~~Massachusetts –Massachusetts RFPs" in this Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~.

Operations.

Greater Boston Reliability Solution: In February 2015, ISO-NE selected the Greater Boston and New Hampshire Solution ~~("the Solution"~~(the "Solution"), proposed by Eversource and National Grid, to satisfy the requirements identified in the Greater Boston study. The Solution consists of a portfolio of electric transmission upgrades covering southern New Hampshire and northern Massachusetts ~~in the Merrimack Valley~~ and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory. The ~~NH SEC~~NHSEC issued its written order approving the New Hampshire upgrades on October 4, 2016. We are currently pursuing the necessary regulatory and siting application approvals in Massachusetts. To date, we have received approval for three of these projects from the Massachusetts Energy Facilities Siting Board. Construction has also begun on ~~several~~multiple smaller projects, ~~not requiring siting approval.~~several of which have been placed in service. All upgrades are expected to be completed by the end of 2019. We estimate our portion of the investment in the Solution will be approximately $560 million, of which ~~approximately $134~~$235.8 million has been capitalized through December 31, ~~2016.~~2017.

GHCC: The Greater Hartford Central Connecticut ("GHCC") projects, which have been approved by ISO-NE, consist of 27 projects with an expected investment of approximately $350 million that are expected to be placed in service through 2019. As of December 31, 2017, 18 projects have been placed in service, and six projects are in active construction. As of December 31, 2017, CL&P had capitalized $210.0 million in costs associated with GHCC.

Seacoast Reliability Project: On April 12, 2016, PSNH filed a siting application with the ~~NH SEC~~NHSEC for the Seacoast Reliability Project, a 13-mile, 115kV transmission line within several New Hampshire communities, which proposes to use a combination of overhead, underground and underwater line design to help meet the growing demand for electricity in the Seacoast region. In June 2016, the ~~NH SEC~~NHSEC accepted our application as complete. The New Hampshire Department of Environmental Services has experienced delays with the issuance of permit conditions and now expects to complete its review in February 2018. As a result, siting hearings have yet to be rescheduled and we now expect the ~~NH SEC~~NHSEC decision ~~by mid-2017.~~in late-2018. This project is expected to be completed by the end of ~~2018.~~2019. We estimate our investment in this project ~~will~~to be approximately ~~$77~~$84 million, of which, ~~approximately $13~~PSNH had capitalized $24.5 million ~~has been capitalized~~in costs, through December 31, ~~2016.~~2017.

Distribution Business:

A summary of distribution capital expenditures by company is as follows:


	For the Years Ended December 31,															For the Years Ended December 31,
(Millions of Dollars)	CL&P		NSTAR Electric			PSNH		WMECO		Total Electric		Natural Gas		Total Electric and Natural Gas Distribution Segments		CL&P		NSTAR Electric		PSNH		Total Electric		Natural Gas		Total Electric and Natural Gas Distribution Segments
2017
Basic Business																$	214.0	$	166.1	$	67.2	$	447.3	$	67.7	$	515.0
Aging Infrastructure																180.7		95.4		87.8		363.9		219.9		583.8
Load Growth and Other																52.3		96.6		13.2		162.1		47.7		209.8
Total Distribution																447.0		358.1		168.2		973.3		335.3		1,308.6
Solar Power and Generation																—		100.1		8.5		108.6		—		108.6
Total																$	447.0	$	458.2	$	176.7	$	1,081.9	$	335.3	$	1,417.2

2016
Basic Business	$	179.8	$	125.8		$	70.0	$	20.2	$	395.8	$	70.7	$	466.5	$	179.8	$	146.0	$	70.0	$	395.8	$	70.7	$	466.5
Aging Infrastructure	144.7		82.3			84.7		23.4		335.1		155.9		491.0		144.7		105.7		84.7		335.1		155.9		491.0
Load Growth	48.6		85.8			17.3		3.4		155.1		44.2		199.3
Load Growth and Other																48.6		89.2		17.3		155.1		44.2		199.3
Total Distribution	373.1		293.9			172.0		47.0		886.0		270.8		1,156.8		373.1		340.9		172.0		886.0		270.8		1,156.8
Generation	—		—			17.5		—		17.5		—		17.5		—		—		17.5		17.5		—		17.5
Total	$	373.1	$	293.9	��	$	189.5	$	47.0	$	903.5	$	270.8	$	1,174.3	$	373.1	$	340.9	$	189.5	$	903.5	$	270.8	$	1,174.3

2015
Basic Business	$	141.1	$	108.7		$	59.2	$	18.2	$	327.2	$	46.8	$	374.0	$	141.1	$	126.9	$	59.2	$	327.2	$	46.8	$	374.0
Aging Infrastructure	151.0		103.1			57.3		18.5		329.9		122.3		452.2		151.0		121.6		57.3		329.9		122.3		452.2
Load Growth	42.2		51.9			25.5		6.6		126.2		43.5		169.7
Load Growth and Other																42.2		58.5		25.5		126.2		43.5		169.7
Total Distribution	334.3		263.7			142.0		43.3		783.3		212.6		995.9		334.3		307.0		142.0		783.3		212.6		995.9
Generation	—		—			33.3		—		33.3		—		33.3		—		—		33.3		33.3		—		33.3
Total	$	334.3	$	263.7		$	175.3	$	43.3	$	816.6	$	212.6	$	1,029.2	$	334.3	$	307.0	$	175.3	$	816.6	$	212.6	$	1,029.2

2014
Basic Business	$	120.2	$	99.0		$	62.1	$	19.0	$	300.3	$	53.3	$	353.6
Aging Infrastructure	118.0		104.2			45.3		16.1		283.6		91.5		375.1
Load Growth	66.3		43.1			27.1		6.1		142.6		48.9		191.5
Total Distribution	304.5		246.3			134.5		41.2		726.5		193.7		920.2
Generation	—		—			13.1		7.6		20.7		—		20.7
Total	$	304.5	$	246.3		$	147.6	$	48.8	$	747.2	$	193.7	$	940.9

For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions. For the natural gas distribution business, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth and other reflects growth in existing service territories including new developments, installation of services, and expansion.

The natural gas distribution ~~business'~~segment's capital spending program increased by ~~$58.2~~$64.5 million in ~~2016,~~2017, as compared to ~~2015,~~2016, primarily due to an increased investment in system replacement and reliability, as ~~a result of an increase in the replacement of aging pipeline,~~well as upgrades to our LNG ~~facilities,~~facilities. We expect the LNG facility upgrades to cost approximately $200 million and ~~the favorable weather conditions~~to be placed in ~~2016 allowing for more capital spending on replacement and customer expansion.~~service in late 2019.

Projected Capital Expenditures: A summary of the projected capital expenditures for the ~~Regulated~~regulated companies' electric transmission and for the total electric distribution, ~~(including PSNH generation),~~ solar development and natural gas distribution businesses for ~~2017~~2018 through ~~2020,~~2021, including information technology and facilities upgrades and enhancements on behalf of the ~~Regulated~~regulated companies, is as follows:


	Years										Years
(Millions of Dollars)	2017		2018		2019		2020		2017-2020 Total		2018		2019		2020		2021		2018-2021 Total
CL&P Transmission	$	400	$	299	$	179	$	127	$	1,005	$	390	$	228	$	155	$	128	$	901
NSTAR Electric Transmission	313		297		174		94		878		333		293		267		248		1,141
PSNH Transmission	135		89		21		52		297		149		144		138		147		578
WMECO Transmission	105		50		33		10		198
NPT	31		679		798		—		1,508		300		718		436		70		1,524
Total Electric Transmission	$	984	$	1,414	$	1,205	$	283	$	3,886	$	1,172	$	1,383	$	996	$	593	$	4,144
Electric Distribution	$	1,020	$	884	$	882	$	902	$	3,688	$	1,094	$	963	$	984	$	940	$	3,981
Solar Development	200		—		—		—		200		76		—		—		—		76
Natural Gas Distribution	364		382		394		326		1,466		422		425		380		389		1,616
Total Distribution	$	1,584	$	1,266	$	1,276	$	1,228	$	5,354	$	1,592	$	1,388	$	1,364	$	1,329	$	5,673
Water											$	100	$	102	$	108	$	125	$	435
Information Technology and All Other	$	144	$	91	$	85	$	80	$	400	$	178	$	124	$	111	$	112	$	525
Total	$	2,712	$	2,771	$	2,566	$	1,591	$	9,640	$	3,042	$	2,997	$	2,579	$	2,159	$	10,777

The projections do not include investments related to ~~Access Northeast or~~ Bay State Wind. Actual capital expenditures could vary from the projected amounts for the companies and years above.

FERC Regulatory Issues

FERC ROE Complaints: Four separate complaints have been filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other ~~parties. Each complaint challenges~~parties (collectively the "Complainants"). In each of the first three complaints, the Complainants challenged the NETOs' ~~previous~~ base ROE of 11.14 percent ~~or current~~that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE of 10.57 percent ~~and seeks to reduce it both for the four separate 15-month complaint periods and prospectively.~~

The FERC ordered a 10.57 percent base ROE for the first complaint period and prospectively from October 16, 2014, and that a utility's total or maximum ROE for any incentive project shall not exceed the top of the new zone of reasonableness, which was set at 11.74 percent. We have refunded all amounts associated with the first complaint period. The NETOs and Complainants have appealed the decision in the first complaint to the D.C. Circuit Court of Appeals. A court decision is expected in 2017.

In 2015, the Company recognized an after-tax charge to earnings (excluding interest) of $12.4 million, of which $7.9 million was recorded at CL&P, $1.4 million at NSTAR Electric, $0.6 million at PSNH, and $2.5 million at WMECO. The net aggregate after-tax charge to earnings (excluding interest) in 2014 totaled $22.4 million, of which $12.4 million was recorded at CL&P, $4.9 million at NSTAR Electric, $1.7 million at PSNH, and $3.4 million at WMECO.

On March 22, 2016, the FERC ALJ issued an initial decision on the second and third complaints. For the second complaint period, the FERC ALJ recommended a zone of reasonableness of 7.12 percent to 10.42 percent and a base ROE of 9.59 percent. For the third complaint period, the FERC ALJ recommended a zone of reasonableness of 7.04 percent to 12.19 percent and a base ROE of 10.90 percent. The FERC ALJ also found that the maximum ROE for transmission incentive projects should be the top of the zone of reasonableness. The parties filed briefs on April 21, 2016 and May 11, 2016, in which they requested changes to the FERC ALJ's recommendations. The final FERC order will determine both the base ROE and the maximum ROE for transmission incentive ~~projects~~("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

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

We have not recorded any reserves to reflect the ROEs recommended in the FERC ALJ initial decision. We do not believe any ROE outcome is more likely than the ROEs used to record our current reserves (a base ROE of 10.57 percent and a maximum ROE for transmission incentive projects of 11.74 percent). We are unable to predict the outcome of the final FERC orderHearings on ~~the second and third complaints, and therefore, we believe that our current ROEs and reserves are appropriate at this time.~~

The impact of a 10 basis point change to a base ROE of 10.57 percent would affect Eversource's after-tax earnings by approximately $3 million for each of the historic 15-month second and third complaint periods. If we adjusted our reserves based on the recommendations in the FERC ALJ initial decision (for both the base ROE and maximum ROE for transmission incentive projects), then it would result in an after-tax loss of approximately $34 million for the second complaint and an after-tax gain of approximately $8 million for the third complaint.

~~For~~ the fourth complaint ~~filed April 29, 2016 and covering a 15-month period through July 30,~~were held in December 2017 ~~certain municipal utilities claimed~~before the ~~current base ROE~~Administrative Law Judge ("ALJ"), who is expected to issue an initial decision in March 2018.

A summary of ~~10.57 percent~~the four separate complaints and the ~~incentive cap of 11.74 percent~~base ROEs pertinent to those complaints are unjust and unreasonable. The NETOs answered on June 3, 2016 and requested that FERC dismiss the complaint. On September 20, 2016, the FERC issued an order establishing hearing and settlement judge procedures. The case has been set for trial proceedings concurrently with settlement proceedings. Trial is scheduled for August 2017, and a FERC ALJ initial decision could be received late in 2017. A final FERC order will determine both the base ROE and the maximum ROE for transmission incentive projects for the fourth complaint period and prospectively from the date the final FERC order is issued.as follows:



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

(1)

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


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


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

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

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

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

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

~~Transmission Merger Cost Recovery Filing:~~ ~~On February 26, 2016, Eversource filed an application seeking recovery~~The average impact of ~~certain transmission related costs it incurred in consummating and transitioning~~a 10 basis point change to the ~~2012 merger between Northeast Utilities and NSTAR. On November 22, 2016, Eversource and other parties filed a settlement agreement with~~base ROE for each of the FERC, which included the recovery through transmission rates of $27.5 million of costs over one year, beginning June 1, 2016. The FERC approved the settlement agreement on January 31, 2017. The $27.5 million was recognized in our results of operations for the year ended December 31, 2016.15-month complaint periods would affect Eversource's after-tax earnings by approximately $3 million.

~~FERC Order No. 1000:~~ On August 15, 2014, the D.C. Circuit Court of Appeals upheld the FERC's authority to order major changes to transmission planning and cost allocation in FERC Order No. 1000 and Order No. 1000-A, including transmission planning for public policy needs, and the requirement that utilities remove from their transmission tariffs their rights of first refusal to build transmission, to allow for competition. ISO-NE and the NETOs, including CL&P, NSTAR Electric, PSNH and WMECO made compliance filings to address this policy, which included exemption from competition for certain transmission solutions previously evaluated by ISO-NE, and the NETOs' rights to retain use and control of existing right of ways. This compliance was accepted by the FERC on December 14, 2015. At the same time, the NETOs filed an appeal to the D.C. Circuit Court of Appeals, challenging FERC's removal of the right of first refusal. State regulators have also filed an appeal, challenging the FERC's determination that ISO-NE should select public policy transmission projects after a competitive process. Oral arguments were heard by the Court on January 13, 2017, and the Court is expected to resolve the appeals in 2017.

~~NSTAR Electric and WMECO Merger FERC Filings:~~ On January 13, 2017, Eversource made two filings with FERC related to the proposed merger of WMECO into NSTAR Electric with an anticipated effective date of January 1, 2018. One filing requests FERC approval of the merger, and the other filing requests FERC approval of NSTAR Electric's assumption of WMECO's short-term debt obligations. It is expected that FERC will act on these filings by mid-2017.

Regulatory Developments and Rate Matters

~~General:~~

~~New England~~Electric, Natural Gas, ~~Pipeline Capacity: In late 2015~~ and early 2016, NSTAR Electric, WMECO and National Grid filed with the Massachusetts DPU seeking approval of contracts with AGT for natural gas pipeline capacity and storage. The DPU had determined in 2015 that it had authority to approve such contracts if they were found to be in the public interest. On August 17, 2016, the Massachusetts Supreme Judicial Court vacated the DPU's 2015 order, holding that the state's electric utility restructuring statutes precluded the DPU from approving contracts by EDCs for natural gas capacity. The contracts were subsequently withdrawn from consideration by the DPU. In February 2016, PSNH filed with the NHPUC a natural gas capacity contract with AGT seeking regulatory approval. In October 2016, the NHPUC ruled that it did not have statutory authority to approve such contracts, despite a 2015 finding by NHPUC staff that the NHPUC had such authority. Subsequently, both PSNH and AGT filed appeals of the NHPUC decision with the New Hampshire Supreme Court and on February 15, 2017, the New Hampshire Supreme Court agreed to hear the appeals.

In Connecticut, in October 2016, the DEEP canceled the natural gas capacity RFP without prejudice following the Massachusetts Supreme Judicial Court decision. In Rhode Island, on January 13, 2017, National Grid filed with state utility regulators, a Notice to Withdraw without prejudice its previously filed natural gas capacity contract with AGT due to the uncertainty of EDC contracting in Massachusetts and New Hampshire. In Maine, the PUC issued an order in September 2016 to move forward with the AGT contract, contingent upon the participation by EDCs in other New England states.

We continue to evaluate options on how to fulfill our need to bring additional natural gas transmission and storage capacity to New England. See "Business Development and Capital Expenditures – Access Northeast" in this ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ ~~for more information.~~

~~Electric and Natural Gas~~Water Utility Base Distribution Rates:

Each Eversource utility subsidiary is subject to the regulatory jurisdiction of the state in which it operates: CL&P, ~~and~~ Yankee Gas and Aquarion operate in Connecticut and are subject to PURA regulation; NSTAR Electric, ~~WMECO~~NSTAR Gas and ~~NSTAR Gas~~Aquarion operate in Massachusetts and are subject to DPU regulation; and PSNH ~~operates~~and Aquarion operate in New Hampshire and isare subject to NHPUC regulation. The ~~Regulated~~regulated companies' distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs.

In Connecticut, ~~state law requires regulated~~ electric and natural gas utilities are required to file a distribution rate case, or for PURA to initiate a rate review, within 4four years of the last rate case. CL&P distribution rates were established in a 2014 PURA-approved rate case. ~~Management expects to file~~On January 11, 2018, CL&P filed a ~~CL&P~~distribution rate case ~~application~~settlement agreement for approval with ~~PURA~~PURA. See "Regulatory Developments and Rate Matters - Connecticut - CL&P Rate Case Settlement" in ~~the second quarter~~this Management's Discussion and Analysis of ~~2017.~~Financial Condition and Results of Operations, for more information. Yankee Gas distribution rates were established in a 2011 PURA-approved rate case. The requirement for Yankee Gas to file a base distribution rate case in 2015 was eliminated due to a rate review conducted by PURA and a resulting settlement in 2015 between Yankee Gas and PURA.

In Massachusetts, electric distribution companies are required to file at least one distribution rate case every five years, and natural gas local distribution companies to file at least one distribution rate case every 10 years, and those companies are limited to one settlement agreement in any 10-year period. On November 30, 2017, the DPU approved the NSTAR Electric rate case application. See "Regulatory Developments and ~~WMECO were subject to a base distribution rate freeze through December 31, 2015.~~ Rate Matters - Massachusetts - NSTAR Electric Distribution Rate Case Decision" in this Management's Discussion and Analysis of Financial Condition and Results of Operations, for more information.NSTAR Gas distribution rates were established in a 2015 ~~DPU approved~~DPU-approved rate case.

In New Hampshire, PSNH distribution rates were established in a settlement approved by the NHPUC in 2010. Prior to the expiration of that settlement, the NHPUC approved the continuation of those rates, and increased funding via rates, of PSNH's reliability enhancement program. In accordance with the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, PSNH agreed to not seek a general distribution rate increase effective before July 1, 2017.

Electric and Natural Gas Retail Rates:

The Eversource EDCs obtain and resell power to retail customers who choose not to buy energy from a competitive energy supplier. The natural gas distribution companies procure natural gas for firm and seasonal customers. These energy supply procurement costs are recovered from customers in energy supply rates that are approved by the respective state regulatory commission. The rates are reset periodically and are fully reconciled to their costs. Each electric and natural gas distribution company fully recovers its energy supply costs through approved regulatory rate mechanisms and, therefore, such costs have no impact on earnings.

The electric and natural gas distribution companies also recover certain other costs on a fully reconciling basis through regulatory commission-approved cost tracking mechanisms and, therefore, such costs have no impact on earnings. Costs recovered through cost tracking mechanisms include energy efficiency program costs, electric transmission charges, electric federally mandated congestion charges, system resiliency costs, certain uncollectible hardship bad debt expenses, and restructuring and stranded costs resulting from deregulation. The reconciliation filings compare the total actual costs allowed to revenue requirements related to these services and the difference between the costs incurred (or the rate recovery allowed) and the actual costs allowed is deferred and included, to be either recovered or refunded, in future customer rates.

~~Massachusetts:~~

~~Distribution Rates:~~U.S. Federal Corporate Income Taxes: On ~~January 17,~~December 22, 2017, ~~NSTAR Electric~~the "Tax Cuts and ~~WMECO jointly filed an application~~Jobs Act" (the ~~"Joint Applicants"~~"Act") ~~with~~became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, the ~~DPU for approval of a combined $96 million increase in base distribution rates,~~Act reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. AsFor our regulated companies, the most significant changes will be (1) the benefit of incurring a lower federal income tax expense, which we expect to be passed back to customers, and (2) the provisional regulated excess ADIT liabilities that we expect to benefit our customers in future periods, which were estimated to be approximately $2.9 billion and recognized as regulatory liabilities as of December 31, 2017. We are currently working with our state regulatory commissions, who have opened investigations to examine the impact of the Act on customer rates. FERC has yet to address how the Act would impact transmission rates.

We will continue to evaluate the impacts of the Act on our statement of financial position, results of operations, and cash flows. The impacts will vary depending on the ultimate amount and timing of when certain income tax benefits will benefit our customers, and will vary by jurisdiction.

Connecticut:

CL&P Rate Case Settlement: On April 20, 2017, PURA approved the joint request of CL&P, the Connecticut Office of Consumer Counsel ("OCC") and the Connecticut Attorney General to amend the deadline to establish new electric distribution rates in the 2012 Connecticut merger settlement agreement from "no later than December 1, 2017" to "no later than July 1, 2018." On November 22, 2017, CL&P filed its application with PURA, which sought a rate increase of $255.8 million, $45.0 million and $36.0 million effective in May 2018, 2019, and 2020, respectively. On December, 15, 2017, CL&P, the Prosecutorial Unit of PURA, and the OCC reached a settlement in principle.

On January 11, 2018, CL&P filed a distribution rate case settlement agreement for approval by PURA, which included, among other things, rate increases of $97.1 million, $32.7 million and $24.7 million, effective May 1, 2018, 2019, and 2020, respectively, an authorized regulatory ROE of 9.25 percent, 53 percent common equity in CL&P's capital structure, and a new capital tracker through 2020 for capital additions, system resiliency, and grid modernization. The rate increases associated with the settlement agreement will be reduced by the impact of the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act", which we currently estimate to average approximately $45 million to $50 million per year, while amounts related to ADIT will be addressed in a separate manner. We expect to receive final approval from PURA in the second quarter of 2018.

Clean Energy RFP: On January 31, 2018, pursuant to Section 8 of Public Act 13-303, "An Act Concerning Connecticut’s Clean Energy Goals," as amended by Section 10 of Public Act 17-144, “An Act Promoting the Use of Fuel Cells for Electric Distribution System Benefits and Reliability and Amending Various Energy-Related Programs and Requirements,” DEEPissued the Connecticut Clean Energy RFP, seeking bids from developers of qualified offshore wind, fuel cell and anaerobic digestion Class I resources. The maximum authorized procurement for qualified clean energy and RECs is 899,250 MWh per year, of which no more than 825,000 MWh per year may be provided by offshore wind, which in aggregate is the equivalent to the output of an approximate 200 MW facility. Energy deliveries under any resulting agreement must begin no earlier than July 1, 2019 and no later than December 31, 2025. The Connecticut EDC's, including CL&P, will be part of the evaluation team responsible for conducting an evaluation and ranking bids received. Eversource and Ørsted are expected to submit a bid in response to this ~~filing,~~RFP.

Massachusetts:

NSTAR Electric Distribution Rate Case Decision: On November 30, 2017, the ~~Joint Applicants are presenting a grid-wise performance plan, including~~DPU issued its decision in the ~~implementation~~NSTAR Electric distribution rate case, which approved an annual distribution rate increase of ~~a performance-based rate-making mechanism in conjunction~~$37 million, with ~~a grid modernization base commitment of $400 million in incremental capital investment over a period of five years, commencing January~~rates effective February 1, 2018. On January 3, 2018, NSTAR Electric filed a motion to reflect a revenue requirement reduction of $56 million (due to the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act"), resulting in an annual net decrease in rates of $19 million.

In addition to its decision regarding rates, the ~~Joint Applicants are proposing to streamline and align rate classifications between NSTAR Electric and WMECO, and requesting~~DPU approved an authorized regulatory ROE of 10 percent, the establishment of a revenue decoupling rate mechanism for the portion of the NSTAR ~~Electric. WMECO has~~Electric business that did not previously have a ~~revenue~~ decoupling mechanism, ~~in place. A final decision from~~and the ~~DPU is expected in late 2017,~~implementation of an inflation-based adjustment mechanism with ~~new rates anticipated to be effective~~a five-year stay-out until January 1, ~~2018.~~2023.

~~NSTAR Electric, WMECO and NSTAR Gas Energy Efficiency Plan:~~ The Massachusetts EDCs and natural gas distribution companies have increased their energy efficiency savings achievements significantly since the enactment of the Green Communities Act in 2008, with electric savings almost tripling between 2008 and 2014. On January 28, 2016, the DPU issued an order approving NSTAR Electric's, WMECO's, and NSTAR Gas' three-year electric and natural gas energy efficiency plan, which was jointly developed withAmong other Massachusetts EDCs and natural gas distribution companies. As part of this plan, which covers the years 2016 through 2018, NSTAR Electric, WMECO, and NSTAR Gas will maintain aggressive savings goals. The plan includes the ability to earn performance incentives related to these aggressive savings goals totaling approximately $20 million annually over the three-year period for NSTAR Electric, WMECO and NSTAR Gas, as well as recovery of LBR estimated to be approximately $55 million annually for NSTAR Electric until it is operating under a decoupled rate structure.

~~Solar Development:~~ ~~On December 29, 2016,~~items, the DPU approved the recovery of previously expensed merger-related costs over a 10-year period and the recovery of previously deferred storm costs with carrying charges at the prime rate, but disallowed certain property taxes. The rate case decision resulted in the recognition of an aggregate $44.1 million pre-tax benefit recorded in 2017.

Eversource and NSTAR Electric Boston Harbor Civil Action: On July 15, 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), and the Massachusetts Water Resources Authority (together with NSTAR Electric and ~~WMECO application~~HEEC, the "Defendants"). The action alleged that the Defendants failed to ~~develop 35 MW and 27 MW, respectively, of solar generation facilities, in addition~~comply with certain permitting requirements related to ~~WMECO's existing 8 MW of solar generation facilities. We expect development~~the placement of the ~~facilities~~HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.

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

Massachusetts RFPs: On March 31, 2017, pursuant to a comprehensive energy law enacted in 2016, "An Act to Promote Energy Diversity," (the "Act") the ~~end~~Massachusetts EDCs, including NSTAR Electric, and the DOER issued a joint RFP for 9.45 terawatt hours of ~~2017. We estimate our investment in these new facilities will be between approximately $180 million~~clean energy per year, such as hydropower, land-based wind or solar. The RFP seeks proposals for long-term contracts of 15 to ~~$200 million. These solar~~20 years to provide the state's EDCs with clean energy generation ~~facilities will be included in rates anticipated to be effective January 1, 2018.~~with a submission due date of July 27, 2017.

~~July 2016 Storm Filing~~:On ~~July 6, 2016,~~January 25, 2018, the Northern Pass project was selected from the 46 proposals submitted as a winning bidder. On February 1, 2018, the NHSEC voted to deny Northern Pass’ siting application. On February 14, 2018, pursuant to the NHSEC’s decision, the Massachusetts EDCs, in coordination with the DOER and an independent evaluator, notified NPT that the EDCs will continue contract negotiations, with the option of discontinuing discussions and terminating its conditional selection by March 27, 2018.

On June 29, 2017, pursuant to the Act, the Massachusetts EDCs, including NSTAR Electric, ~~filed~~and the DOER issued a joint RFP for long-term contracts for offshore wind energy projects, seeking bids for a minimum of 400 MW of offshore wind capacity. The RFP stated that bids of up to 800 MW would be considered, provided they demonstrated significant net economic benefits to customers. On December 20, 2017, Bay State Wind submitted two proposals in response to the Massachusetts clean energy RFP to the EDCs. One proposal was for 400 MW and the other was for 800 MW. The selection of the winning proposals for further negotiation of power purchase agreements with the DPU a final accounting of incremental, storm-related preparation and response costs totaling approximately $109 million for eight storms that occurred between 2012 through 2015. In the filing, NSTAR Electric requested that the DPU investigate the storm-related costs and render a determination asEDCs is currently expected to the final storm-related costs eligible for recovery. Recovery of these costs will be reflected in the rates anticipated to be effective January 1, 2018, in accordance with the currently filed Massachusetts distribution rate case.

~~October 2016 DPU Storm Order~~: On October 7, 2016, the DPU issued a final decision on WMECO's storm cost filing that sought to recover $27 million of storm restoration costs associated with the October 2011 snowstorm and Storm Sandy in 2012. The DPU approved essentially all of the costs, with the disallowed amounts and other items included in a filed motion for reconsideration.

occur by April 23, 2018.

New Hampshire:

Generation Divestiture: OnIn June ~~10,~~ 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, ~~(the "Agreement") with the New Hampshire Office of Energy and Planning, certain members of the NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. Under~~under the terms of ~~the Agreement,~~which PSNH agreed to divest its generation assets, subject to NHPUC approval. The ~~Agreement provided~~NHPUC approval for ~~a resolution~~this agreement, as well as NHPUC approval of ~~issues pertaining~~the final divestiture plan and auction process, were received in the second half of 2016. In October 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to ~~PSNH's~~sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in ~~pending regulatory proceedings before~~ the ~~NHPUC.~~Agreements. The ~~Agreement provided for~~NHPUC approved the ~~Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included~~Agreements in rates effective January 1, 2016. As part of the Agreement, PSNH agreed to forego recovery of $25 million of the equity return related to the Clean Air Project. In addition, PSNH will not seek a general distribution rate increase effective before July 1, 2017 and will contribute $5 million to create a clean energy fund, which will not be recoverable from its customers. In 2015, PSNH recorded the $5 million contribution as a long-term liability and an increase to Operations and Maintenance expense on the statements of income.late November 2017.

On ~~July 1, 2016,~~January 10, 2018, PSNH completed the sale of its thermal generation facilities. In accordance with the Purchase and Sale Agreement, the original purchase price of $175 million was adjusted to reflect working capital adjustments, closing date adjustments and proration of taxes and fees prior to closing, totaling $40.9 million, resulting in net proceeds of $134.1 million. We are targeting for PSNH to complete the sale of its hydroelectric generation facilities by the end of the first quarter of 2018 at a sale price of $83 million, subject to adjustment. On January 30, 2018, the NHPUC approved the ~~Agreement in~~issuance of rate reduction bonds up to $690 million to recover stranded costs, subject to an order that, among other things, instructs PSNH to begin the process to divest its generation assets. The NHPUC selected an auction adviser to assist with the divestiture, and a final plan and auction process was approvedaudit by the NHPUC ~~in November 2016. In December 2016, certain intervenors asked the NHPUC~~Audit Staff. This order is subject to ~~reconsider certain aspects~~an appeal period of its divestiture plan; the NHPUC rejected that request on December 23, 2016. On January 10, 2017, these intervenors appealed the NHPUC's decision to the New Hampshire Supreme Court, alleging procedural deficiencies, and complaining that the auction schedule and process were unreasonable. PSNH and the New Hampshire Attorney General's office acting on behalf of the NHPUC requested the court to reject this appeal. On February 10, 2017, the New Hampshire Supreme Court issued an order declining to accept the appeal. We continue to believe the assets will be sold by the end of 2017.30 days.

As of December 31, 2016, PSNH's energy service rate base subject to divestiture, was approximately $625 million. This rate base will be reduced by the amount of the sales proceeds from the generation assets that are divested and sold. Upon completion of the divestiture, ~~process,~~ full recovery of PSNH's generation assets ~~is probable~~and transaction-related costs are expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, ~~upon divestiture,~~ and recovery of stranded costs via the issuance of bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers.

Legislative and Policy Matters

Federal:On December ~~18, 2015,~~22, 2017, the "Protecting Americans from Tax Hikes" Act became law, which extended the accelerated deduction of depreciation to businesses from 2015 through 2019. This extended stimulus provided us with cash flow benefits of approximately $275 million (including approximately $105 million for CL&P) due to a refund of taxes paid in 2015"Tax Cuts and ~~lower tax payments in 2016 of approximately $300 million.~~

~~Massachusetts~~

~~On August 8, 2016, in conjunction with efforts to shape comprehensive energy legislation, "An Act to Promote Energy Diversity"~~Jobs Act" (the "Act") became law, ~~in Massachusetts,~~ which ~~requires EDCs to jointly solicit RFPs~~amended existing federal tax rules and ~~enter into 15- to 20-year contracts for at least 1,600 MW of offshore wind and up to an additional 9.45 terawatt hours of clean energy per year, such as hydropower, land-based wind or solar, provided~~included numerous provisions that reasonable proposals have been received. The RFP for up to 9.45 terawatt hours of clean energy per year, such as hydropower, is due to be released by April 1, 2017. The initial RFP for no less than 400 MW of off-shore wind is due to be released by June 30, 2017. On December 27, 2016, the DOER also determined, pursuant towill impact corporations. In particular, the Act ~~that it will establish targets for electric companies~~reduced the federal corporate income tax rate from 35 percent to ~~deploy and/or procure viable~~21 percent effective January 1, 2018. See "Regulatory Developments and cost-effective energy storage solutions that will be adopted by July 1, 2017. For more information regarding projects that Eversource will bid into the RFP processes, see "Business Development and Capital Expenditures – Bay State Wind and Electric Transmission Business – Northern Pass"Rate Matters - U.S. Federal Corporate Income Taxes" in this Management's Discussion and Analysis of Financial Condition and Results of Operations,.

On April 11, 2016, "An Act Relative to Solar Energy" became law, which raises the solar net metering cap levels by three percent for both private and public projects. Among many items, the law allowed utilities to file proposals with the DPU by June 30, 2016 to build up to 35 MW of solar generation. NSTAR Electric and WMECO filed an application with the DPU seeking approval to develop 35 MW and 27 MW, respectively, of solar generation facilities to be built in 2017. On December 29, 2016, the DPU approved the application. Together, NSTAR Electric and WMECO expect to invest up to $200 million in those facilities in 2017. See "Regulatory Developments and Rate Matters – Massachusetts – Solar Generation" in this ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ for more information.

~~New Hampshire~~

Massachusetts: On ~~May 2, 2016, "An~~August 11, 2017, Massachusetts issued final legislation, pursuant to Executive Order 569, which established volumetric limits on multiple greenhouse emission sources to ensure reductions are realized by deadlines established in the Massachusetts Global Warming Solutions Act ~~Relative~~enacted in 2008. Under this legislation, the initial target date for reduction in greenhouse gas emissions has been established in the year 2020. The legislation is not expected to Net Metering" became law, which raises the cap on net energy metering tariffs available to eligible customer generators from 50 MW to 100 MW and requires the NHPUC to initiate a proceeding to develop alternative net energy metering tariffs. We do not believe that this law will have a material ~~financial~~ impact on the ~~Company.~~financial statements of Eversource or NSTAR Electric.

New Hampshire: On January 11, 2018, the New Hampshire Supreme Court issued a decision affirming the lower court's October 2016 decision that the Town of Bow, New Hampshire had over-assessed the value of the property owned by PSNH for the 2012 and 2013 property tax years. We estimate that the result of this decision will be approximately $7.5 million in property taxes and interest payable to PSNH. PSNH plans to account for any recovery on the same basis that the taxes were originally expensed in the respective periods covered by the decision.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies are discussed below. See the combined notes to our financial statements for further information concerning the accounting policies, estimates and assumptions used in the preparation of our financial statements.

Regulatory Accounting: Our ~~Regulated~~regulated 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~~regulated companies' financial statements reflect the effects of the rate-making process.

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, we record regulatory assets before approval for recovery has been received from the applicable regulatory commission. We must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery. We base our conclusion on certain factors, including, but not limited to, regulatory precedent. Regulatory liabilities represent revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.

We use ~~our best~~ 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 our financial statements. We believe it is probable that each of the ~~Regulated~~regulated companies will recover the regulatory assets that have been recorded. If we determine that we can no longer apply the accounting guidance applicable to rate-regulated enterprises to our operations, or that we cannot conclude it is probable that costs will be recovered from customers in future rates, the costs would be charged to earnings in the period in which the determination is made.

Unbilled Revenues: The determination of retail energy sales to residential, commercial and industrial customers is based on the reading of meters, which occurs regularly throughout the month. Billed revenues are based on these meter readings, and the majority of our recorded annual revenues is based on actual billings. Because customers are billed throughout the month based on pre-determined cycles rather than on a calendar month basis, an estimate of electricity or natural gas delivered to customers for which the customers have not yet been billed is calculated as of the balance sheet date.

Unbilled revenues represent an estimate of electricity or natural gas delivered to customers but not yet billed. Unbilled revenues are included in Operating Revenues on the statement of income and are assets on the balance sheet that are reclassified to Accounts Receivable in the following month as customers are billed. Such estimates are subject to adjustment when actual meter readings become available or when there is a change in our estimates.

The Regulated companies estimate unbilled sales volumes monthly by first allocating billed sales volumes to the current calendar month based on the daily load (for electric distribution companies) or the daily send-out (for natural gas distribution companies) for each billing cycle. The billed sales volumes are then subtracted from total month load or send-out, net of delivery losses, to estimate unbilled sales volumes. Unbilled revenues are ~~estimated~~recognized by ~~first~~ allocating estimated unbilled sales volumes to the respective customer classes, and then applying an estimated rate by customer class to those sales volumes. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer rates in effect for customer classes, and the timing of customer billing. The estimate of unbilled revenues can significantly impact the amount of revenues recorded at ~~NSTAR Electric, PSNH and Yankee Gas because they~~the operating companies that do not have a revenue decoupling mechanism. CL&P, ~~WMECO~~NSTAR Electric and NSTAR Gas record a regulatory deferral to reflect the actual allowed amount of revenue associated with their respective decoupled distribution rate design.

Pension, SERP and PBOP: We sponsor Pension, SERP and PBOP Plans to provide retirement benefits to our employees. For each of these plans, several significant assumptions are used to determine the projected benefit obligation, funded status and net periodic benefit cost. These assumptions include the expected long-term rate of return on plan assets, discount rate, compensation/progression rate and mortality and retirement assumptions. We evaluate these assumptions at least annually and adjust them as necessary. Changes in these assumptions could have a material impact on our financial position, results of operations or cash flows.

Expected Long-Term Rate of Return on Plan Assets: In developing this assumption, we consider historical and expected returns, as well as input from our consultants. Our expected long-term rate of return on assets is based on assumptions regarding target asset allocations and corresponding expected rates of return for each asset class. We routinely review the actual asset allocations and periodically rebalance the investments to the targeted asset allocations when appropriate. For the year ended December 31, ~~2016,~~2017, our aggregate expected long-term rate-of-return assumption of 8.25 percent was used to determine our pension and PBOP expense. For the forecasted ~~2017~~2018 pension and PBOP expense, our expected long-term rate of return of 8.25 percent will be used reflecting our target asset allocations.

Discount Rate: Payment obligations related to the Pension, SERP and PBOP Plans are discounted at interest rates applicable to the expected timing of each plan's cash flows. The discount rate that was utilized in determining the ~~2016~~2017 pension, SERP and PBOP obligations was based on a yield-curve approach. This approach utilizes a population of bonds with an average rating of AA based on bond ratings by Moody's, S&P and Fitch, and uses bonds with above median yields within that population. As of December 31, ~~2016,~~2017, the discount rates used to determine the funded status were within a range of 3.43 percent to 3.75 percent for the Pension and SERP Plans, and within a range of 3.55 percent to 3.70 percent for the PBOP Plans. As of December 31, 2016, the discount rates used were within a range of 4.01 percent to 4.33 percent for the Pension ~~Plan~~and SERP Plans, and 4.21 ~~percent for the PBOP Plan. As of December 31, 2015, the discount rates used were 4.6 percent for the Pension Plan and 4.62~~ percent for the PBOP Plan. The decrease in the discount ~~rate~~rates used to calculate the funded status resulted in an increase onto the Pension and PBOP Plans' liability of approximately ~~$177~~$390 million and ~~$75~~$64 million, respectively, as of December 31, ~~2016.~~2017.

Effective January 1, 2016, we elected to transition the discount rate to the spot rate methodology from the yield-curve approach for the service and interest cost components of Pension, SERP and PBOP expense because it provides a more precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve. Historically, these components were estimated using the same weighted-average discount rate as for the funded status. The discount rates used to estimate the ~~2016~~2017 service costs were ~~4.89~~within a range of 3.58 percent ~~and 4.09~~to 3.90 percent for the Pension and SERP Plans, and 4.64 percent for the PBOP ~~Plans, respectively.~~Plans. The discount rates used to estimate the ~~2016~~2017 interest costs were ~~3.80~~within a range of 3.20 percent and ~~2.88~~3.36 percent for the Pension and ~~PBOP~~SERP Plans, ~~respectively. The total pre-tax benefit of this change on Pension~~ and ~~PBOP expense, prior to the capitalized portion and amounts deferred and recovered through rate reconciliation mechanisms,~~3.48 percent for the ~~year ended December 31, 2016 resulted in decreases to Pension and~~ PBOP ~~costs of $46 million and $10 million, respectively. Pension and PBOP expense charged to earnings is net of the amounts capitalized.~~Plans.

Mortality Assumptions: Assumptions as to mortality of the participants in our Pension, SERP and PBOP Plans are a key estimate in measuring the expected payments a participant may receive over their lifetime and the corresponding plan liability we need to record. In ~~2016,~~2017, the IRS issued a revised mortality table used for determining lump sum payments from the Pension Plan, resulting in an increase to the liability of approximately $38 million. Also in 2017, a revised scale for the mortality table was released, having the effect of decreasing the estimate of benefits to be provided to plan participants. The impact of the adoption of the ~~new~~revised mortality scale resulted in a decrease of approximately ~~$32~~$26 million and ~~$11~~$4 million for the Pension and PBOP ~~Plans' liability,~~Plans, respectively, as of December 31, ~~2016.~~2017.

Compensation/Progression Rate: This assumption reflects the expected long-term salary growth rate, including consideration of the levels of increases built into collective bargaining agreements, and impacts the estimated benefits that Pension and SERP Plan participants receive in the future. As of ~~both~~ December 31, ~~2016 and 2015,~~2017, the compensation/progression rate used to determine the funded status was ~~3.5~~within a range of 3.50 percent to 4.00 percent. As of December 31, 2016, this rate was 3.50 percent.

Health Care Cost: In August 2016, we amended the Eversource PBOP Plan to standardize benefit design and make benefit changes. As a result, ~~the~~this plan is no longer subject to health care cost trends.

Actuarial Determination of Expense: Pension, SERP and PBOP expense is determined by our actuaries and consists of service cost and prior service cost, interest cost based on the discounting of the obligations, and amortization of actuarial gains and losses, offset by the expected return on plan assets. Actuarial gains and losses represent differences between assumptions and actual information or updated assumptions. Pre-tax net periodic benefit expense for the Pension ~~Plan (excluding the~~and SERP ~~Plans)~~Plans was ~~$62.4~~$64.9 million, ~~$124.2~~$71.9 million and ~~$118.4~~$134.7 million for the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014,~~2015, respectively. The pre-tax net periodic PBOP cost is income of $39.6 million and $17.9 million for the years ended December 31, 2017 and 2016, respectively, and expense of $2.4 million for the year ended December 31, ~~2016 and expense of $2.4 million and $8.1 million for the years ended December 31, 2015 and 2014, respectively.~~2015.

The expected return on plan assets is determined by applying the assumed long-term rate of return to the Pension and PBOP Plan asset balances. This calculated expected return is compared to the actual return or loss on plan assets at the end of each year to determine the investment gains or losses to be immediately reflected in unrecognized actuarial gains and losses.

Forecasted Expenses and Expected Contributions: We estimate that the expense for the Pension ~~Plan (excluding the~~and SERP ~~Plans)~~Plans will be approximately ~~$54~~$45 million and income for the PBOP ~~Plan~~Plans will be approximately ~~$38~~$45 million ~~respectively,~~ in ~~2017. The periodic benefit cost for the PBOP Plan has been favorably impacted by the plan amendment which reduced the PBOP liability.~~2018. Pension, SERP and PBOP expense for subsequent years will depend on future investment performance, changes in future discount rates and other assumptions, and various other factors related to the populations participating in the plans.

Our policy is to fund the Pension ~~Plan~~Plans annually in an amount at least equal to the amount that will satisfy all federal funding requirements. We contributed ~~$146.2~~$235.2 million to the Pension ~~Plan~~Plans in ~~2016.~~2017. We currently estimate contributing approximately ~~$175~~$180 million to the Pension ~~Plan~~Plans in ~~2017.~~2018.

For the PBOP ~~Plan,~~Plans, it is our policy to fund the PBOP ~~Plan~~Plans annually through tax deductible contributions to external trusts. We contributed ~~$12.5 million to the PBOP Plan in 2016. We currently estimate contributing~~ $7.6 million to the PBOP ~~Plan~~Plans in 2017. We currently estimate contributing $10 million to the PBOP Plans in 2018.

Sensitivity Analysis: The following represents the hypothetical increase to the Pension ~~Plan's~~Plans' (excluding the SERP Plans) and PBOP ~~Plan's~~Plans' reported annual cost as a result of a change in the following assumptions by 50 basis points:


(Millions of Dollars)	Increase in Pension Plan Cost				Increase in PBOP Plan Cost				Increase in Pension Plan Cost				Increase in PBOP Plan Cost
Assumption Change	As of December 31,								As of December 31,
Eversource	2016		2015		2016		2015		2017		2016		2017		2016
Lower expected long-term rate of return	$	19.5	$	20.6	$	3.9	$	4.2	$	20.4	$	19.5	$	4.1	$	3.9
Lower discount rate	20.7		26.3		3.9		6.2		19.7		20.7		3.6		3.9
Higher compensation rate	10.2		12.4		N/A		N/A		9.3		10.2		N/A		N/A

Goodwill: We ~~have~~ recorded ~~approximately $3.5 billion of~~ goodwill on our balance sheet associated with previous mergers and acquisitions. On December 4, 2017, we completed the acquisition of Aquarion, resulting in the addition of $0.9 billion of goodwill. As of December 31, 2017, a total of $4.4 billion of goodwill is recorded on our balance sheet. We have identified our reporting units for purposes of allocating and testing goodwill as Electric Distribution, Electric Transmission, ~~and~~ Natural Gas ~~Distribution.~~Distribution and Water. These reporting units are consistent with our operating segments underlying our reportable segments. Electric Distribution and Electric Transmission reporting units include carrying values for the respective components of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO.~~PSNH. The Natural Gas Distribution reporting unit includes the carrying values of NSTAR Gas and Yankee Gas. The Water reporting unit was created upon completion of the acquisition of Aquarion and includes its water utility businesses. As of December 31, ~~2016,~~2017, goodwill was allocated to the reporting units as follows: $2.5 billion to Electric Distribution, $0.6 billion to Electric Transmission, ~~and~~ $0.4 billion to Natural Gas ~~Distribution.~~Distribution and $0.9 billion to Water.

We are required to test goodwill balances for impairment at least annually by considering the fair values of the reporting units, which requires us to use estimates and judgments. We have selected October 1st of each year as the annual goodwill impairment testing date. Goodwill impairment is deemed to exist if the carrying amount of a reporting unit exceeds its estimated fair value and if the implied fair value of goodwill based on the estimated fair values of the reporting units' assets and liabilities is less than the carrying amount of the goodwill. If goodwill were deemed to be impaired, it would be written down in the current period to the extent of the impairment.

We performed an impairment test of goodwill as of October 1, ~~2016~~2017 for the Electric Distribution, Electric Transmission and Natural Gas Distribution reporting units. This evaluation required the consideration of several factors that impact the fair value of the reporting units, including conditions and assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, and internal estimates of future cash flows and net income.

The ~~2016~~2017 goodwill impairment test resulted in a conclusion that goodwill is not impaired and no reporting unit is at risk of a goodwill impairment.

Long-Lived Assets: Impairment evaluations of long-lived assets, including property, plant and equipment and strategic, infrastructure and other investments, involve a significant degree of estimation and judgment, including identifying circumstances that indicate an impairment may exist. Impairment analysis is required when events or changes in circumstances indicate that the carrying value of a long-lived asset may not be recoverable. Indicators of potential impairment include a deteriorating business climate, unfavorable regulatory action, decline in value that is other than temporary in nature, plans to dispose of a long-lived asset significantly before the end of its useful life, and accumulation of costs that are in excess of amounts allowed for recovery. The review of long-lived assets for impairment utilizes significant assumptions about operating strategies and external developments, including assessment of current and projected market conditions that can impact future cash flows.

As of December 31, 2017, we did not identify any impairment indicators for our long-lived assets. If events or changes in circumstances indicate the carrying value of a long-lived asset may not be recoverable, we would perform an impairment analysis. An impairment analysis would consist of two steps: first, the estimated undiscounted future cash flows attributable to the asset would be compared with the carrying value of the asset, and second, if the carrying value is greater than the undiscounted future cash flows, an impairment charge would be recognized equal to the amount by which the carrying value of the asset exceeds its estimated fair value.

Income Taxes: Income tax expense is estimated for each of the jurisdictions in which we operate and is recorded each quarter using an estimated annualized effective tax rate. This process to record income tax expense involves estimating current and deferred income tax expense or benefit and the impact of temporary differences resulting from differing treatment of items for financial reporting and income tax return reporting purposes. Such differences are the result of timing of the deduction for expenses, as well as any impact of permanent differences, non-tax deductible expenses, or other items that directly impact income tax expense as a result of regulatory activity (flow-through items). The temporary differences and flow-through items result in deferred tax assets and liabilities that are included in the balance sheets.

We also account for uncertainty in income taxes, which applies to all income tax positions previously filed in a tax return and income tax positions expected to be taken in a future tax return that have been reflected on our balance sheets. The determination of whether a tax position meets the recognition threshold under applicable accounting guidance is based on facts and circumstances available to us. Once a tax position meets the recognition threshold, the tax benefit is measured using a cumulative probability assessment. Assigning probabilities in measuring a recognized tax position and evaluating new information or events in subsequent periods requires significant judgment and could change previous conclusions used to measure the tax position estimate. New information or events may include tax examinations or appeals (including information gained from those examinations), developments in case law, settlements of tax positions, changes in tax law and regulations, rulings by taxing authorities and statute of limitation expirations. Such information or events may have a significant impact on our financial position, results of operations and cash flows.

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

We will continue to evaluate the impacts of the Act, which will vary depending on the ultimate amount and timing of when certain income tax benefits will benefit our customers, and will vary by jurisdiction. Although the impacts could not be finalized upon the issuance of this combined Annual Report on Form 10-K, reasonable provisional estimates were recognized as of December 31, 2017. In accordance with SEC Staff Accounting Bulletin No. 118 ("SAB 118"), additional re-measurement may occur based on final analyses, computations, technical corrections, or other forms of guidance issued from regulatory agencies or commissions. While we believe the impacts of the Act were appropriately accounted for in accordance with applicable authoritative guidance, the ultimate outcome may be different from the provisional estimates recorded, and those differences may materially impact our future statement of financial position, results of operations, and cash flows.

Accounting for Environmental Reserves: Environmental reserves are accrued when assessments indicate it is probable that a liability has been incurred and an amount can be reasonably estimated. Adjustments made to estimates of environmental liabilities could have an adverse impact on earnings. We estimate these liabilities based on findings through various phases of the assessment, considering the most likely action plan from a variety of available remediation options (ranging from no action required to full site remediation and long-term monitoring), current site information from our site assessments, remediation estimates from third party engineering and remediation contractors, and our prior experience in remediating contaminated sites. If a most likely action plan cannot yet be determined, we estimate the liability based on the low end of a range of possible action plans. A significant portion of our environmental sites and reserve amounts relate to former MGP sites that were operated several decades ago and manufactured gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which we may have potential liability. As assessments on these sites are performed, we may receive new information to be considered in our estimates related to the extent and nature of the contamination and the costs of required remediation.

Our estimates also incorporate currently enacted state and federal environmental laws and regulations and data released by the EPA and other organizations. The estimates associated with each possible action plan are judgmental in nature partly because there are usually several different remediation options from which to choose. Our estimates are subject to revision in future periods based on actual costs or new information from other sources, including the level of contamination at the site, the extent of our responsibility or the extent of remediation required, recently enacted laws and regulations or a change in cost estimates due to certain economic factors.

Fair Value Measurements: We follow fair value measurement guidance that defines fair value as the price that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We have applied this guidance to our Company's derivative contracts that are not elected or designated as "normal purchases or normal sales" (normal), to marketable securities held in trusts, to our investments in our Pension and PBOP Plans, and to nonfinancial assets such as goodwill and AROs. This guidance was also applied in estimating the fair value of preferred stock and long-term debt.

Changes in fair value of the ~~Regulated company~~ derivative contracts are recorded as Regulatory Assets or Liabilities, as we recover the costs of these contracts in rates charged to customers. These valuations are sensitive to the prices of energy and energy-related products in future years for which markets have not yet developed and assumptions are made.

We use quoted market prices when available to determine the fair value of financial instruments. If quoted market prices are not available, fair value is determined using quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments that are not active and model-derived valuations. When quoted prices in active markets for the same or similar instruments are not available, we value derivative contracts using models that incorporate both observable and unobservable inputs. Significant unobservable inputs utilized in the models include energy and energy-related product prices for future years for long-dated derivative contracts and market volatilities. Discounted cash flow valuations incorporate estimates of premiums or discounts, reflecting risk-adjusted profit that would be required by a market participant to arrive at an exit price, using available historical market transaction information. Valuations of derivative contracts also reflect our estimates of nonperformance risk, including credit risk.

Other Matters

Accounting Standards: For information regarding new accounting standards, see Note ~~1C,~~1D, "Summary of Significant Accounting Policies - Accounting Standards," to the financial statements.

Contractual Obligations and Commercial Commitments: Information regarding our contractual obligations and commercial commitments as of December 31, ~~2016~~2017, is summarized annually through ~~2021~~2022 and thereafter as follows:


Eversource
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Long-term debt maturities ^(a)	$	745.0	$	960.0	$	800.0	$	295.0	$	871.3	$	5,665.3	$	9,336.6	$	961.0	$	801.0	$	296.1	$	922.8	$	1,188.9	$	7,643.1	$	11,812.9
Estimated interest payments on existing debt ^(b)	390.2		336.7		307.8		269.4		254.2		2,684.8		4,243.1		446.4		417.4		378.9		361.5		328.9		2,994.5		4,927.6
Capital leases^(c)	2.3		2.3		2.2		2.2		1.7		1.1		11.8		2.9		3.3		3.3		2.8		1.3		2.5		16.1
Operating leases^(d)	14.1		10.6		8.7		7.0		6.0		10.4		56.8		13.2		11.4		10.0		8.9		7.4		19.7		70.6
Funding of pension obligations ^{(d) (e)}	175.0		—		—		—		—		—		175.0		180.0		—		—		—		—		—		180.0
Funding of PBOP obligations ^{(d) (e)}	7.6		—		—		—		—		—		7.6		10.0		—		—		—		—		—		10.0
Estimated future annual long-term contractual costs ^(f)	667.8		557.1		498.4		483.2		433.9		2,331.8		4,972.2		599.0		578.2		542.8		497.2		459.5		2,869.4		5,546.1
Total ^(g)	$	2,002.0	$	1,866.7	$	1,617.1	$	1,056.8	$	1,567.1	$	10,693.4	$	18,803.1	$	2,212.5	$	1,811.3	$	1,231.1	$	1,793.2	$	1,986.0	$	13,529.2	$	22,563.3


CL&P
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Long-term debt maturities ^(a)	$	250.0	$	300.0	$	250.0	$	—	$	—	$	1,990.3	$	2,790.3	$	300.0	$	250.0	$	—	$	—	$	—	$	2,515.3	$	3,065.3
Estimated interest payments on existing debt ^(b)	136.0		117.8		102.4		95.5		95.5		1,307.2		1,854.4		137.1		121.7		114.8		114.8		114.8		1,462.8		2,066.0
Capital leases ^(c)	1.9		2.0		2.0		2.0		1.4		—		9.3		2.0		2.0		2.0		1.4		—		—		7.4
Operating leases^(d)	2.0		1.3		1.0		0.7		0.6		1.4		7.0		1.8		1.5		1.3		1.1		1.0		1.0		7.7
Funding of pension obligations ^{(d) (e)}															82.0		—		—		—		—		—		82.0
Estimated future annual long-term contractual costs ^(f)	222.2		169.3		167.4		189.0		170.0		909.7		1,827.6		177.9		175.4		198.2		187.8		175.6		836.9		1,751.8
Total ^(g)	$	612.1	$	590.4	$	522.8	$	287.2	$	267.5	$	4,208.6	$	6,488.6	$	700.8	$	550.6	$	316.3	$	305.1	$	291.4	$	4,816.0	$	6,980.2


(a)	Long-term debt maturities exclude the CYAPC pre-1983 spent nuclear fuel obligation, net unamortized premiums, discounts and debt issuance costs, and other fair value adjustments.

(b)

Estimated interest payments on fixed-rate debt are calculated by multiplying the coupon rate on the debt by its scheduled notional amount outstanding for the period of measurement. Estimated interest payments on floating-rate debt are calculated by multiplying the end of ~~2016~~2017 floating-rate reset on the debt by its scheduled notional amount outstanding for the period of measurement. This same rate is then assumed for the remaining life of the debt.


(c)	The capital lease obligations include interest.


(d)	Amounts are not included on our balance sheets.


(e)	These amounts represent ~~Eversource's~~ expected pension and PBOP contributions for ~~2017.~~2018. Future contributions will vary depending on many factors, including the performance of existing plan assets, valuation of the plans' liabilities and long-term discount rates.


(f)	Other than certain derivative contracts held by the ~~Regulated~~regulated companies, these obligations are not included on our balance sheets.

(g)

Does not include other long-term liabilities recorded on our balance sheet, such as environmental reserves, employee medical insurance, workers compensation and long-term disability insurance reserves, ARO liability reserves and other reserves, as we cannot make reasonable estimates of the timing of payments. Also, does not include amounts not included on our balance sheets for future funding of Eversource's equity method investments, as we cannot make reasonable estimates of the periods or the investment contributions.

For further information regarding our contractual obligations and commercial commitments, see Note 6, "Asset Retirement Obligations," Note 7, "Short-Term Debt," Note 8, "Long-Term Debt," Note 9A, "Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pensions," Note 11, "Commitments and Contingencies," and Note 13, "Leases," to the financial statements.

RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the years ended December 31, ~~2016, 2015,~~2017 and ~~2014~~2016 included in this Annual Report on Form ~~10-K.~~10-K:



	For the Years Ended December 31,
(Millions of Dollars)	2017		2016		Increase/(Decrease)
Operating Revenues	$	7,752.0	$	7,639.1	$	112.9
Operating Expenses:
Purchased Power, Fuel and Transmission	2,535.3		2,500.8		34.5
Operations and Maintenance	1,277.1		1,323.5		(46.4		)
Depreciation	773.8		715.5		58.3
Amortization of Regulatory Assets, Net	90.0		71.7		18.3
Energy Efficiency Programs	480.8		533.7		(52.9		)
Taxes Other Than Income Taxes	676.8		634.0		42.8
Total Operating Expenses	5,833.8		5,779.2		54.6
Operating Income	1,918.2		1,859.9		58.3
Interest Expense	421.8		401.0		20.8
Other Income, Net	78.0		45.9		32.1
Income Before Income Tax Expense	1,574.4		1,504.8		69.6
Income Tax Expense	578.9		555.0		23.9
Net Income	995.5		949.8		45.7
Net Income Attributable to Noncontrolling Interests	7.5		7.5		—
Net Income Attributable to Common Shareholders	$	988.0	$	942.3	$	45.7

Operating Revenues

A summary of our Operating Revenues by segment was as follows:



	For the Years Ended December 31,
(Millions of Dollars)	2017			2016			Increase/(Decrease)
Electric Distribution	$	5,542.9		$	5,594.3		$	(51.4	)
Natural Gas Distribution	947.3			857.7			89.6
Electric Transmission	1,301.7			1,210.0			91.7
Other and Eliminations	(39.9		)	(22.9		)	(17.0		)
Total Operating Revenues	$	7,752.0		$	7,639.1		$	112.9

A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in MMcf and percentage changes was as follows:



	Electric						Firm Natural Gas
	For the Years Ended December 31,						For the Years Ended December 31,
	2017	2016	Decrease		Percent		2017	2016	Increase	Percent
Traditional	27,855	28,479	(624	)	(2.2	)%	46,957	45,314	1,643	3.6	%
Decoupled and Natural Gas Special Contracts	24,391	25,163	(772	)	(3.1	)%	54,069	52,728	1,341	2.5	%
Total Sales Volumes	52,246	53,642	(1,396	)	(2.6	)%	101,026	98,042	2,984	3.0	%

Fluctuations in sales volumes at certain of the electric and natural gas utilities impact earnings ("Traditional" in the table above). Fluctuations in CL&P's, NSTAR Electric's (for a portion of its sales volumes as of December 31, 2017) and NSTAR Gas' sales volumes do not impact the level of base distribution revenue realized or earnings due to the commission-approved revenue decoupling mechanisms ("Decoupled and Natural Gas Special Contracts" in the table above). The revenue decoupling mechanisms permit recovery of a base amount of distribution revenues and breaks the relationship between sales volumes and revenues recognized. Effective February 1, 2018, all of NSTAR Electric's distribution revenues were decoupled as a result of the DPU-approved rate case decision.

Operating Revenues, which primarily consist of base electric and natural gas distribution revenues and tracked revenues further described below, increased by $112.9 million in 2017, as compared to 2016.

~~Comparison~~Base electric and natural gas distribution revenues: Base electric distribution segment revenues, excluding LBR, decreased $12.3 million in 2017, as compared to 2016, due primarily to a decrease in sales volumes driven by the mild summer weather in 2017 at our non-decoupled electric companies. LBR increased $13.0 million in 2017, as compared to 2016. Effective February 1, 2018, NSTAR Electric no longer has an LBR mechanism. Base natural gas distribution revenues increased $2.9 million in 2017, as compared to 2016. The impact of higher firm natural gas

sales volumes, which was driven by colder winter weather in the fourth quarter of 2017, was partially offset by lower demand revenues in Connecticut driven by lower peak usage in 2017, as compared to 2016.

Tracked natural gas distribution segment revenues increased as a result of an increase in natural gas supply costs ($68.7 million) and an increase in energy efficiency program revenues ($18.1 million). Tracked electric distribution revenues decreased as a result of a decrease in electric energy supply costs ($21.7 million), driven by decreased average retail prices and lower sales volumes, a decrease in retail electric transmission charges ($14.8 million), a decrease in transition and stranded cost recovery revenues ($46.2 million), a decrease in pension rate adjustment mechanisms ($21.6 million), a decrease in revenues related to the timing of the sale of PSNH's RECs ($16.3 million), and a decrease in energy efficiency program revenues ($10.4 million). Partially offsetting these decreases were increases in tracked electric distribution revenues related to federally-mandated congestion charges ($30.1 million), net metering revenues ($29.8 million) and revenues related to renewable energy requirements ($41.9 million).

Electric transmission revenues: The electric transmission segment revenues increased by $91.7 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.

Other: Other revenues decreased due primarily to the sale of Eversource's unregulated telecommunication business on December 31, 2016 ($20.0 million), partially offset by the addition of Aquarion revenues due to ~~2015~~the acquisition on December 4, 2017 ($15.9 million).

Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These energy supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense increased in 2017, as compared to 2016, due primarily to the following:



(Millions of Dollars)	(Decrease)/Increase
Electric Distribution	$	(68.9	)
Natural Gas Distribution	59.5
Transmission	43.9
Total Purchased Power, Fuel and Transmission	$	34.5

The decrease in purchased power expense at the electric distribution business in 2017, as compared to 2016, was driven primarily by lower prices associated with the procurement of energy supply and lower sales volumes. The increase in purchased power expense at the natural gas distribution business was due to higher average natural gas prices and higher sales volumes. The increase in transmission costs in 2017, as compared to 2016, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.

Operations and Maintenance expense includes tracked costs and costs that are part of base electric and natural gas distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased in 2017, as compared to 2016, due primarily to the following:



(Millions of Dollars)	Increase/(Decrease)
Base Electric Distribution:
Employee-related expenses, including labor and benefits	$	(47.4	)
Bad debt expense	(14.5		)
Shared corporate costs (including computer software depreciation at Eversource Service)	24.2
Boston Harbor civil action settlement charges	16.0
Other non-tracked operations and maintenance	7.4
Total Base Electric Distribution	(14.3		)
Base Natural Gas Distribution	3.7
Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution):
Absence in 2017 of earnings benefit related to merger-related costs allowed for recovery through transmission rates	27.5
Other tracked operations and maintenance	(15.4		)
Total Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution)	12.1
Other and eliminations:
Merger-related costs allowed for recovery through NSTAR Electric distribution rates as a result of the November 30, 2017 DPU distribution rate case decision (earnings benefit)	(30.5		)
Addition of Aquarion operations and maintenance expenses due to acquisition on December 4, 2017	7.2
Eversource Parent and Other Companies - other operations and maintenance	8.2
Eliminations	(32.8		)
Total Operations and Maintenance	$	(46.4	)

Depreciation expense increased in 2017, as compared to 2016, due primarily to higher utility plant in service balances.

Energy Efficiency Programs expense decreased in 2017, as compared to 2016, due primarily to a State of Connecticut policy change impacting CL&P requiring the remittance of $25.4 million of 2017 energy efficiency funds to the State (resulting in these costs being classified as Taxes Other than Income Taxes), and the deferral adjustment at NSTAR Electric. The deferral adjustment reflects the actual costs of energy efficiency programs compared to the estimated amounts billed to customers. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers and the timing of the recovery of energy efficiency costs. The costs for various state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.

Taxes Other Than Income Taxes expense increased in 2017, as compared to 2016, due primarily to a State of Connecticut policy change requiring $25.4 million of 2017 CL&P energy efficiency costs to be remitted to the State of Connecticut that is included in Taxes Other than Income Taxes, an increase in property taxes as a result of higher utility plant balances, partially offset by a decrease in gross earnings taxes. Gross earnings taxes are recovered from customers in rates and have no impact on earnings.

Interest Expense increased in 2017, as compared to 2016, due primarily to an increase in interest on long-term debt ($30.3 million) as a result of new debt issuances and an increase in interest on notes payable ($5.1 million), partially offset by a decrease in regulatory deferrals, primarily at NSTAR Electric, which decreased interest expense ($14.7 million) due primarily to the November 30, 2017 NSTAR Electric DPU distribution rate case decision which allowed for a higher rate on carrying charges for past storm costs.

Other Income, Net increased in 2017, as compared to 2016, due primarily to increased gains on investments ($27.2 million), primarily related to Eversource's investment in a renewable energy fund, changes in the market value related to deferred compensation plans ($8.3 million) and higher AFUDC related to equity funds ($8.2 million). Partially offsetting these favorable impacts was the absence in 2017 of a gain on the sale of an unregulated business in 2016 ($11.8 million) and lower interest income ($3.3 million).

Income Tax Expense increased in 2017, as compared to 2016, due primarily to higher pre-tax earnings ($29.1 million), lower excess tax benefit ($16.2 million), the absence of tax credits in 2017 ($3.5 million), and the impact from federal tax rate change ($0.5 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($11.4 million), the sale of an unregulated business in 2016 ($10.2 million), and lower state taxes ($3.8 million).

RESULTS OF OPERATIONS –

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the years ended December 31, 2017 and 2016 included in this Annual Report on Form 10-K:



	For the Years Ended December 31,
	CL&P							NSTAR Electric							PSNH
(Millions of Dollars)	2017		2016		Increase/(Decrease)			2017		2016		Increase/(Decrease)			2017			2016		Increase/(Decrease)
Operating Revenues	$	2,887.4	$	2,806.0	$	81.4		$	2,980.6	$	3,041.6	$	(61.0	)	$	981.6		$	959.5	$	22.1
Operating Expenses:
Purchased Power, Fuel and Transmission	930.8		919.7		11.1			1,025.4		1,084.3		(58.9		)	237.5			210.8		26.7
Operations and Maintenance	500.4		490.1		10.3			463.7		489.9		(26.2		)	257.2			260.8		(3.6		)
Depreciation	249.4		230.5		18.9			274.0		259.3		14.7			128.2			116.5		11.7
Amortization of Regulatory Assets/ (Liabilities), Net	83.2		38.8		44.4			33.8		34.3		(0.5		)	(16.6		)	11.2		(27.8		)
Energy Efficiency Programs	114.7		154.0		(39.3		)	294.1		321.8		(27.7		)	13.8			14.2		(0.4		)
Taxes Other Than Income Taxes	323.8		299.7		24.1			182.0		177.8		4.2			89.7			82.9		6.8
Total Operating Expenses	2,202.3		2,132.8		69.5			2,273.0		2,367.4		(94.4		)	709.8			696.4		13.4
Operating Income	685.1		673.2		11.9			707.6		674.2		33.4			271.8			263.1		8.7
Interest Expense	143.0		144.1		(1.1		)	105.7		108.4		(2.7		)	51.0			50.0		1.0
Other Income, Net	21.2		13.5		7.7			14.9		10.8		4.1			3.9			1.2		2.7
Income Before Income Tax Expense	563.3		542.6		20.7			616.8		576.6		40.2			224.7			214.3		10.4
Income Tax Expense	186.6		208.3		(21.7		)	242.1		225.8		16.3			88.7			82.3		6.4
Net Income	$	376.7	$	334.3	$	42.4		$	374.7	$	350.8	$	23.9		$	136.0		$	132.0	$	4.0

Operating Revenues

A summary of our retail electric GWh sales volumes was as follows:



	Rate	For the Years Ended December 31,
	Structure	2017	2016	Decrease		Percent
CL&P	Decoupled	20,950	21,617	(667	)	(3.1	)%
NSTAR Electric (eastern Massachusetts)	Traditional	20,097	20,619	(522	)	(2.5	)%
NSTAR Electric (western Massachusetts)	Decoupled	3,441	3,546	(105	)	(3.0	)%
PNSH	Traditional	7,758	7,860	(102	)	(1.3	)%

Fluctuations in retail electric sales volumes at certain of the electric utilities impact earnings ("Traditional" in the table above). For others, fluctuations in retail electric sales volumes do not impact earnings due to their regulatory commission-approved distribution revenue decoupling mechanisms ("Decoupled" in the table above). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.

In 2017 and 2016, NSTAR Electric operated under two different rate structures based on its service territory geography. For customers that were served in eastern Massachusetts, including metropolitan Boston, Cape Cod and Martha's Vineyard, NSTAR Electric operated using traditional rates. For customers that were served in western Massachusetts, including the metropolitan Springfield region, NSTAR Electric operated using decoupled rates. Effective February 1, 2018, all of NSTAR Electric's distribution revenues were decoupled as a result of the DPU-approved rate decision. See "Regulatory Developments and Rate Matters - Massachusetts - NSTAR Electric Distribution Rate Case Decision" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased/(decreased) in 2017, as compared to 2016 as follows:



(Millions of Dollars)	CL&P		NSTAR Electric			PSNH
Operating Revenues	$	81.4	$	(61.0	)	$	22.1

Base Distribution Revenues, with changes that impact earnings:

NSTAR Electric's base distribution revenues, excluding LBR, decreased $10.8 million in 2017, as compared to 2016, as a result of lower sales volumes driven by the mild summer weather in 2017. LBR increased $13.0 million in 2017, as compared to 2016. Effective February 1, 2018, NSTAR Electric no longer has an LBR mechanism.

PSNH's base distribution revenues decreased $1.5 million in 2017, as compared to 2016, as a result of lower sales volumes driven by the mild summer weather in 2017.

Tracked Revenues: Fluctuations in the overall level of operating revenues are primarily related to tracked revenues. Tracked revenues consist of certain costs that are recovered from customers in rates through commission-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, net metering for distributed generation and restructuring and stranded cost recovery revenues. In addition, tracked revenues include certain incentives earned and carrying charges. Tracked revenues increased/(decreased) in 2017, as compared to 2016, due primarily to the following:



(Millions of Dollars)	CL&P		NSTAR Electric			PSNH
Energy supply procurement	$	18.8	$	(50.8	)	$	10.3
All other distribution tracking mechanisms	35.0		(33.7		)	(12.7		)

Transmission Revenues: Transmission revenues increased by $34.2 million, $31.0 million and $26.5 million at CL&P, NSTAR Electric and PSNH, respectively, due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure.

Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH's customers. For PSNH, these costs also include PSNH's generation of electricity. These energy supply costs are recovered from customers in commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense increased/(decreased) in 2017, as compared to 2016, due primarily to the following:



(Millions of Dollars)	CL&P			NSTAR Electric			PSNH
Purchased Power Costs	$	(41.4	)	$	(27.9	)	$	3.7
Transmission Costs	52.5			(31.0		)	23.0
Total Purchased Power, Fuel and Transmission	$	11.1		$	(58.9	)	$	26.7

Purchased Power Costs: Included in purchased power costs are the costs associated with certain energy supply tracking mechanisms and deferred energy supply costs. Energy supply tracking mechanisms recover energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. In order to meet the demand of customers who have not migrated to third party suppliers, PSNH procures power through power supply contracts and spot purchases in the competitive New England wholesale power market and/or produces power through its own generation. The increase/(decrease) in purchased power costs in 2017, as compared to 2016, was due primarily to the following:

The decrease at CL&P was due primarily to a decrease in the price of standard offer supply associated with the GSC.

The decrease at NSTAR Electric was due primarily to lower prices associated with the procurement of energy supply, lower sales volumes and the expiration of certain purchase power agreements.

The increase at PSNH was due primarily to higher purchased power energy expenses that are recovered as a component of the Energy Service rate, and Regional Greenhouse Gas Initiative related expenses recovered in the SCRC.

Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generating plants to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. The increase/(decrease) in transmission costs in 2017, as compared to 2016, was due primarily to the following:

The increase at CL&P was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, Local Network Service charges, which reflect the cost of transmission service, and the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.

The decrease at NSTAR Electric was primarily the result of a decrease in the retail transmission cost deferral. This was partially offset by an increase in costs billed by ISO-NE.

The increase at PSNH was primarily the result of increases in costs billed by ISO-NE, Local Network Service charges, and the retail transmission cost deferral.

Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased/(decreased) in 2017, as compared to 2016, due primarily to the following:



(Millions of Dollars)	CL&P			NSTAR Electric			PSNH
Base Electric Distribution (Non-Tracked Costs):
Employee-related expenses, including labor and benefits	$	(4.5	)	$	(36.6	)	$	(6.3	)
Bad debt expense	(6.8		)	(7.5		)	(0.2		)
Shared corporate costs (including computer software depreciation at Eversource Service)	7.8			12.6			3.8
Boston Harbor civil action settlement charges	—			16.0			—
Other non-tracked operations and maintenance	8.8			0.6			(2.0		)
Total Base Electric Distribution (Non-Tracked Costs)	5.3			(14.9		)	(4.7		)
Tracked Costs:
Employee-related expenses, including labor and benefits	1.3			(16.2		)	(0.5		)
Other tracked operations and maintenance	3.7			4.9			1.6
Total Tracked Costs	5.0			(11.3		)	1.1
Total Operations and Maintenance	$	10.3		$	(26.2	)	$	(3.6	)

Depreciation increased at CL&P, NSTAR Electric and PSNH in 2017, as compared to 2016, due primarily to higher utility plant in service balances.

Amortization of Regulatory Assets/(Liabilities), Net expense includes the deferral of energy supply and energy-related costs and the amortization of storm and other costs. Amortization of Regulatory Assets/(Liabilities), Net increased at CL&P and decreased for both NSTAR Electric and PSNH in 2017, as compared to 2016, due primarily to the deferral adjustment of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The deferral adjusts expense to match the corresponding revenues. Energy supply and energy-related costs, which are the primary drivers of amortization, are recovered from customers in rates and have no impact on earnings.

Energy Efficiency Programs expenseincludes costs for various state policy initiatives and are recovered from customers in rates and have no impact on earnings. Energy Efficiency Programs expensedecreased in 2017, as compared to 2016, due primarily to the following:

The decrease at CL&P is due primarily to a State of Connecticut policy change requiring the remittance of $25.4 million of 2017 energy efficiency funds to the State. These amounts collected from customers were reclassified to Taxes Other than Income Taxes.

The decrease at NSTAR Electric is due to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs to match energy efficiency revenue billed to customers.

Taxes Other Than Income Taxes increased in 2017, as compared to 2016, due primarily to the following:

The increase at CL&P is due primarily to a State of Connecticut policy change requiring the remittance of $25.4 million of 2017 energy efficiency funds to the State and higher utility plant balances, partially offset by a decrease in gross earnings taxes. Gross earnings taxes are recovered from customers in rates and have no impact on earnings.

The increase at NSTAR Electric is due primarily to higher property taxes resulting from disallowed costs in the November 30, 2017 NSTAR Electric DPU distribution rate case decision and higher employee-related payroll taxes, partially offset by a decrease in property tax rates in Boston.

The increase at PSNH is due to an increase in property taxes as a result of higher utility plant balances.

Interest Expense at NSTAR Electricdecreased in 2017, as compared to 2016, due primarily to lower deferred regulatory interest expense ($14.0 million), primarily as a result of the November 30, 2017 NSTAR Electric DPU distribution rate case decision, which allowed for a higher interest rate on carrying charges for past storm costs, partially offset by an increase in interest on long-term debt ($9.6 million).

Other Income, Net increased in 2017, as compared to 2016, due primarily to the following:

The increase at CL&P is due to higher AFUDC related to equity funds ($5.9 million) and market value changes related to the deferred compensation plans ($6.3 million), partially offset by lower interest income ($4.4 million).

The increase at NSTAR Electric is due to market value changes related to the deferred compensation plans ($1.6 million), an increase in amounts related to officer life insurance policies ($1.3 million) and an increase in interest income ($1.2 million).

The increase at PSNH is due to market value changes related to the deferred compensation plans ($1.5 million).

Income Tax Expense increased/(decreased) in 2017, as compared to 2016, due primarily to the following:

The decrease at CL&P is due primarily to the tax reform impacts on the federal tax effect of state reserves and credits ($10.7 million), items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($10.1 million), the true up of the return to provision impacts ($2.6 million), and lower state taxes ($5.5 million), partially offset by higher pre-tax earnings ($7.2 million).

The increase at NSTAR Electric is due primarily to higher pre-tax earnings ($14.5 million), higher state taxes ($2.4 million), partially offset by items that impact our tax rate as a result of flow-through items and permanent differences ($0.6 million).

The increase at PSNH is due primarily to higher pre-tax earnings ($3.6 million) and the absence of tax credits in 2017 ($3.5 million), partially offset by items that impact our tax rate as a result of flow-through items and permanent differences ($0.7 million).

EARNINGS SUMMARY

CL&P's earnings increased $42.4 million in 2017, as compared to 2016, due primarily to a lower effective tax rate, an increase in transmission earnings driven by a higher transmission rate base, and higher distribution revenues due in part to a higher rate base for the system resiliency program. These favorable earnings impacts were partially offset by higher depreciation expense, higher operations and maintenance expense, and higher property tax expense.

NSTAR Electric's earnings increased $23.9 million in 2017, as compared to 2016, due primarily to higher distribution revenues related to lost base revenues, net metering and the PAM, lower operations and maintenance expense, lower interest expense as a result of the November 30, 2017 NSTAR Electric distribution rate case decision, and an increase in transmission earnings driven by a higher transmission rate base. These favorable earnings impacts were partially offset by lower sales volumes driven by the mild summer weather in 2017, higher depreciation expense, and higher property tax expense.

PSNH's earnings increased $4.0 million in 2017, as compared to 2016, due primarily to an increase in transmission earnings driven by a higher transmission rate base and lower operations and maintenance expense. These favorable earnings impacts were partially offset by lower generation earnings, higher depreciation expense, higher property tax expense, lower sales volumes driven by the mild summer weather in 2017, and a higher effective tax rate.

LIQUIDITY

CL&P:

Cash totaled $6.0 million as of December 31, 2017, compared with $6.6 million as of December 31, 2016.

CL&P had cash flows provided by operating activities of $804.6 million in 2017, compared with $811.5 million in 2016. The decrease in operating cash flows was due primarily to income tax payments of $68.8 million made in 2017, compared to the income tax refunds of $73.9 million received in 2016. Partially offsetting this decrease was the timing of regulatory recoveries, an increase in distribution rates due to higher rate base, and the timing of collections and payments related to our working capital items.

Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt, with intercompany loans to certain subsidiaries, including CL&P. The weighted-average interest rate on the commercial paper borrowings as of December 31, 2017 and 2016 was 1.86 percent and 0.88 percent, respectively. As of December 31, 2017 and 2016, there were intercompany loans from Eversource parent to CL&P of $69.5 million and $80.1 million, respectively. Eversource parent, and certain of its subsidiaries, including CL&P, are parties to a five-year $1.45 billion revolving credit facility. On December 8, 2017, Eversource parent amended and restated the revolving credit facility. The amended and restated credit facility terminates on December 8, 2022 and serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2017 or 2016.

Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. CL&P's investments totaled $824.4 million in 2017, compared with $612.0 million in 2016.

Financing activities in 2017 included $254.8 million in common stock dividends paid to Eversource parent.

NSTAR Electric:

NSTAR Electric had cash flows provided by operating activities of $638.4 million in 2017, as compared to $808.7 million in 2016. The decrease in operating cash flows was due primarily to a decrease in regulatory recoveries, which were significantly impacted by the timing of collections of purchased power and transmission costs, an increase of $53.4 million in Pension and PBOP Plan cash contributions and an increase of $29.5 million in income tax payments made in 2017, compared to 2016. Also contributing to the decrease was the timing of working capital items, including accounts payable and inventory.

NSTAR Electric has a $650.0 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. On December 8, 2017, NSTAR Electric increased its commercial paper program from $450 million to $650 million. As of December 31, 2017 and 2016, NSTAR Electric had $234.0 million and $126.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $416.0 million and $323.5 million of available borrowing capacity as of December 31, 2017 and 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2017 and 2016 was 1.55 percent and 0.71 percent, respectively. NSTAR Electric is also a party to a five-year $650.0 million revolving credit facility. On December 8, 2017, NSTAR Electric amended and restated the revolving credit facility, increasing it from $450 million to $650 million. The amended and restated credit facility terminates on December 8, 2022 and serves to backstop NSTAR Electric's $650.0 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2017 or 2016.

PSNH:

PSNH had cash flows provided by operating activities of $300.9 million in 2017, as compared to $361.8 million in 2016. The decrease in operating cash flows was due primarily to the income tax payments of $26.1 million made in 2017, compared to the income tax refunds of $36.0 million received in 2016 and the unfavorable impacts related to the timing of regulatory recoveries. Partially offsetting these decreases were the timing of collections and payments of our working capital items, including accounts payable and inventory, and a $16.3 million decrease in Pension Plan cash contributions.

RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the years ended December 31, 2016 and 2015 included in this Annual Report on Form 10-K:



	For the Years Ended December 31,
(Millions of Dollars)	2016		2015		Increase/(Decrease)			Percent
Operating Revenues	$	7,639.1	$	7,954.8	$	(315.7	)	(4.0	)%
Operating Expenses:
Purchased Power, Fuel and Transmission	2,500.8		3,086.9		(586.1		)	(19.0	)
Operations and Maintenance	1,323.5		1,329.3		(5.8		)	(0.4	)
Depreciation	715.5		665.9		49.6			7.4
Amortization of Regulatory Assets, Net	71.7		22.3		49.4			(a)
Energy Efficiency Programs	533.7		495.7		38.0			7.7
Taxes Other Than Income Taxes	634.0		590.5		43.5			7.4
Total Operating Expenses	5,779.2		6,190.6		(411.4		)	(6.6	)
Operating Income	1,859.9		1,764.2		95.7			5.4
Interest Expense	401.0		372.4		28.6			7.7
Other Income, Net	45.9		34.2		11.7			34.2
Income Before Income Tax Expense	1,504.8		1,426.0		78.8			5.5
Income Tax Expense	555.0		540.0		15.0			2.8
Net Income	949.8		886.0		63.8			7.2
Net Income Attributable to Noncontrolling Interests	7.5		7.5		—			—
Net Income Attributable to Common Shareholders	$	942.3	$	878.5	$	63.8		7.3	%

(a) Percent greater than 100 not shown as it is not meaningful.

Operating Revenues

A summary of our Operating Revenues by segment was as follows:



	For the Years Ended December 31,
(Millions of Dollars)	2016			2015			Increase/(Decrease)			Percent
Electric Distribution	$	5,594.3		$	5,903.6		$	(309.3	)	(5.2	)%
Natural Gas Distribution	857.7			995.5			(137.8		)	(13.8	)
Electric Transmission	1,210.0			1,069.1			140.9			13.2
Other and Eliminations	(22.9		)	(13.4		)	(9.5		)	70.9
Total Operating Revenues	$	7,639.1		$	7,954.8		$	(315.7	)	(4.0	)%

A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in ~~Mcf~~MMcf were as follows:



	For the Years Ended December 31,
	2016	2015	Decrease		Percent
Electric
Traditional	28,479	28,982	(503	)	(1.7	)%
Decoupled	25,163	25,634	(471	)	(1.8	)
Total Electric	53,642	54,616	(974	)	(1.8	)%

Firm Natural Gas
Traditional	45,314	47,600	(2,286	)	(4.8	)%
Decoupled and Special Contracts	52,728	55,399	(2,671	)	(4.8	)
Total Firm Natural Gas	98,042	102,999	(4,957	)	(4.8	)%

Operating Revenues, which primarily consist of base electric and natural gas distribution revenues and tracked revenues further described below, decreased by $315.7 million in 2016, as compared to 2015.

Base electric and natural gas distribution revenues: Base electric distribution segment revenues increased by $19.9 million due primarily to a higher rate base resulting from the 2015 PURA ADIT settlement agreement that is being collected from customers in distribution rates at CL&P ($26.1 million) and the absence of a required ROE reduction in 2015, as stipulated in the PURA 2014 rate case decision, at CL&P ($4 million). This increase was partially offset by the absence of the benefit recognized in 2015 in Operating Revenues due to the PURA ADIT settlement agreement. In addition, traditional electric base distribution revenues decreased $10.1 million due to a 1.7 percent decrease in non-decoupled retail electric sales volumes due primarily to increased customer energy conservation efforts, partly offset by PSNH distribution rate increases effective July 1, 2015 and July 1, 2016.

Contributing to the decrease in Operating Revenues in 2016 was the absence of an $11 million benefit related to the Comprehensive Settlement Agreement associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs recorded at NSTAR Electric in 2015.

Firm natural gas base distribution segment revenues increased $11.7 million due primarily to the impact of the NSTAR Gas base distribution rate increase effective January 1, 2016, partially offset by a 4.8 percent decrease in traditional firm natural gas sales volumes as a result of warmer than normal weather experienced in the first quarter of 2016, as compared to much colder than normal temperatures in 2015.

Fluctuations in CL&P's, ~~WMECO's~~NSTAR Electric's and NSTAR Gas' sales volumes do not impact the level of base distribution revenue realized or earnings due to their respective regulatory commission approved revenue decoupling mechanisms. The revenue decoupling mechanisms permit recovery of a base amount of distribution revenues and break the relationship between sales volumes and revenues recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements.

Tracked distribution revenues: Tracked revenues consist of certain costs that are recovered from customers in rates through regulatory commission-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement costs and other energy-related costs for our electric and natural gas customers, retail transmission charges, energy efficiency program costs, and restructuring and stranded cost recovery revenues. In addition, tracked revenues include certain incentives earned and carrying charges. Tracked electric distribution segment revenues decreased as a result of decreases in energy supply costs ($625.2 million), driven by decreased average retail rates and lower sales volumes, partially offset by an increase in retail electric transmission charges ($84.6 million), an increase in federally mandated congestion charges ($103.0 million), an increase in energy efficiency program revenues ($51.7 million), an increase in stranded cost recovery charges ($39.2 million) and an increase in net metering for distributed generation revenues ($34.0 million). In addition, as a result of a change to the amounts collected in the system benefits charge, CL&P's calculated rate base increased, providing an increase to distribution revenues that positively impacted earnings by $23.2 million.

In 2016, tracked natural gas distribution segment revenues decreased as a result of decreases in natural gas supply costs ($128.2 million) driven by decreased average rates and lower sales volumes, and a decrease in energy efficiency program revenues ($22.7 million).

Electric transmission revenues: The electric transmission segment revenues increased by $140.9 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure and the absence in 2016 of a $20 million reserve charge recorded in 2015 associated with the March 2015 FERC ROE order.

Other: Other revenues decreased due primarily to the sale of Eversource's unregulated contracting business on April 13, 2015 ($11.4 million).

Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These energy supply costs are recovered from customers in rates through cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense decreased in 2016, as compared to 2015, due primarily to the following:



(Millions of Dollars)	(Decrease)/Increase
Electric Distribution	$	(625.9	)
Natural Gas Distribution	(130.3		)
Transmission	170.1
Total Purchased Power, Fuel and Transmission	$	(586.1	)

The decrease in purchased power expense at the electric distribution business was driven by lower prices associated with the procurement of energy supply, lower sales volumes, and a decrease in the amount of electricity generated by PSNH facilities in 2016, as compared to 2015. The decrease in purchased power expense at the natural gas distribution business was due to lower sales volumes and lower average natural gas prices. The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment.

Operations and Maintenance expense includes tracked costs and costs that are part of base electric and natural gas distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased in 2016, as compared to 2015, due primarily to the following:


(Millions of Dollars)	Increase/(Decrease)			Increase/(Decrease)
Base Electric Distribution:
Absence of 2015 resolution of basic service bad debt adder mechanism at NSTAR Electric	$	24.2		$	24.2
Absence of 2015 regulatory proceedings benefiting NSTAR Electric	10.5			10.5
Employee-related expenses, including labor and benefits	(27.0		)	(27.0		)
Storm restoration costs	15.0			15.0
Bad debt expense	0.4
Vegetation management costs	8.0
Write-off of software design costs	9.2			9.2
Absence of 2015 contribution to create clean energy fund in connection with the generation divestiture agreement at PSNH	(5.0		)
Other operations and maintenance	10.7			14.1
Total Base Electric Distribution	46.0			46.0
Total Base Natural Gas Distribution:
Employee-related expenses, including labor and benefits	(15.5		)	(15.5		)
Other operations and maintenance	8.2			8.2
Total Base Natural Gas Distribution	(7.3		)	(7.3		)
Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution):
Merger-related costs allowed for recovery through transmission rates (earnings benefit)	(27.5		)	(27.5		)
Other tracked operations and maintenance	41.8			41.8
Total Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution)	14.3			14.3
Other and eliminations:
Integration costs	(27.2		)	(27.2		)
Absence of Eversource's unregulated electrical contracting business due to sale in April 2015, net	(13.9		)	(13.9		)
Eversource Parent and Other Companies	(2.8		)	(2.8		)
Eliminations	(14.9		)	(14.9		)
Total Operations and Maintenance	$	(5.8	)	$	(5.8	)

Depreciation expense increased in 2016, as compared to 2015, due primarily to higher utility plant in service balances.

Amortization of Regulatory Assets, Net expense includes the deferral of energy supply and energy-related costs included in certain regulatory-approved tracking mechanisms and the amortization of certain costs. The deferral adjusts expense to match the corresponding revenues. Amortization of Regulatory Assets, Net increased in 2016, as compared to 2015, due primarily to the deferral of energy supply and energy-related costs which can fluctuate from period to period based on the timing of costs incurred and the related rate changes to recover these costs. Energy supply and energy-related costs at CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, which are the primary drivers in amortization, are recovered from customers in rates and have no impact on earnings. The increase in Amortization of Regulatory Assets, Net for the year ended December 31, 2016 also includes the absence in 2016 of the $11.7 million benefit recorded in 2015 at NSTAR Electric in connection with the Comprehensive Settlement Agreement.

Energy Efficiency Programs expense increased in 2016, as compared to 2015, due primarily to deferral adjustments at NSTAR Electric, partially offset by deferral adjustments for the natural gas businesses, which reflect the actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs incurred in accordance with the three-year program guidelines established by the DPU. The deferrals adjust expense to match the energy efficiency programs revenue. The costs for various state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.

Taxes Other Than Income Taxes expense increased in 2016, as compared to 2015, due primarily to an increase in property taxes as a result of higher utility plant balances and an increase in gross earnings taxes. Gross earnings taxes are recovered from customers in rates and have no impact on earnings.

Interest Expense increased in 2016, as compared to 2015, due primarily to an increase in interest on long-term debt ($33.8 million) as a result of new debt issuances and an increase in interest on notes payable ($2.2 million), partially offset by a decrease in regulatory deferrals which decreased interest expense ($5.5 million).

Other Income, Net increased in 2016, as compared to 2015, due primarily to higher equity AFUDC amounts ($7.4 million), higher gains related to the sales of unregulated businesses ($9.4 million) and an increase in interest income ($4.1 million). Partially offsetting these favorable impacts were the market value changes related to deferred compensation plans ($9.6 million).

Income Tax Expense increased in 2016, as compared to 2015, due primarily to higher pre-tax earnings ($24.2 million), higher state taxes ($7.5 million), and the sale of an unregulated business ($10.2 million), partially offset by the excess tax benefit due to the adoption of new accounting guidance related to share based payment transactions ($19.1 million), the true-up of the return to provision impacts and a higher tax benefit from a reduction in tax reserves ($7.6 million), and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.2 million).

~~Comparison of 2015 to 2014:~~

For the Years Ended December 31,
(Millions of Dollars) 2015 2014 Increase/(Decrease) Percent
Operating Revenues $ 7,954.8
$ 7,741.9
$ 212.9
2.7 %
Operating Expenses:

Purchased Power, Fuel and Transmission 3,086.9
3,021.6
65.3
2.2
Operations and Maintenance 1,329.3
1,427.6
(98.3 ) (6.9 )
Depreciation 665.9
614.7
51.2
8.3
Amortization of Regulatory Assets, Net 22.3
10.7
11.6
(a)
Energy Efficiency Programs 495.7
473.1
22.6
4.8
Taxes Other Than Income Taxes 590.5
561.4
29.1
5.2
Total Operating Expenses 6,190.6
6,109.1
81.5
1.3
Operating Income 1,764.2
1,632.8
131.4
8.0
Interest Expense 372.4
362.1
10.3
2.8
Other Income, Net 34.2
24.6
9.6
39.0
Income Before Income Tax Expense 1,426.0
1,295.3
130.7
10.1
Income Tax Expense 540.0
468.3
71.7
15.3
Net Income 886.0
827.0
59.0
7.1
Net Income Attributable to Noncontrolling Interests 7.5
7.5
—
—
Net Income Attributable to Controlling Interest $ 878.5
$ 819.5
$ 59.0
7.2 %

~~(a) Percent greater than 100 percent not shown as it is not meaningful.~~

~~Operating Revenues~~

~~A summary of our Operating Revenues by segment was as follows:~~

For the Years Ended December 31,
(Millions of Dollars) 2015 2014 Increase/(Decrease) Percent
Electric Distribution $ 5,903.6
$ 5,663.4
$ 240.2
4.2 %
Natural Gas Distribution 995.5
1,007.3
(11.8 ) (1.2 )
Electric Transmission 1,069.1
1,018.2
50.9
5.0
Other and Eliminations (13.4 ) 53.0
(66.4 ) (a)
Total Operating Revenues $ 7,954.8
$ 7,741.9
$ 212.9
2.7 %

~~(a) Percent greater than 100 percent not shown as it is not meaningful.~~

~~A summary of our retail electric sales volumes and firm natural gas sales volumes were as follows:~~

For the Years Ended December 31,
2015 2014 Increase/(Decrease) Percent
Electric Sales Volumes in GWh:
Traditional 28,982
28,811
171
0.6 %
Decoupled 25,634
25,631
3
—
Total Electric Sales Volumes in GWh 54,616
54,442
174
0.3 %

Firm Natural Gas Sales Volumes in Million Cubic Feet 102,999
104,191
(1,192 ) (1.1 )%

Operating Revenues, which primarily consist of base electric and natural gas distribution revenues and tracked revenues further described below, increased by $212.9 million in the aggregate in 2015 compared to 2014.

~~Base electric and natural gas distribution revenues~~: Base electric distribution segment revenues increased $150.9 million due primarily to CL&P's base distribution rate increase, effective December 1, 2014 ($136.3 million) and higher retail sales volumes driven by weather impacts at our non-decoupled operating companies (traditional). In addition, Operating Revenues increased $19.9 million at CL&P due to the PURA-approved settlement agreement regarding ADIT, $11 million for the Comprehensive Settlement Agreement associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs at NSTAR Electric, and $20.7 million increase of 2015 LBR recognition at NSTAR Electric compared to 2014 LBR amounts. The $19.9 million represents CL&P's revenue requirement from the settlement agreement's rate increase through December 31, 2015, and is being collected from customers in rates over a 24-month period beginning December 1, 2015. The impact of colder winter weather experienced in the first quarter of 2015and warmer weather in the third quarter of 2015, partially offset by milder winter weather in the fourth quarter of 2015, all as compared to the same periods in 2014, were the primary drivers of the increase in 2015 retail electric sales volumes of 0.6 percent and base electric distribution revenues at NSTAR Electric and PSNH.

For CL&P (effective December 1, 2014) and WMECO, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission approved revenue decoupling mechanisms. The revenue decoupling mechanisms permit recovery of a base amount of distribution revenues and break the relationship between sales volumes and revenues recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements. Therefore, changes in sales volumes had no impact on the level of base distribution revenue realized at our decoupled companies.

Firm natural gas base distribution segment revenues decreased $4.9 million due primarily to a 1.1 percent decrease in firm natural gas sales volumes in 2015, as compared to 2014. This was due to record warm weather in the fourth quarter of 2015 when compared to 2014, partially offset by colder winter weather in the first quarter of 2015 compared to 2014. Weather-normalized firm natural gas sales volumes (based on 30-year average temperatures) increased 2.5 percent in 2015 compared to 2014, due primarily to improved economic conditions as well as residential and commercial customer growth, partially offset by the impact of customer conservation efforts resulting from company-sponsored energy efficiency programs.

~~Tracked distribution revenues:~~ Tracked revenues consist of certain costs that are recovered from customers in rates through regulatory commission-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement costs and other energy-related costs for our electric and natural gas customers, retail transmission charges, energy efficiency program costs, and restructuring and stranded cost recovery revenues. Tracked electric distribution segment revenues increased primarily as a result of increases in energy supply costs ($176.4 million), driven by increased average retail rates, and increases in energy efficiency program revenues ($18.3 million). These increases were partially offset by a decrease in retail electric transmission charges ($77.5 million) and a decrease in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecovery ($103.9 million). Tracked natural gas supply revenues decreased $20.1 million as a result of a decrease in average rates related to the recovery of natural gas supply costs.

~~Electric transmission revenues:~~ The electric transmission segment revenues increased by $50.9 million primarily as a result of lower reserves associated with the FERC ROE complaint proceedings in 2015 compared to 2014 and higher revenue requirements associated with ongoing investments in our transmission infrastructure.

~~Other:~~ ~~Other revenues decreased due primarily to the sale of Eversource's unregulated contracting business on April 13, 2015 ($55 million).~~

~~Purchased Power, Fuel and Transmission~~ expense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These energy supply costs are recovered from customers in rates through reconciling cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission increased in 2015, as compared to 2014, due primarily to the following:

(Millions of Dollars) Increase/(Decrease)
Electric Distribution $ 74.8
Natural Gas Distribution (1.6 )
Electric Transmission 2.8
Other and Eliminations (10.7 )
Total Purchased Power, Fuel and Transmission $ 65.3

The increase in purchased power costs at the electric distribution business was driven by higher prices associated with the procurement of energy supply in 2015, as compared to 2014. The decrease in purchased power costs at the natural gas distribution business was due to lower average natural gas prices in 2015, as compared to 2014.

~~Operations and Maintenance~~ expense includes tracked costs and costs that are part of base electric and natural gas distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance decreased in 2015, as compared to 2014, due primarily to the following:

(Millions of Dollars) Increase/(Decrease)
Base Electric Distribution:
   Resolution of basic service bad debt adder mechanism at NSTAR Electric $ (24.2 )
   Contribution to create clean energy fund in connection with the generation divestiture agreement at PSNH 5.0
   Increase in employee-related expenses, including labor and benefits 1.8
   Other operations and maintenance 7.0
Total Base Electric Distribution (10.4 )
Total Base Natural Gas Distribution (1.5 )
Total Tracked costs (Transmission and Electric and Natural Gas Distribution) (9.3 )
Total Distribution and Transmission (21.2 )
Other and eliminations:
  Integration costs (8.4 )
  Absence of Eversource's unregulated electrical contracting business due to sale in April 2015, net (45.7 )
  Merger-related costs allowed for recovery (7.0 )
  Eversource Parent and Other Companies (16.0 )
Total Operations and Maintenance $ (98.3 )

~~Depreciation~~ increased in 2015, as compared to 2014, due primarily to higher utility plant in service balances resulting from completed construction projects placed into service and an increase in depreciation rates at CL&P as a result of the distribution rate case effective December 1, 2014.

~~Amortization of Regulatory Assets, Net,~~ which are tracked costs, include certain regulatory-approved tracking mechanisms. Fluctuations in these costs are recovered from customers in rates and have no impact on earnings. Amortization of Regulatory Assets, Net, increased in 2015, as compared to 2014, due primarily to the following:

(Millions of Dollars) Increase/(Decrease)
CL&P:
   Amortization increase (including storm cost recovery) approved and included in base distribution rates $ 61.0
   Energy and energy-related supply costs tracking mechanism (108.0 )
NSTAR Electric (primarily the recognition of the Comprehensive Settlement Agreement, partially offset by
  transition costs tracking mechanism)
(6.7 )
PSNH (primarily default energy service charge tracking mechanism) 45.9
WMECO (primarily the absence of the refund of DOE proceeds to customers in 2014 and energy and
  energy-related cost tracking mechanisms)
20.7
Other (1.3 )
Total Amortization of Regulatory Assets, Net $ 11.6

The increase in CL&P's amortization was due primarily to an increase in storm cost recovery, which was approved and included in distribution rates effective December 1, 2014. In connection with the Comprehensive Settlement Agreement associated with the CPSL program filings, NSTAR Electric recognized an $11.7 million benefit in the first quarter of 2015, which was recorded as a reduction to amortization expense.

The remaining fluctuations in amortization expense are driven by the deferral of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. Fluctuations in energy supply and energy-related costs, which are the primary drivers in amortization, are recovered from customers in rates and have no impact on earnings.

~~Energy Efficiency Programs~~, which are tracked costs, increased in 2015, as compared to 2014, due primarily to an increase in energy efficiency costs in accordance with the three-year program guidelines established by the DPU at NSTAR Electric.

~~Taxes Other Than Income Taxes~~ ~~increased in 2015, as compared to 2014, due primarily to an increase in property taxes as a result of both an increase in utility plant balances and property tax rates.~~

~~Interest Expense~~ increased in 2015, as compared to 2014, due primarily to an increase in interest on long-term debt ($9.3 million) as a result of new debt issuances in 2015 and an increase in interest on notes payable ($1.9 million).

~~Other Income, Net~~ increased in 2015, as compared to 2014, due primarily to higher equity AFUDC amounts ($5.1 million) and an increase in interest income related to the deferred compensation plans ($4.3 million), partially offset by the absence in 2015 of a gain on the sale of land recorded in 2014 at CL&P ($4.5 million).

~~Income Tax Expense~~ increased in 2015, as compared to 2014, due primarily to higher pre-tax earnings ($45.7 million), higher state taxes, the impact of adjusting our estimated tax expense to what was filed on our tax return (provision to return), the lower tax benefit in 2015 compared to 2014 from a change in tax reserves ($19.8 million), and higher items that impact our tax rate as a result of regulatory treatment (flow-through items) ($6.2 million).

EARNINGS SUMMARY

Regulated Companies:~~Excluding integration costs, our~~ Our electric distribution segment earnings ~~increased $45.5~~decreased $44.3 million in ~~2015,~~2016, as compared to ~~2014,~~2015. The decrease was due primarily to the ~~impact~~absence in 2016 of ~~the December 1, 2014 CL&P base distribution rate increase, the $27.5 million favorable earnings impact related to~~ the resolution of NSTAR Electric's basic service bad debt adder ~~and~~mechanism recorded in 2015 ($14.5 million), the ~~settlement~~absence in 2016 of the favorable impact associated with the ~~Massachusetts Attorney General on eleven open dockets covering the CPSL program filings~~NSTAR Electric Comprehensive Settlement Agreement recorded in 2015 ($13.0 million), and ~~the recovery of LBR~~higher depreciation expense. In addition, earnings decreased due to higher operations and maintenance expense (primarily related to ~~2009 through 2011 energy efficiency programs~~the absence of a $6.3 million regulatory benefit related to certain uncollectible hardship accounts receivable that was recorded in 2015 at NSTAR Electric, ~~an increase in~~as well as higher storm restoration costs, higher vegetation management costs and the ~~recovery~~write-off of ~~LBR at NSTAR Electric related to 2015 energy efficiency programs,~~software design costs), higher property tax expense, and ~~higher~~lower non-decoupled retail electric sales volumes ~~at NSTAR Electric and PSNH. Partially offsetting these favorable~~due primarily to increased customer energy conservation efforts. These unfavorable earnings impacts were partially offset by increased CL&P distribution revenues primarily as a result of higher ~~effective tax~~ rate base and the absence of a required ROE reduction, as stipulated in ~~2015,~~the PURA 2014 rate case decision, and higher ~~property taxes, higher depreciation expense and a $5 million contribution in 2015 to create a clean energy fund in connection with the PSNH divestiture agreement.~~generation earnings.

Our electric transmission segment earnings increased ~~$9.1~~$66.3 million in ~~2015,~~2016, as compared to ~~2014,~~2015, due primarily to ~~the result of lower reserve charges associated with the FERC ROE complaint proceedings of $12.4 million recorded in 2015, as compared to $22.4 million recorded in 2014, and~~ a higher transmission rate base as a result of an increased ~~investment~~investments in our transmission ~~infrastructure. These favorable earnings impacts were partially offset by a higher effective tax rate~~infrastructure, the FERC-allowed recovery of certain merger-related costs in ~~2015.~~2016 ($16.5 million), and the absence in 2016 of reserve charges in 2015 associated with the FERC ROE complaint proceedings ($12.4 million).

Our natural gas distribution segment earnings increased ~~$0.1~~$5.3 million in ~~2015,~~2016, as compared to ~~2014. Our natural gas~~2015, due primarily to the impact of the NSTAR Gas base distribution ~~segment earnings were favorably impacted by a decrease~~rate increase effective January 1, 2016, the higher return earned on the NSTAR Gas System Enhancement Program ("GSEP") capital tracker mechanism effective in 2016, and lower operations and maintenance ~~costs primarily attributable to lower employee-related expenses, a lower effective tax rate in 2015, and additional natural gas heating customers.~~expense. These favorable earnings impacts were partially offset by ~~a decrease in~~lower non-decoupled firm natural gas sales volumes driven by ~~record warm~~the warmer than normal weather in the ~~fourth~~first quarter of 2016, as compared to the much colder than normal weather in the first quarter of 2015, ~~as compared to 2014,~~ higher ~~depreciation~~property tax expense, and higher ~~property taxes.~~interest expense.

Eversource Parent and Other Companies: ~~Excluding the impact of integration costs,~~ Eversource parent and other companies had earnings of ~~$9.5~~$31.0 million in ~~2015,~~2016, compared with ~~earnings~~a net loss of ~~$11.5~~$5.5 million in ~~2014.~~2015. The earnings ~~decrease~~increase was due primarily to ~~a higher effective~~lower income tax ~~rate at Eversource parent in 2015, as compared to 2014, higher interest~~ expense ~~at Eversource parent~~ as a result of recognizing tax benefits from executive deferred compensation payments, which resulted from the adoption of a new ~~debt issuances~~accounting standard, and the absence in ~~January 2015, and reduced earnings in 2015 from Eversource's unregulated electrical contracting business, which was sold in April 2015. These unfavorable earnings impacts were~~2016 of integration costs, partially offset by ~~a reduction in operations and maintenance costs.~~higher interest expense.

LIQUIDITY

Cash flows provided by operating activities totaled $2.2 billion in 2016, compared with $1.4 billion in ~~2015, compared with $1.6 billion in 2014.~~2015. The ~~decrease~~increase in operating cash flows ~~in 2015 compared to 2014~~ was due primarily to the absence in 2016 of $302 million ~~payment~~in payments made in 2015 to fully satisfy the obligation with the DOE as discussed below, and an increase in purchased power and congestion costs at NSTAR Electric, WMECO and CL&P that will be recovered in future periods. Also contributing to the decrease in operating cash flows were DOE Damages proceeds received from the Yankee Companies of $4.7 million in 2015, compared to $132 million in 2014. Partially offsetting these unfavorable cash flow impacts were a decrease of $49.2 million in Pension and PBOP Plan cash contributions in 2015, as compared to 2014, and lower federal income tax payments of approximately $324 million in 2015, as compared to 2014, primarily due to the extension of the accelerated depreciation deduction.

In late 2015, CL&P and WMECO made payments of $244.6 million and $57.4 million, respectively, to fully satisfy their obligations with the DOE, which were classified as long-term debt on the balance sheets as of December 31, 2014, for costs associated with the disposal of spent nuclear fuel and high-level radioactive waste ~~for all periods prior~~at previously owned generation facilities. In addition, there was an increase of $226.0 million in regulatory recoveries, primarily at NSTAR Electric, due to ~~1983~~$98.1 million of collections from ~~their previous ownership interest~~customers in excess of purchased power costs, the Millstone nuclear power station. CL&P and WMECO divested their ownership interest in Millstone in 2001. These payments included accumulated interest of $178 million and $41.8 million for CL&P and WMECO, respectively. CL&P funded its paymentfavorable impact associated with the ~~issuance of debt, and WMECO liquidated its spent nuclear fuel trust to satisfy its obligation with the DOE.~~

On December ~~18,~~ 2015 ~~the "Protecting Americans from Tax Hikes" Act became law,~~legislation that extended tax bonus depreciation, which ~~extended the accelerated deduction of depreciation to businesses from 2015 through 2019. This extended stimulus provided us with cash flow benefits~~resulted in ~~2016 of approximately $275~~a $145.8 million ~~(including approximately $105 million for CL&P) due to a refund of taxes paid~~decrease in ~~2015 and lower~~income tax payments in 2016, as compared to 2015, and an increase of ~~approximately $300 million.~~$55.2 million of the Yankee Companies' DOE Damages and other proceeds received in 2016, as compared to 2015. Partially offsetting these favorable impacts was the timing of collections and payments related to our working capital items.

RESULTS OF OPERATIONS – THE CONNECTICUT LIGHT AND POWER COMPANY

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P for the years ended December 31, 2016 ~~2015,~~ and ~~2014~~2015 included in this Annual Report on Form 10-K:

~~Comparison of 2016 to 2015:~~



	For the Years Ended December 31,
(Millions of Dollars)	2016		2015		Increase/(Decrease)			Percent
Operating Revenues	$	2,806.0	$	2,802.7	$	3.3		0.1	%
Operating Expenses:
Purchased Power and Transmission	919.7		1,054.3		(134.6		)	(12.8	)
Operations and Maintenance	490.1		487.3		2.8			0.6
Depreciation	230.5		215.3		15.2			7.1
Amortization of Regulatory Assets, Net	38.8		12.3		26.5			(a)
Energy Efficiency Programs	154.0		153.7		0.3			0.2
Taxes Other Than Income Taxes	299.7		268.7		31.0			11.5
Total Operating Expenses	2,132.8		2,191.6		(58.8		)	(2.7	)
Operating Income	673.2		611.1		62.1			10.2
Interest Expense	144.1		145.8		(1.7		)	(1.2	)
Other Income, Net	13.5		11.5		2.0			17.4
Income Before Income Tax Expense	542.6		476.8		65.8			13.8
Income Tax Expense	208.3		177.4		30.9			17.4
Net Income	$	334.3	$	299.4	$	34.9		11.7	%

(a) Percent greater than 100 not shown as it is not meaningful.

Operating Revenues

CL&P's retail sales volumes were as follows:



	For the Years Ended December 31,
	2016	2015	Decrease		Percent
Retail Sales Volumes in GWh	21,617	22,071	(454	)	(2.1	)%

CL&P's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $3.3 million in 2016, as compared to 2015.

Base distribution revenues increased by $30.1 million due to a higher rate base resulting from the 2015 PURA ADIT settlement agreement that is being collected from customers in distribution rates ($26.1 million) and the absence of a required ROE reduction, as stipulated in the PURA 2014 rate case decision, recorded in 2015 ($4 million). This increase was partially offset by the absence of the benefit recognized in 2015 in Operating Revenues due to the PURA ADIT settlement agreement.

Fluctuations in CL&P's sales volumes do not impact the level of base distribution revenue realized or earnings due to the PURA approved revenue decoupling mechanism. CL&P's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($1.059 billion annually) and breaks the relationship between sales volumes and revenues recognized. The revenue decoupling mechanism results in the recovery of approved base distribution revenue requirements.

Fluctuations in the overall level of operating revenues are primarily related to tracked revenues. Tracked revenues consist of certain costs that are recovered from customers in rates through PURA-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs and restructuring and stranded cost recovery revenues. In addition, tracked revenues include certain incentives earned and carrying charges. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($222.4 million) driven by decreased average retail rates and lower sales volumes. Partially offsetting this decrease was an increase in federally mandated congestion charges ($103.0 million) and an increase in competitive transition assessment charges ($31.7 million). In addition, as a result of a change to the amounts collected in the system benefits charge, CL&P's calculated rate base increased, providing an increase to distribution revenues that impacted earnings of $23.2 million.

Transmission revenues increased by $62.7 million due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure and the absence in 2016 of a $12.5 million reserve charge recorded in 2015 associated with the March 2015 FERC ROE order.

Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P's customers. These energy supply costs are recovered from customers in PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense decreased in 2016, as compared to 2015, due primarily to the following:



(Millions of Dollars)	(Decrease)/Increase
Purchased Power Costs	$	(173.1	)
Transmission Costs	38.5
Total Purchased Power and Transmission	$	(134.6	)

Included in purchased power costs are the costs associated with CL&P's GSC and deferred energy supply costs. The GSC recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs in 2016, compared to 2015, was due primarily to a decrease in the price of standard offer supply, as well as lower sales volumes. The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment.

Operations and Maintenance expense increased in 2016, as compared to 2015, driven by a $9.2 million increase in tracked costs, which have no earnings impact, that was primarily attributable to higher transmission expenses, partially offset by a $6.4 million decrease in non-tracked costs, which was primarily attributable to lower employee-related expenses, partially offset by higher storm restoration costs and the write-off of software design costs.

Depreciation increased in 2016, as compared to 2015, due primarily to higher utility plant in service balances.

Amortization of Regulatory Assets, Net expense includes the deferral of energy supply and energy-related costs and the amortization of storm and other costs. Amortization of Regulatory Assets, Net increased in 2016, as compared to 2015, due primarily to the deferral adjustment of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The deferral adjusts expense to match the corresponding revenues. Energy supply and energy-related costs, which are the primary drivers of amortization, are recovered from customers in rates and have no impact on earnings.

Taxes Other Than Income Taxes expense increased in 2016, as compared to 2015, due primarily to an increase in property taxes as a result of both an increase in utility plant balances and an increase in gross earnings taxes. Gross earnings taxes are recovered from customers in rates and have no impact on earnings.

Interest Expense decreased in 2016, as compared to 2015, due primarily to lower deferred regulatory interest expense ($5.0 million) and a decrease in interest expense related to deposits ($1.3 million), partially offset by an increase in interest on long-term debt ($5.1 million).

Income Tax Expense increased in 2016, as compared to 2015, due primarily to higher pre-tax earnings ($23.2 million), higher state taxes ($1.5 million), and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($7.7 million), partially offset by the excess tax benefit due to the adoption of new accounting guidance related to share-based payment transactions ($0.9 million), and the true-up of the return to provision impacts and a lower tax benefit from a reduction in tax reserves ($0.5 million).

EARNINGS SUMMARY

CL&P's earnings increased $34.9 million in 2016, as compared to 2015, due primarily to an increase in transmission earnings driven by a higher transmission rate base, as well as the absence in 2016 of the 2015 FERC ROE complaint proceedings reserve charge, higher distribution revenues as a result of higher rate base and the absence of a required ROE reduction, as stipulated in the PURA 2014 rate case decision, and lower operations and maintenance expense. These favorable earnings impacts were partially offset by higher property and other tax expense, a higher effective tax rate and higher depreciation expense.

LIQUIDITY

Cash totaled $6.6 million as of December 31, 2016, compared with $1.1 million as of December 31, 2015.

Eversource parent, and certain of its subsidiaries, including CL&P, are parties to a five-year $1.45 billion revolving credit facility. Effective September 26, 2016, the revolving credit facility's termination date was extended for one additional year to September 4, 2021. There were no borrowings outstanding on the revolving credit facility as of December 31, 2016 or 2015.

In 2016, CL&P had cash flows provided by operating activities of $811.5 million, compared with $298.3 million in 2015. The increase in operating cash flows was due primarily to the absence in 2016 of ~~approximately~~ $244.6 million in payments made in 2015 to fully satisfy the pre-1983 spent nuclear fuel obligation with the DOE, and the favorable impact associated with the December 2015 legislation that extended tax bonus depreciation, which resulted in income tax refunds of $73.9 million received in 2016, as compared to income tax payments of $55.2 million made in 2015. Also contributing to the favorable impact was an increase in distribution rates due to higher rate base and the timing of collections and payments related to our working capital items, including accounts receivable and accounts payable. Partially offsetting these impacts was the timing of regulatory recoveries primarily related to energy efficiency program costs.

Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. CL&P's investments totaled $612.0 million in 2016, compared with $523.8 million in 2015.

Financing activities in 2016 included $199.6 million in common stock dividends paid to Eversource parent.

~~RESULTS OF OPERATIONS – THE CONNECTICUT LIGHT AND POWER COMPANY~~

~~Comparison of 2015 to 2014:~~

For the Years Ended December 31,
(Millions of Dollars) 2015 2014 Increase/(Decrease) Percent
Operating Revenues $ 2,802.7
$ 2,692.6
$ 110.1
4.1 %
Operating Expenses:

Purchased Power and Transmission 1,054.3
982.9
71.4
7.3
Operations and Maintenance 487.3
494.6
(7.3 ) (1.5 )
Depreciation 215.3
188.8
26.5
14.0
Amortization of Regulatory Assets, Net 12.3
59.3
(47.0 ) (79.3 )
Energy Efficiency Programs 153.7
156.3
(2.6 ) (1.7 )
Taxes Other Than Income Taxes 268.7
255.4
13.3
5.2
Total Operating Expenses 2,191.6
2,137.3
54.3
2.5
Operating Income 611.1
555.3
55.8
10.0
Interest Expense 145.8
147.4
(1.6 ) (1.1 )
Other Income, Net 11.5
13.4
(1.9 ) (14.2 )
Income Before Income Tax Expense 476.8
421.3
55.5
13.2
Income Tax Expense 177.4
133.5
43.9
32.9
Net Income $ 299.4
$ 287.8
$ 11.6
4.0 %

~~Operating Revenues~~

~~CL&P's retail sales volumes were as follows:~~

For the Years Ended December 31,
2015 2014 Increase Percent
Retail Sales Volumes in GWh 22,071
22,046
25
0.1 %

~~Operating Revenues~~

~~CL&P's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $110.1 million in the aggregate in 2015 compared to 2014.~~

~~Base distribution revenues:~~ Base distribution revenues increased $136.3 million due to a base distribution rate increase effective December 1, 2014. In addition, CL&P recognized $19.9 million in Operating Revenues due to the PURA-approved settlement agreement regarding ADIT. The $19.9 million represents the revenue requirement from the settlement agreement's rate increase through December 31, 2015, and is being collected from customers in rates over a 24-month period beginning December 1, 2015.

Effective December 1, 2014, CL&P's distribution revenues were decoupled from its sales volumes. As a result, CL&P no longer earns LBR related to its energy efficiency programs. The revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($1.059 billion annually effective December 1, 2014) and breaks the relationship between sales volumes and revenues recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements. Therefore, changes in sales volumes had no impact on the level of base distribution revenue realized in 2015 and prospectively.

~~Tracked revenues:~~ Tracked revenues consist of certain costs that are recovered from customers in rates through PURA-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs and restructuring and stranded cost recovery revenues. Tracked distribution revenues decreased primarily as a result of a decrease in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecovery ($103.9 million) and a decrease in competitive transition assessment charges ($17 million), partially offset by an increase in energy supply costs ($51.1 million) driven by increased average retail rates, and an increase in retail transmission charges ($22.7 million).

Transmission revenues increased $5.8 million due primarily to the result of lower reserves associated with the FERC ROE complaint proceedings recorded in 2015 as compared to 2014, and higher revenue requirements associated with ongoing investments in our transmission infrastructure.

~~Purchased Power and Transmission~~ expense includes costs associated with purchasing electricity on behalf of CL&P's customers. These energy supply costs are recovered from customers in PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission increased in 2015, as compared to 2014, due primarily to the following:

(Millions of Dollars) Increase/(Decrease)
Purchased Power Costs $ 54.6
Transmission Costs 17.8
Other (1.0 )
Total Purchased Power and Transmission $ 71.4

Included in purchased power are the costs associated with CL&P's GSC and deferred energy supply costs. The GSC recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to third party suppliers. The increase in purchased power was due primarily to higher prices associated with the procurement of energy supply related to standard offer from third party suppliers. The increase in transmission costs was primarily the result of higher Local Network Service (LNS) expenses, which are included in the retail transmission cost deferral.

~~Depreciation~~ increased in 2015, as compared to 2014, due primarily to an increase in depreciation rates as a result of the distribution rate case decision that was effective December 1, 2014 and higher utility plant in service balances.

~~Amortization of Regulatory Assets, Net~~ decreased in 2015, as compared to 2014, due primarily to a decrease in the deferral of energy supply and energy-related costs that can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs ($108 million decrease in 2015 compared to 2014), partially offset by an increase in storm cost recovery and other cost recovery approved and included in distribution rates effective December 1, 2014 ($61 million increase in 2015 compared to 2014). Fluctuations in energy supply and energy-related costs, which are the primary drivers in amortization, are recovered from customers in rates and have no impact on earnings.

~~Energy Efficiency Programs~~, which are tracked costs, decreased in 2015, as compared to 2014, due primarily to a decrease in the deferral, which reflects the actual costs of energy efficiency programs compared to estimated amounts billed to customers. CL&P is allowed to recover its costs for various state energy policy initiatives and expanded energy efficiency programs.

~~Other Income, Net~~ decreased in 2015, as compared to 2014, due primarily to the absence in 2015 of a gain on the sale of land recorded in 2014 ($4.5 million), partially offset by higher equity AFUDC amounts ($2.3 million).

~~Income Tax Expense~~ increased in 2015, as compared to 2014, due primarily to higher pre-tax earnings ($19.4 million), higher state income taxes, the impact of adjusting estimated tax expense to what was filed on our tax return (provision to return), the lower tax benefit in 2015 compared to 2014 from a change in tax reserves ($17.3 million), and higher items that impact our tax rate as a result of regulatory treatment (flow-through items) ($7.2 million).

~~EARNINGS SUMMARY~~

CL&P's earnings increased $11.6 million in 2015, as compared to 2014, driven by higher distribution revenues due primarily to the impact of the December 1, 2014 base distribution rate increase and the PURA-approved settlement agreement. In addition, earnings increased due to lower operations and maintenance costs, which were primarily attributable to lower employee-related expenses, and lower reserves associated with the FERC ROE complaint proceedings recorded in 2015 compared to 2014. These favorable earnings impacts were partially offset by higher income tax expense as a result of lower tax benefits available for utilization in 2015, higher property taxes and the absence of a gain on the sale of land recorded in 2014.

~~LIQUIDITY~~

In 2015, CL&P had cash flows provided by operating activities of $298.3 million, compared with $612.4 million in 2014. The decrease in operating cash flows was due primarily to the approximate $245 million in payments made to fully satisfy the pre-1983 spent nuclear fuel obligation with the DOE. Also contributing to the decrease in operating cash flows were DOE Damages proceeds received from the Yankee Companies of $2.3 million in 2015, compared to $68.6 million in 2014.

In late 2015, CL&P made a payment of $244.6 million to fully satisfy its obligation with the DOE, which was classified as long-term debt on the balance sheet as of December 31, 2014, for costs associated with the disposal of spent nuclear fuel and high-level radioactive waste for all periods prior to 1983 from its previous ownership interest in the Millstone nuclear power station. CL&P divested its ownership interest in Millstone in 2001. This payment included accumulated interest of $178 million. CL&P funded its payment with the issuance of debt.

On December 18, 2015, the "Protecting Americans from Tax Hikes" Act became law, which extended the accelerated deduction of depreciation to businesses from 2015 through 2019. This extended stimulus provided CL&P with cash flow benefits in 2016 of approximately $105 million due to a refund of taxes paid in 2015 and lower tax payments in 2016.

Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. CL&P's investments totaled $523.8 million in 2015, compared with $515.7 million in 2014.

On October 26, 2015, Eversource parent and certain of its subsidiaries, including CL&P, amended and restated their joint $1.45 billion revolving credit facility and the termination date was extended to September 4, 2020. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. The commercial paper program allows ES parent to issue commercial paper as a form of short-term debt with intercompany loans to certain subsidiaries, including CL&P. As of December 31, 2015 and 2014, there were intercompany loans from Eversource parent of $277.4 million and $133.4 million, respectively, to CL&P.

On May 20, 2015 and December 1, 2015, CL&P issued $300 million and $50 million, respectively, of 4.15 percent 2015 Series A First and Refunding Mortgage Bonds due to mature in 2045. The proceeds, net of issuance costs, were used to repay short-term borrowings.

On April 1, 2015, CL&P repaid at maturity the $100 million 5.00 percent 2005 Series A First and Refunding Mortgage Bonds using short-term borrowings and also redeemed the $62 million 1996A Series 1.55 percent PCRBs that were subject to mandatory tender, using short term borrowings.

~~Financing activities in 2015 included $196 million in common stock dividends paid to Eversource parent.~~

~~RESULTS OF OPERATIONS – NSTAR ELECTRIC COMPANY AND SUBSIDIARY~~

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for NSTAR Electric for the years ended December 31, 2016 and 2015 included in this Annual Report on Form 10-K:

For the Years Ended December 31,
(Millions of Dollars) 2016 2015 Increase/(Decrease) Percent
Operating Revenues $ 2,557.9
$ 2,681.3
$ (123.4 ) (4.6 )%
Operating Expenses:

Purchased Power and Transmission 953.4
1,190.2
(236.8 ) (19.9 )
Operations and Maintenance 393.2
306.5
86.7
28.3
Depreciation 213.1
196.8
16.3
8.3
Amortization of Regulatory Assets/(Liabilities), Net 30.1
(13.0 ) 43.1
(a)
Energy Efficiency Programs 277.6
224.8
52.8
23.5
Taxes Other Than Income Taxes 136.7
133.2
3.5
2.6
Total Operating Expenses 2,004.1
2,038.5
(34.4 ) (1.7 )
Operating Income 553.8
642.8
(89.0 ) (13.8 )
Interest Expense 84.0
75.4
8.6
11.4
Other Income, Net 10.7
5.1
5.6
(a)
Income Before Income Tax Expense 480.5
572.5
(92.0 ) (16.1 )
Income Tax Expense 187.8
228.0
(40.2 ) (17.6 )
Net Income $ 292.7
$ 344.5
$ (51.8 ) (15.0 )%

~~(a) Percent greater than 100 percent not shown as it is not meaningful.~~

~~Operating Revenues~~

~~NSTAR Electric's retail sales volumes were as follows:~~

For the Years Ended December 31,
2016 2015 Decrease Percent
Retail Sales Volumes in GWh 20,619
21,055
(436 ) (2.1 )%

~~NSTAR Electric's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $123.4 million in 2016, as compared to 2015.~~

~~Base distribution revenues~~: Base distribution revenues, excluding LBR, decreased $13.4 million in 2016, as compared to 2015, driven by a 2.1 percent decrease in sales volumes due primarily to increased customer energy conservation efforts, including those resulting from company-sponsored energy efficiency programs. NSTAR Electric is allowed to recover LBR related to reductions in sales volumes as a result of successful energy efficiency programs.

Also contributing to the decrease in operating revenues in 2016 was the absence of an $11 million benefit recorded in 2015 related to the Comprehensive Settlement Agreement associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs.

~~Tracked revenues:~~ Tracked revenues consist of certain costs that are recovered from customers in rates through DPU-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply costs, retail transmission charges, energy efficiency program costs, net metering for distributed generation and transition cost recovery revenues. In addition, tracked revenues include certain incentives earned and carrying charges. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($332.4 million) driven by decreased average retail rates and lower sales volumes. Partially offsetting this decrease was an increase in retail transmission charges ($67.9 million), an increase in cost recovery related to energy efficiency programs ($53.2 million), an increase in net metering revenues ($30.2 million) and an increase in transition cost recovery revenues ($20 million).

Transmission revenues increased by $38.7 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure and the absence in 2016 of a $2.4 million reserve charge recorded in 2015 associated with the March 2015 FERC ROE order.

~~Purchased Power and Transmission~~ expense includes costs associated with purchasing electricity on behalf of NSTAR Electric's customers. These energy supply costs are recovered from customers in DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense decreased in 2016, as compared to 2015, due primarily to the following:

(Millions of Dollars) (Decrease)/Increase
Purchased Power Costs $ (339.7 )
Transmission Costs 102.9
Total Purchased Power and Transmission $ (236.8 )

Included in purchased power costs are the costs associated with NSTAR Electric's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs was due primarily to lower prices associated with the procurement of energy supply and lower sales volumes. The increase in transmission costs was primarily the result of an increase in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers. The increase in transmission costs was also driven by costs billed by ISO-NE that support regional grid investment.

~~Operations and Maintenance~~ expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased in 2016, as compared to 2015, driven by a $59.9 million increase in non-tracked costs, which was primarily attributable to the absence in 2016 of the resolution of the basic service bad debt adder mechanism recorded in 2015 ($24.2 million), higher bad debt expense due primarily to the absence of a regulatory benefit related to certain uncollectible hardship accounts receivable that was recorded in 2015, higher vegetation management expense, and higher storm restoration costs. Additionally, there was a $26.8 million increase in tracked costs, which have no earnings impact, that was primarily attributable to higher employee-related expenses due to increased current year collections of a prior year pension and PBOP costs underrecovery and higher bad debt expense.

~~Depreciation~~ ~~increased in 2016, as compared to 2015, due primarily to higher utility plant in service balances.~~

~~Amortization of Regulatory Assets/(Liabilities), Net,~~ reflects the absence in 2016 of an $11.7 million benefit recognized in the first quarter of 2015 related to the Comprehensive Settlement Agreement, and the deferral adjustment of certain costs that exceeded billed revenues in 2016 as compared to 2015. The deferral adjusts expense to match the corresponding revenues. These deferred costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs, are recovered from customers in rates and have no impact on earnings.

~~Energy Efficiency Programs~~, expense increased in 2016, as compared to 2015, due primarily the deferral adjustments, which reflects the actual costs of energy efficiency programs compared to the amount billed to customers and the timing of the recovery of energy efficiency costs incurred in accordance with the three-year program guidelines established by the DPU. The deferral adjusts expense to match the energy efficiency programs revenue. The costs for state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.

~~Taxes Other Than Income Taxes~~ ~~expense increased in 2016, as compared to 2015, due primarily to an increase in property taxes as a result of an increase in utility plant balances.~~

~~Interest Expense~~ increased in 2016, as compared to 2015, due primarily to an increase in interest on long-term debt ($10.6 million), partially offset by a decrease in regulatory deferrals which decreased interest expense ($1.8 million).

~~Other Income, Net~~ ~~increased in 2016, as compared to 2015, due primarily to higher AFUDC on equity funds ($5.8 million).~~

~~Income Tax Expense~~ decreased in 2016, as compared to 2015, due primarily to lower pre-tax earnings ($32.5 million), lower state taxes ($5.6 million), items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.1 million), and the excess tax benefit due to the adoption of new accounting guidance related to share based payment transactions ($1 million).

~~EARNINGS SUMMARY~~

NSTAR Electric's earnings decreased $51.8 million in 2016, as compared to 2015, due primarily to the absence in 2016 of both the 2015 resolution of the basic service bad debt adder mechanism ($14.5 million) and the 2015 favorable impact associated with the Comprehensive Settlement Agreement ($13 million), the absence of a regulatory benefit related to certain uncollectible hardship accounts receivable that was recorded in the fourth quarter of 2015, higher operations and maintenance expense, lower retail sales volumes and higher depreciation expense. These unfavorable earnings impacts were partially offset by an increase in transmission earnings, which was driven by a higher transmission rate base as well as the absence in 2016 of the 2015 FERC ROE complaint proceedings reserve charge.

~~LIQUIDITY~~

NSTAR Electric had cash flows provided by operating activities of $641.4 million in 2016, as compared to $657.0 million in 2015. The decrease in operating cash flows was due primarily to income tax payments of $80.7 million made in 2016, compared to income tax refunds of $19.8 million received in 2015, changes related to working capital items, including the timing of accounts payable payments and the collections of accounts receivable, and an increase in 2016 of $27.4 million in Pension and PBOP Plan cash contributions. Partially offsetting these impacts was an increase in regulatory recoveries due to collections from customers in excess of purchased power costs and energy efficiency programs.

NSTAR Electric has a $450.0 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of December 31, 2016 and 2015, NSTAR Electric had $126.5 million and $62.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $323.5 million and $387.5 million of available borrowing capacity as of December 31, 2016 and 2015, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 and 2015 was 0.71 percent and 0.40 percent, respectively. NSTAR Electric is a party to a five-year $450.0 million revolving credit facility. Effective September 26, 2016, the revolving credit facility's termination date was extended for one additional year to September 4, 2021. The revolving credit facility serves to backstop NSTAR Electric's $450.0 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, 2016 or 2015.

~~RESULTS OF OPERATIONS – PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY~~

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for PSNH for the years ended December 31, 2016 and 2015 included in this Annual Report on Form 10-K:

For the Years Ended December 31,
(Millions of Dollars) 2016 2015 Increase/(Decrease) Percent
Operating Revenues $ 959.5
$ 972.2
$ (12.7 ) (1.3 )%
Operating Expenses:

Purchased Power, Fuel and Transmission 210.8
247.7
(36.9 ) (14.9 )
Operations and Maintenance 260.8
276.5
(15.7 ) (5.7 )
Depreciation 116.5
105.4
11.1
10.5
Amortization of Regulatory Assets, Net 11.2
16.3
(5.1 ) (31.3 )
Energy Efficiency Programs 14.2
14.3
(0.1 ) (0.7 )
Taxes Other Than Income Taxes 82.9
81.8
1.1
1.3
Total Operating Expenses 696.4
742.0
(45.6 ) (6.1 )
Operating Income 263.1
230.2
32.9
14.3
Interest Expense 50.0
46.0
4.0
8.7
Other Income, Net 1.2
3.3
(2.1 ) (63.6 )
Income Before Income Tax Expense 214.3
187.5
26.8
14.3
Income Tax Expense 82.3
73.1
9.2
12.6
Net Income $ 132.0
$ 114.4
$ 17.6
15.4 %

~~Operating Revenues~~

~~PSNH's retail sales volumes were as follows:~~

For the Years Ended December 31,
2016 2015 Decrease Percent
Retail Sales Volumes in GWh 7,860
7,927
(67 ) (0.8 )%

~~PSNH's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $12.7 million in 2016, as compared to 2015.~~

~~Base distribution revenues~~: Base distribution revenues increased $3.3 million due primarily to a $5.3 million increase as a result of distribution rate increases effective July 1, 2015 and July 1, 2016. Partially offsetting this increase was a 0.8 percent decrease in sales volumes due primarily to increased customer energy conservation efforts, including those resulting from company-sponsored energy efficiency programs.

~~Tracked revenues:~~ Tracked revenues consist of certain costs that are recovered from customers in rates through NHPUC-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply costs and costs associated with the generation of electricity for customers, retail transmission charges, energy efficiency program costs and stranded cost recovery revenues. In addition, tracked revenues include certain incentives earned and carrying charges. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs and a reduction in wholesale generation revenues in 2016, as compared to 2015 ($36.5 million), driven by lower sales volumes. Stranded cost recovery charges decreased by $7.7 million in 2016, as compared to 2015. In addition, PSNH's generation rate base increased, which provided an increase to generation revenues that impacted earnings of $6.9 million.

Transmission revenues increased by $23.8 million due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure and the absence in 2016 of a $1 million reserve charge recorded in 2015 associated with the March 2015 FERC ROE order.

~~Purchased Power, Fuel and Transmission~~ expense includes costs associated with PSNH's generation of electricity as well as purchasing electricity on behalf of its customers. These generation and energy supply costs are recovered from customers in NHPUC-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense decreased in 2016, as compared to 2015, due primarily to the following:

(Millions of Dollars) (Decrease)/Increase
Purchased Power and Generation Fuel Costs $ (56.2 )
Transmission Costs 19.3
Total Purchased Power, Fuel and Transmission $ (36.9 )

In order to meet the demand of customers who have not migrated to third party suppliers, PSNH procures power through power supply contracts and spot purchases in the competitive New England wholesale power market and/or produces power through its own generation. The decrease in purchased power and generation fuel costs was due primarily to a decrease in the amount of electricity generated by PSNH facilities. The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment.

~~Operations and Maintenance~~ expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased in 2016, as compared to 2015, driven by an $11.9 million decrease in non-tracked costs that was primarily attributable to lower employee-related expenses and the absence in 2016 of a $5 million contribution recorded in 2015 to create a clean energy fund in connection with the generation divestiture agreement. Additionally, there was a $3.8 million decrease in tracked costs, which have no earnings impact, that was primarily attributable to lower contractor costs due to the timing of planned outages at PSNH's generation facilities, and lower employee-related expenses, partially offset by higher transmission expenses.

~~Depreciation~~ ~~expense increased in 2016, as compared to 2015, due primarily to higher utility plant in service balances.~~

~~Amortization of Regulatory Assets, Net~~ expense includes the deferral to expense of energy supply costs and the amortization of certain costs, which are recovered from customers in rates and have no impact on earnings. The decrease in 2016, as compared to 2015, was due primarily to the deferral adjustment of the stranded cost recovery charge. The deferral adjusts expense to match the corresponding revenues.

~~Taxes Other Than Income Taxes~~ ~~expense increased in 2016, as compared to 2015, due primarily to an increase in property taxes as a result of an increase in utility plant balances.~~

~~Interest Expense~~ ~~increased in 2016, as compared to 2015 due primarily to an increase in regulatory deferrals which increased interest expense.~~

~~Other Income, Net~~ ~~decreased in 2016, as compared to 2015, due primarily to a decrease in gains related to deferred compensation plans ($1.0 million) and lower AFUDC on equity funds ($0.9 million).~~

~~Income Tax Expense~~ increased in 2016, as compared to 2015, due primarily to higher pre-tax earnings ($9.3 million) and higher state taxes ($1.1 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.8 million), and the excess tax benefit due to the adoption of new accounting guidance related to share based payment transactions ($0.4 million).

~~EARNINGS SUMMARY~~

PSNH's earnings increased $17.6 million in 2016, as compared to 2015, due primarily to an increase in transmission earnings, which was driven by a higher transmission rate base as well as the absence in 2016 of the 2015 FERC ROE complaint proceedings reserve charge, higher generation earnings, lower operations and maintenance expense, and the impact of the distribution rate increases effective July 1, 2015 and July 1, 2016. These favorable earnings impacts were partially offset by higher depreciation expense, higher property tax expense, and lower retail sales volumes.

~~LIQUIDITY~~

PSNH had cash flows provided by operating activities of $361.8 million in 2016, as compared to $274.5 million in 2015. The increase in operating cash flows was due primarily to the income tax refunds of $36.0 million received in 2016, compared to income tax payments of $14.4 million made in 2015, as well as rate increases effective in 2016. In addition, there was a favorable impact due to the timing of payments related to our accounts payable and other working capital items. Partially offsetting these favorable impacts were an increase in Pension and PBOP Plan cash contributions of $16.1 million and timing of collections related to accounts receivable.

~~RESULTS OF OPERATIONS – WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for WMECO for the years ended December 31, 2016 and 2015 included in this Annual Report on Form 10-K:

For the Years Ended December 31,
(Millions of Dollars) 2016 2015 Increase/(Decrease) Percent
Operating Revenues $ 484.2
$ 518.1
$ (33.9 ) (6.5 )%
Operating Expenses:

Purchased Power and Transmission 131.4
177.2
(45.8 ) (25.8 )
Operations and Maintenance 96.7
86.3
10.4
12.1
Depreciation 46.1
43.4
2.7
6.2
Amortization of Regulatory Assets/(Liabilities), Net 4.2
14.5
(10.3 ) (71.0 )
Energy Efficiency Programs 44.2
42.9
1.3
3.0
Taxes Other Than Income Taxes 41.2
38.3
2.9
7.6
Total Operating Expenses 363.8
402.6
(38.8 ) (9.6 )
Operating Income 120.4
115.5
4.9
4.2
Interest Expense 24.4
24.7
(0.3 ) (1.2 )
Other Income, Net 0.1
2.7
(2.6 ) (96.3 )
Income Before Income Tax Expense 96.1
93.5
2.6
2.8
Income Tax Expense 38.0
37.0
1.0
2.7
Net Income $ 58.1
$ 56.5
$ 1.6
2.8 %

~~Operating Revenues~~

~~WMECO's retail sales volumes were as follows:~~

For the Years Ended December 31,
2016 2015 Decrease Percent
Retail Sales Volumes in GWh 3,546
3,563
(17 ) (0.5 )%

~~WMECO's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $33.9 million in 2016, as compared to 2015.~~

Fluctuations in WMECO's sales volumes do not impact the level of base distribution revenue realized or earnings due to the DPU approved revenue decoupling mechanism. WMECO's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($132.4 million annually) and breaks the relationship between sales volumes and revenues recognized. The revenue decoupling mechanism results in the recovery of approved base distribution revenue requirements.

Transmission revenues increased by $15.6 million due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure and the absence in 2016 of a $4.1 million reserve charge recorded in 2015 associated with the March 2015 FERC ROE order.

~~Purchased Power and Transmission~~ expense includes costs associated with the purchasing of energy supply on behalf of WMECO's customers. These energy supply costs are recovered from customers in DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense decreased in 2016, as compared to 2015, due primarily to the following:

(Millions of Dollars) (Decrease)/Increase
Purchased Power Costs $ (55.2 )
Transmission Costs 9.4
Total Purchased Power and Transmission $ (45.8 )

Included in purchased power costs are the costs associated with WMECO's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs was due primarily to lower prices associated with the procurement of energy supply and lower sales volumes. The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment.

~~Depreciation~~ ~~expense increased in 2016, as compared to 2015, due primarily to higher utility plant in service balances.~~

~~Amortization of Regulatory Assets/(Liabilities), Net~~ ~~expense decreased in 2016 as compared to 2015, due to the timing of refunds or recovery of tracked costs, which are recovered from customers in rates and have no impact on earnings.~~

~~Energy Efficiency Programs~~ expense increased in 2016, as compared to 2015, due primarily to the deferral adjustments, which reflect the actual costs of energy efficiency programs compared to the amount billed to customers and the timing of the recovery of energy efficiency costs incurred in accordance with the three-year program guidelines established by the DPU. The deferral adjusts expense to match the energy efficiency programs revenue. The costs for state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.

~~Taxes Other Than Income Taxes~~ ~~expense increased in 2016, as compared 2015, due primarily to an increase in property taxes as a result of an increase in utility plant balances.~~

~~Other Income, Net~~ ~~decreased in 2016, as compared to 2015, due primarily to lower AFUDC on equity funds ($1.7 million) and a decrease in net gains related to the deferred compensation plans ($0.7 million).~~

~~Income Tax Expense~~ increased in 2016, as compared to 2015, due primarily to higher pre-tax earnings ($1.0 million) and various other items ($0.2 million), partially offset by the excess tax benefit due to the adoption of new accounting guidance related to share based payment transactions ($0.2 million).

~~EARNINGS SUMMARY~~

WMECO's earnings increased $1.6 million in 2016, as compared to 2015, due primarily to an increase in transmission earnings, which was driven by the absence in 2016 of the 2015 FERC ROE complaint proceedings reserve charge as well as a higher transmission rate base, and lower interest expense on long-term debt. These favorable earnings impacts were partially offset by higher operations and maintenance expense, higher property and other taxes expense, and higher depreciation expense.

~~LIQUIDITY~~

WMECO had cash flows provided by operating activities of $167.3 million in 2016, as compared to $43.0 million in 2015. The increase in operating cash flows was due primarily to the absence in 2016 of a $57.4 million payment made in 2015 from WMECO's spent nuclear fuel trust to fully satisfy the pre-1983 spent nuclear fuel obligation with the DOE, and income tax refunds of $14.7 million in 2016, compared to income tax payments of $14.7 million in 2015. In addition, the timing of regulatory recoveries, the receipt of $3.6 million in DOE Damages proceeds received from the Yankee Companies, and the timing of working capital items all had a favorable impact on operating cash flows in 2016, as compared to 2015.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market Risk Information

Commodity Price Risk Management: Our ~~Regulated~~regulated companies enter into energy contracts to serve our customers and the economic impacts of those contracts are passed on to our customers. Accordingly, the ~~Regulated~~regulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments. Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all ~~large scale~~large-scale energy related transactions entered into by its ~~Regulated~~regulated companies.

Other Risk Management Activities

We have an Enterprise Risk Management (ERM) program for identifying the principal risks of the Company. Our ERM program involves the application of a well-defined, enterprise-wide methodology designed to allow our Risk Committee, comprised of our senior officers and directors of the Company, to identify, categorize, prioritize, and mitigate the principal risks to the Company. The ERM program is integrated with other assurance functions throughout the Company including Compliance, Auditing, and Insurance to ensure appropriate coverage of risks that could impact the Company. In addition to known risks, ERM identifies emerging risks to the Company, through participation in industry groups, discussions with management and in consultation with outside advisers. Our management then analyzes risks to determine materiality, likelihood and impact, and develops mitigation strategies. Management broadly considers our business model, the utility industry, the global economy and the current environment to identify risks. The Finance Committee of the Board of Trustees is responsible for oversight of the Company's ERM program and enterprise-wide risks as well as specific risks associated with insurance, credit, financing, investments, pensions and overall system security including cyber security. The findings of the ERM process are periodically discussed with the Finance Committee of our Board of Trustees, as well as with other Board Committees or the full Board of Trustees, as appropriate, including reporting on how these issues are being measured and managed. However, there can be no assurances that the Enterprise Risk Management process will identify or manage every risk or event that could impact our financial position, results of operations or cash flows.

Interest Rate Risk Management: We manage our interest rate risk exposure in accordance with our written policies and procedures by maintaining a mix of fixed and variable rate long-term debt. As of December 31, ~~2016,~~2017, approximately 9798 percent of our long-term debt, including fees and interest due for CYAPC's spent nuclear fuel disposal costs, was at a fixed interest rate. The remaining long-term debt is at variable interest rates and is subject to interest rate risk that could result in earnings volatility. Assuming a one percentage point increase in our variable interest rates, annual interest expense would have increased by a pre-tax amount of $2.7 million.

Credit Risk Management: Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties pursuant to the terms of our contractual obligations. We serve a wide variety of customers and transact with suppliers that include IPPs, industrial companies, natural gas and electric utilities, oil and gas producers, financial institutions, and other energy marketers. Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts. This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.

Our ~~Regulated~~regulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our ~~Regulated~~regulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contracting risks, including credit risk. As of December 31, ~~2016,~~2017, our ~~Regulated~~regulated companies did not hold collateral (letters of credit) from counterparties related to our standard service contracts. As of December 31, ~~2016,~~2017, Eversource had ~~$21.7~~$24.5 million of cash posted with ISO-NE related to energy transactions.

For further information on cash collateral deposited and posted with counterparties, see Note ~~1G,~~1H, "Summary of Significant Accounting Policies - Deposits,~~" and Note 4, "Derivative Instruments,~~" to the financial statements.

If the respective unsecured debt ratings of Eversource or its subsidiaries were reduced to below investment grade by either Moody's or S&P, certain of Eversource's contracts would require additional collateral in the form of cash to be provided to counterparties and independent system operators. Eversource would have been and remains able to provide that collateral.

Item 8. Financial Statements and Supplementary Data



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

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

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

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

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

Company Report on Internal Controls Over Financial Reporting

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, ~~2016.~~2017.

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

February ~~22, 2017~~23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Eversource Energy:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Eversource Energy and subsidiaries (the ~~"Company"~~“Company”) as of December 31, ~~2016~~2017 and ~~2015, and~~2016, the related consolidated statements of income, comprehensive income, common ~~shareholders'~~shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the ~~financial statement~~related notes and the schedules listed in the Index at Item 15 of Part ~~IV.~~IV (collectively referred to as the “financial statements”). We also have audited the ~~Company's~~Company’s internal control over financial reporting as of December 31, ~~2016,~~2017, based on criteria established in Internal Control -Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway ~~Commission.~~ Commission (COSO).

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

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

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

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

Basis for Opinions

The ~~Company's~~Company’s management is responsible for these financial statements, ~~and financial statement schedules,~~ for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Company Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and ~~financial statement schedules and~~ an opinion on the ~~Company's~~Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A ~~company's~~company’s internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A ~~company's~~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~~company’s assets that could have a material effect on the financial statements.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eversource Energy and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in ~~Internal Control~~ -~~Integrated Framework (2013)~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission.~~

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February ~~22, 2017~~23, 2018

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of December 31,						As of December 31,
(Thousands of Dollars)	2016			2015			2017			2016

ASSETS
Current Assets:
Cash and Cash Equivalents	$	30,251		$	23,947		$	38,165		$	30,251
Receivables, Net	847,301			775,480			925,083			847,301
Unbilled Revenues	168,490			202,647			201,361			168,490
Taxes Receivable	80,471			305,359
Fuel, Materials, Supplies and Inventory	328,721			336,476			223,063			328,721
Regulatory Assets	887,625			845,843			741,868			887,625
Prepayments and Other Current Assets	134,813			129,034			138,009			215,284
Assets Held for Sale							219,550			—
Total Current Assets	2,477,672			2,618,786			2,487,099			2,477,672

Property, Plant and Equipment, Net	21,350,510			19,892,441			23,617,463			21,350,510

Deferred Debits and Other Assets:
Regulatory Assets	3,638,688			3,737,960			4,497,447			3,638,688
Goodwill	3,519,401			3,519,401			4,427,266			3,519,401
Marketable Securities	544,642			516,478			585,419			544,642
Other Long-Term Assets	522,260			295,243			605,692			522,260
Total Deferred Debits and Other Assets	8,224,991			8,069,082			10,115,824			8,224,991

Total Assets	$	32,053,173		$	30,580,309		$	36,220,386		$	32,053,173

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	1,148,500		$	1,160,953		$	1,088,087		$	1,148,500
Long-Term Debt – Current Portion	773,883			228,883			549,631			773,883
Accounts Payable	884,521			813,646			1,085,034			884,521
Regulatory Liabilities	146,787			107,759			128,071			146,787
Other Current Liabilities	684,914			678,549			738,222			684,914
Total Current Liabilities	3,638,605			2,989,790			3,589,045			3,638,605

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	5,607,207			5,147,678			3,297,518			5,607,207
Regulatory Liabilities	702,255			513,595			3,637,273			702,255
Derivative Liabilities	413,676			337,102			377,257			413,676
Accrued Pension, SERP and PBOP	1,141,514			1,407,288			1,228,091			1,141,514
Other Long-Term Liabilities	853,260			871,499			1,073,501			853,260
Total Deferred Credits and Other Liabilities	8,717,912			8,277,162			9,613,640			8,717,912

Capitalization:
Long-Term Debt	8,829,354			8,805,574			11,775,889			8,829,354

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

Equity:
Common Shareholders' Equity:
Common Shares	1,669,392			1,669,313			1,669,392			1,669,392
Capital Surplus, Paid In	6,250,224			6,262,368			6,239,940			6,250,224
Retained Earnings	3,175,171			2,797,355			3,561,084			3,175,171
Accumulated Other Comprehensive Loss	(65,282		)	(66,844		)	(66,403		)	(65,282		)
Treasury Stock	(317,771		)	(309,977		)	(317,771		)	(317,771		)
Common Shareholders' Equity	10,711,734			10,352,215			11,086,242			10,711,734
Total Capitalization	19,696,656			19,313,357			23,017,701			19,696,656

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	32,053,173		$	30,580,309		$	36,220,386		$	32,053,173

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	For the Years Ended December 31,						For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)	2016		2015		2014		2017		2016		2015

Operating Revenues	$	7,639,129	$	7,954,827	$	7,741,856	$	7,751,952	$	7,639,129	$	7,954,827

Operating Expenses:
Purchased Power, Fuel and Transmission	2,500,828		3,086,905		3,021,550		2,535,271		2,500,828		3,086,905
Operations and Maintenance	1,323,549		1,329,289		1,427,589		1,277,147		1,323,549		1,329,289
Depreciation	715,466		665,856		614,657		773,802		715,466		665,856
Amortization of Regulatory Assets, Net	71,696		22,339		10,704		89,986		71,696		22,339
Energy Efficiency Programs	533,659		495,701		473,127		480,835		533,659		495,701
Taxes Other Than Income Taxes	634,072		590,573		561,380		676,757		634,072		590,573
Total Operating Expenses	5,779,270		6,190,663		6,109,007		5,833,798		5,779,270		6,190,663
Operating Income	1,859,859		1,764,164		1,632,849		1,918,154		1,859,859		1,764,164
Interest Expense	400,961		372,420		362,106		421,755		400,961		372,420
Other Income, Net	45,920		34,227		24,619		78,008		45,920		34,227
Income Before Income Tax Expense	1,504,818		1,425,971		1,295,362		1,574,407		1,504,818		1,425,971
Income Tax Expense	554,997		539,967		468,297		578,892		554,997		539,967
Net Income	949,821		886,004		827,065		995,515		949,821		886,004
Net Income Attributable to Noncontrolling Interests	7,519		7,519		7,519		7,519		7,519		7,519
Net Income Attributable to Common Shareholders	$	942,302	$	878,485	$	819,546	$	987,996	$	942,302	$	878,485

Basic Earnings Per Common Share	$	2.97	$	2.77	$	2.59	$	3.11	$	2.97	$	2.77

Diluted Earnings Per Common Share	$	2.96	$	2.76	$	2.58	$	3.11	$	2.96	$	2.76

Weighted Average Common Shares Outstanding:
Basic	317,650,180		317,336,881		316,136,748		317,411,097		317,650,180		317,336,881
Diluted	318,454,239		318,432,687		317,417,414		318,031,580		318,454,239		318,432,687

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,									For the Years Ended December 31,
(Thousands of Dollars, Except Share Information)	2016			2015			2014			2017			2016			2015

Net Income	$	949,821		$	886,004		$	827,065		$	995,515		$	949,821		$	886,004
Other Comprehensive Income/(Loss), Net of Tax:
Other Comprehensive (Loss)/Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	2,137			2,079			2,037			1,974			2,137			2,079
Changes in Unrealized Gains/(Losses) on Marketable Securities	2,294			(2,588		)	315
Changes in Unrealized (Losses)/Gains on Marketable Securities										(350		)	2,294			(2,588		)
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans	(2,869		)	7,674			(30,330		)	(2,745		)	(2,869		)	7,674
Other Comprehensive Income/(Loss), Net of Tax	1,562			7,165			(27,978		)
Other Comprehensive (Loss)/Income, Net of Tax										(1,121		)	1,562			7,165
Comprehensive Income Attributable to Noncontrolling Interests	(7,519		)	(7,519		)	(7,519		)	(7,519		)	(7,519		)	(7,519		)
Comprehensive Income Attributable to Common Shareholders	$	943,864		$	885,650		$	791,568		$	986,875		$	943,864		$	885,650

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY


	Common Shares				Capital Surplus, Paid In			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Common Shareholders' Equity			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																	Shares		Amount
Balance as of January 1, 2014	315,273,559		$	1,665,351	$	6,192,765		$	2,125,980		$	(46,031	)	$	(326,537	)	$	9,611,528
Net Income								827,065									827,065
Dividends on Common Shares - $1.57 Per Share								(496,524		)							(496,524		)
Dividends on Preferred Stock								(7,519		)							(7,519		)
Issuance of Common Shares, $5 Par Value	288,941		1,445		5,164												6,609
Long-Term Incentive Plan Activity					(9,569		)										(9,569		)
Issuance of Treasury Shares	1,420,837				37,817									26,070			63,887
Other Changes in Shareholders' Equity					9,657			(341		)							9,316
Other Comprehensive Loss											(27,978		)				(27,978		)
Balance as of December 31, 2014	316,983,337		1,666,796		6,235,834			2,448,661			(74,009		)	(300,467		)	9,976,815
Balance as of January 1, 2015																				316,983,337		$	1,666,796	$	6,235,834		$	2,448,661		$	(74,009	)	$	(300,467	)	$	9,976,815
Net Income								886,004									886,004										886,004									886,004
Dividends on Common Shares - $1.67 Per Share								(529,791		)							(529,791		)								(529,791		)							(529,791		)
Dividends on Preferred Stock								(7,519		)							(7,519		)								(7,519		)							(7,519		)
Issuance of Common Shares, $5 Par Value	503,443		2,517		6,951												9,468			503,443		2,517		6,951												9,468
Long-Term Incentive Plan Activity					(6,140		)										(6,140		)					(6,140		)										(6,140		)
Increase in Treasury Shares	(295,531	)			22,070									(9,510		)	12,560			(295,531	)			22,070									(9,510		)	12,560
Other Changes in Shareholders' Equity					3,653												3,653							3,653												3,653
Other Comprehensive Income											7,165						7,165													7,165						7,165
Balance as of December 31, 2015	317,191,249		1,669,313		6,262,368			2,797,355			(66,844		)	(309,977		)	10,352,215			317,191,249		1,669,313		6,262,368			2,797,355			(66,844		)	(309,977		)	10,352,215
Net Income								949,821									949,821										949,821									949,821
Dividends on Common Shares - $1.78 Per Share								(564,486		)							(564,486		)								(564,486		)							(564,486		)
Dividends on Preferred Stock								(7,519		)							(7,519		)								(7,519		)							(7,519		)
Issuance of Common Shares, $5 Par Value	15,787		79		(5,639		)										(5,560		)	15,787		79		(5,639		)										(5,560		)
Long-Term Incentive Plan Activity					(6,056		)										(6,056		)					(6,056		)										(6,056		)
Increase in Treasury Shares	(321,228	)												(7,794		)	(7,794		)	(321,228	)												(7,794		)	(7,794		)
Other Changes in Shareholders' Equity					(449		)										(449		)					(449		)										(449		)
Other Comprehensive Income											1,562						1,562													1,562						1,562
Balance as of December 31, 2016	316,885,808		$	1,669,392	$	6,250,224		$	3,175,171		$	(65,282	)	$	(317,771	)	$	10,711,734		316,885,808		1,669,392		6,250,224			3,175,171			(65,282		)	(317,771		)	10,711,734
Net Income																											995,515									995,515
Dividends on Common Shares - $1.90 Per Share																											(602,083		)							(602,083		)
Dividends on Preferred Stock																											(7,519		)							(7,519		)
Long-Term Incentive Plan Activity																								(10,834		)										(10,834		)
Other Changes in Shareholders' Equity																								550												550
Other Comprehensive Loss																														(1,121		)				(1,121		)
Balance as of December 31, 2017																				316,885,808		$	1,669,392	$	6,239,940		$	3,561,084		$	(66,403	)	$	(317,771	)	$	11,086,242

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

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,									For the Years Ended December 31,
(Thousands of Dollars)	2016			2015			2014			2017			2016			2015

Operating Activities:
Net Income	$	949,821		$	886,004		$	827,065		$	995,515		$	949,821		$	886,004
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	715,466			665,856			614,657			773,802			715,466			665,856
Deferred Income Taxes	466,463			491,736			443,259			491,630			466,463			491,736
Pension, SERP and PBOP Expense	39,912			96,017			99,056			22,454			39,912			96,017
Pension and PBOP Contributions	(158,741		)	(162,452		)	(211,649		)	(242,800		)	(158,741		)	(162,452		)
Regulatory Over/(Under) Recoveries, Net	13,340			(163,287		)	6,853
Regulatory (Under)/Over Recoveries, Net										(47,935		)	13,340			(163,287		)
Amortization of Regulatory Assets, Net	71,696			22,339			10,704			89,986			71,696			22,339
Refunds/(Payments) Related to Spent Nuclear Fuel, Net	59,804			(297,253		)	132,138			—			59,804			(297,253		)
Other	(77,294		)	(82,219		)	56,026			(148,429		)	(77,294		)	(82,219		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(142,699		)	(39,797		)	(122,139		)	(117,155		)	(142,699		)	(39,797		)
Fuel, Materials, Supplies and Inventory	7,755			34,112			(41,310		)	(9,223		)	7,755			34,112
Taxes Receivable/Accrued, Net	234,543			30,282			(323,224		)	52,284			234,543			30,282
Accounts Payable	(14,126		)	(91,618		)	144,743			56,067			(14,126		)	(91,618		)
Other Current Assets and Liabilities, Net	9,112			44,031			15,797			88,738			9,112			44,031
Net Cash Flows Provided by Operating Activities	2,175,052			1,433,751			1,651,976			2,004,934			2,175,052			1,433,751

Investing Activities:
Investments in Property, Plant and Equipment	(1,976,867		)	(1,724,139		)	(1,603,744		)	(2,348,105		)	(1,976,867		)	(1,724,139		)
Proceeds from Sales of Marketable Securities	659,338			799,165			488,789			832,903			659,338			799,165
Purchases of Marketable Securities	(681,272		)	(717,114		)	(491,220		)	(810,507		)	(681,272		)	(717,114		)
Acquisition of Aquarion										(877,652		)	—			—
Payments to Acquire Investments	(188,958		)	(23,353		)	(9,779		)	(32,634		)	(188,958		)	(23,353		)
Other Investing Activities	36,951			6,291			24,159			25,521			36,951			6,291
Net Cash Flows Used in Investing Activities	(2,150,808		)	(1,659,150		)	(1,591,795		)	(3,210,474		)	(2,150,808		)	(1,659,150		)

Financing Activities:
Cash Dividends on Common Shares	(564,486		)	(529,791		)	(475,227		)	(602,083		)	(564,486		)	(529,791		)
Cash Dividends on Preferred Stock	(7,519		)	(7,519		)	(7,519		)	(7,519		)	(7,519		)	(7,519		)
(Decrease)/Increase in Notes Payable	(12,453		)	(242,122		)	285,075
Increase/(Decrease) in Notes Payable										72,810			(12,453		)	(242,122		)
Issuance of Long-Term Debt	800,000			1,225,000			725,000			2,500,000			800,000			1,225,000
Retirements of Long-Term Debt	(200,000		)	(216,700		)	(576,551		)	(745,000		)	(200,000		)	(216,700		)
Other Financing Activities	(33,482		)	(18,225		)	(15,620		)	(4,754		)	(33,482		)	(18,225		)
Net Cash Flows (Used in)/Provided by Financing Activities	(17,940		)	210,643			(64,842		)
Net Cash Flows Provided by/(Used in) Financing Activities										1,213,454			(17,940		)	210,643
Net Increase/(Decrease) in Cash and Cash Equivalents	6,304			(14,756		)	(4,661		)	7,914			6,304			(14,756		)
Cash and Cash Equivalents - Beginning of Year	23,947			38,703			43,364			30,251			23,947			38,703
Cash and Cash Equivalents - End of Year	$	30,251		$	23,947		$	38,703		$	38,165		$	30,251		$	23,947

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

Company Report on Internal Controls Over Financial Reporting

The Connecticut Light and Power Company

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, CL&P conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, ~~2016.~~2017.

February ~~22, 2017~~23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying balance sheets of The Connecticut Light and Power Company (the ~~"Company"~~“Company”) as of December 31, ~~2016~~2017 and ~~2015, and~~2016, the related statements of income, comprehensive income, common ~~stockholder's~~stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the ~~financial statement~~related notes and the schedule listed in the Index at Item 15 of Part ~~IV.~~ IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements ~~and financial statement schedule~~ are the responsibility of the ~~Company's~~Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s financial statements ~~and financial statement schedule~~ 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 ~~Public Company Accounting Oversight Board (United States).~~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.~~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. ~~Our~~As part of our audits, ~~included consideration~~we are required to obtain an understanding of internal control over financial reporting ~~as a basis for designing audit procedures that are appropriate in the circumstances,~~ but not for the purpose of expressing an opinion on the effectiveness of the ~~Company's~~Company’s internal control over financial reporting. Accordingly, we express no such opinion. ~~An audit also includes~~

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 ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of The Connecticut Light and Power Company as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February ~~22, 2017~~23, 2018

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

THE CONNECTICUT LIGHT AND POWER COMPANY

BALANCE SHEETS


	As of December 31,						As of December 31,
(Thousands of Dollars)	2016			2015			2017		2016

ASSETS
Current Assets:
Cash	$	6,579		$	1,057		$	6,028	$	6,579
Receivables, Net	359,132			352,536			370,676		359,132
Accounts Receivable from Affiliated Companies	16,851			21,214			28,181		16,851
Unbilled Revenues	50,373			99,879			54,154		50,373
Taxes Receivable	19,700			137,643
Materials, Supplies and Inventory	52,050			43,124			48,438		52,050
Regulatory Assets	335,526			268,318			200,281		335,526
Prepayments and Other Current Assets	32,970			32,234			46,926		52,670
Total Current Assets	873,181			956,005			754,684		873,181

Property, Plant and Equipment, Net	7,632,392			7,156,809			8,271,030		7,632,392

Deferred Debits and Other Assets:
Regulatory Assets	1,391,564			1,369,028			1,444,935		1,391,564
Other Long-Term Assets	137,907			111,115			159,597		137,907
Total Deferred Debits and Other Assets	1,529,471			1,480,143			1,604,532		1,529,471

Total Assets	$	10,035,044		$	9,592,957		$	10,630,246	$	10,035,044

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent	$	80,100		$	277,400		$	69,500	$	80,100
Long-Term Debt – Current Portion	250,000			—			300,000		250,000
Accounts Payable	289,532			267,764			367,605		289,532
Accounts Payable to Affiliated Companies	88,075			66,456			82,201		88,075
Obligations to Third Party Suppliers	55,520			60,746			52,860		55,520
Regulatory Liabilities	47,055			61,155			38,967		47,055
Derivative Liabilities	77,765			91,820			54,392		77,765
Other Current Liabilities	120,399			110,631			127,234		120,399
Total Current Liabilities	1,008,446			935,972			1,092,759		1,008,446

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,987,661			1,820,865			1,103,367		1,987,661
Regulatory Liabilities	100,138			74,830			1,112,136		100,138
Derivative Liabilities	412,750			336,189			376,918		412,750
Accrued Pension, SERP and PBOP	300,208			271,056			354,469		300,208
Other Long-Term Liabilities	123,244			133,446			128,135		123,244
Total Deferred Credits and Other Liabilities	2,924,001			2,636,386			3,075,025		2,924,001

Capitalization:
Long-Term Debt	2,516,010			2,763,682			2,759,135		2,516,010

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

Common Stockholder's Equity:
Common Stock	60,352			60,352			60,352		60,352
Capital Surplus, Paid In	2,110,714			1,910,663			2,110,765		2,110,714
Retained Earnings	1,299,374			1,170,278			1,415,741		1,299,374
Accumulated Other Comprehensive Loss	(53		)	(576		)
Accumulated Other Comprehensive Income/(Loss)							269		(53		)
Common Stockholder's Equity	3,470,387			3,140,717			3,587,127		3,470,387
Total Capitalization	6,102,597			6,020,599			6,462,462		6,102,597

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	10,035,044		$	9,592,957		$	10,630,246	$	10,035,044

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

THE CONNECTICUT LIGHT AND POWER COMPANY

STATEMENTS OF INCOME


	For the Years Ended December 31,						For the Years Ended December 31,
(Thousands of Dollars)	2016		2015		2014		2017		2016		2015

Operating Revenues	$	2,805,955	$	2,802,675	$	2,692,582	$	2,887,359	$	2,805,955	$	2,802,675

Operating Expenses:
Purchased Power and Transmission	919,723		1,054,313		982,876		930,780		919,723		1,054,313
Operations and Maintenance	490,069		487,281		494,578		500,358		490,069		487,281
Depreciation	230,489		215,289		188,837		249,352		230,489		215,289
Amortization of Regulatory Assets, Net	38,765		12,318		59,336		83,166		38,765		12,318
Energy Efficiency Programs	154,015		153,725		156,335		114,713		154,015		153,725
Taxes Other Than Income Taxes	299,719		268,688		255,370		323,887		299,719		268,688
Total Operating Expenses	2,132,780		2,191,614		2,137,332		2,202,256		2,132,780		2,191,614
Operating Income	673,175		611,061		555,250		685,103		673,175		611,061
Interest Expense	144,110		145,795		147,421		142,973		144,110		145,795
Other Income, Net	13,497		11,490		13,376		21,242		13,497		11,490
Income Before Income Tax Expense	542,562		476,756		421,205		563,372		542,562		476,756
Income Tax Expense	208,308		177,396		133,451		186,646		208,308		177,396
Net Income	$	334,254	$	299,360	$	287,754	$	376,726	$	334,254	$	299,360

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

STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,							For the Years Ended December 31,
(Thousands of Dollars)	2016		2015			2014		2017			2016		2015

Net Income	$	334,254	$	299,360		$	287,754	$	376,726		$	334,254	$	299,360
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	444		444			444		334			444		444
Changes in Unrealized Gains/(Losses) on Marketable Securities	79		(89		)	12
Changes in Unrealized (Losses)/Gains on Marketable Securities								(12		)	79		(89		)
Other Comprehensive Income, Net of Tax	523		355			456		322			523		355
Comprehensive Income	$	334,777	$	299,715		$	288,210	$	377,048		$	334,777	$	299,715

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

THE CONNECTICUT LIGHT AND POWER COMPANY

STATEMENTS OF COMMON STOCKHOLDER'S EQUITY


	Common Stock			Capital Surplus, Paid In			Retained Earnings			Accumulated Other Comprehensive Loss				Total 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				Stock							Amount
Balance as of January 1, 2014	6,035,205	$	60,352			$		1,682,047		$	961,482					$	(1,387	)	$	2,702,494
Net Income							287,754							287,754
Dividends on Preferred Stock							(5,559		)					(5,559		)
Dividends on Common Stock							(171,200		)					(171,200		)
Allocation of Benefits - ESOP				2,771										2,771
Capital Stock Expenses, Net				51										51
Capital Contributions from Eversource Parent				120,000										120,000
Other Comprehensive Income										456				456
Balance as of December 31, 2014	6,035,205	60,352		1,804,869			1,072,477			(931		)		2,936,767
Balance as of January 1, 2015																	6,035,205		$	60,352	$	1,804,869	$	1,072,477		$	(931	)	$	2,936,767
Net Income							299,360							299,360									299,360						299,360
Dividends on Preferred Stock							(5,559		)					(5,559		)							(5,559		)				(5,559		)
Dividends on Common Stock							(196,000		)					(196,000		)							(196,000		)				(196,000		)
Allocation of Benefits - ESOP				743										743							743								743
Capital Stock Expenses, Net				51										51							51								51
Capital Contributions from Eversource Parent				105,000										105,000							105,000								105,000
Other Comprehensive Income										355				355												355			355
Balance as of December 31, 2015	6,035,205	60,352		1,910,663			1,170,278			(576		)		3,140,717			6,035,205		60,352		1,910,663		1,170,278			(576		)	3,140,717
Net Income							334,254							334,254									334,254						334,254
Dividends on Preferred Stock							(5,559		)					(5,559		)							(5,559		)				(5,559		)
Dividends on Common Stock							(199,599		)					(199,599		)							(199,599		)				(199,599		)
Capital Stock Expenses, Net				51										51							51								51
Capital Contributions from Eversource Parent				200,000										200,000							200,000								200,000
Other Comprehensive Income										523				523												523			523
Balance as of December 31, 2016	6,035,205	$	60,352	$	2,110,714		$	1,299,374		$	(53	)		$	3,470,387		6,035,205		60,352		2,110,714		1,299,374			(53		)	3,470,387
Net Income																							376,726						376,726
Dividends on Preferred Stock																							(5,559		)				(5,559		)
Dividends on Common Stock																							(254,800		)				(254,800		)
Capital Stock Expenses, Net																					51								51
Other Comprehensive Income																										322			322
Balance as of December 31, 2017																	6,035,205		$	60,352	$	2,110,765	$	1,415,741		$	269		$	3,587,127

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

THE CONNECTICUT LIGHT AND POWER COMPANY

STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,									For the Years Ended December 31,
(Thousands of Dollars)	2016			2015			2014			2017			2016			2015

Operating Activities:
Net Income	$	334,254		$	299,360		$	287,754		$	376,726		$	334,254		$	299,360
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	230,489			215,289			188,837			249,352			230,489			215,289
Deferred Income Taxes	168,919			135,994			130,949			119,295			168,919			135,994
Pension, SERP and PBOP Expense, Net of PBOP Contributions	6,948			14,091			14,992
Pension, SERP and PBOP Expense, Net of Pension Contributions										7,409			6,948			14,091
Regulatory Underrecoveries, Net	(68,730		)	(53,781		)	(20,502		)	(8,017		)	(68,730		)	(53,781		)
Amortization of Regulatory Assets, Net	38,765			12,318			59,336			83,166			38,765			12,318
Refunds/(Payments) Related to Spent Nuclear Fuel, Net	13,568			(242,231		)	68,610			—			13,568			(242,231		)
Other	(32,212		)	(36,385		)	(1,342		)	(37,648		)	(32,212		)	(36,385		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	3,229			(29,195		)	(78,631		)	(47,768		)	3,229			(29,195		)
Materials and Supplies	(8,926		)	22,810			13,063			3,612			(8,926		)	22,810
Taxes Receivable/Accrued, Net	123,692			(13,517		)	(126,376		)	(9,688		)	123,692			(13,517		)
Accounts Payable	3,252			(16,910		)	68,891			48,032			3,252			(16,910		)
Other Current Assets and Liabilities, Net	(1,770		)	(9,514		)	6,838			20,080			(1,770		)	(9,514		)
Net Cash Flows Provided by Operating Activities	811,478			298,329			612,419			804,551			811,478			298,329

Investing Activities:
Investments in Property, Plant and Equipment	(611,984		)	(523,849		)	(515,710		)	(824,383		)	(611,984		)	(523,849		)
Proceeds from the Sale of Property, Plant and Equipment	9,047			—			4,918			—			9,047			—
Other Investing Activities	296			(716		)	7,735			236			296			(716		)
Net Cash Flows Used in Investing Activities	(602,641		)	(524,565		)	(503,057		)	(824,147		)	(602,641		)	(524,565		)

Financing Activities:
Cash Dividends on Common Stock	(199,599		)	(196,000		)	(171,200		)	(254,800		)	(199,599		)	(196,000		)
Cash Dividends on Preferred Stock	(5,559		)	(5,559		)	(5,559		)	(5,559		)	(5,559		)	(5,559		)
(Decrease)/Increase in Notes Payable to Eversource Parent	(197,300		)	144,000			(153,900		)	(10,600		)	(197,300		)	144,000
Issuance of Long-Term Debt	—			350,000			250,000			525,000			—			350,000
Retirements of Long-Term Debt	—			(162,000		)	(150,000		)	(250,000		)	—			(162,000		)
Capital Contributions from Eversource Parent	200,000			105,000			120,000			—			200,000			105,000
Other Financing Activities	(857		)	(10,504		)	(3,584		)	15,004			(857		)	(10,504		)
Net Cash Flows (Used in)/Provided by Financing Activities	(203,315		)	224,937			(114,243		)
Net Increase/(Decrease) in Cash	5,522			(1,299		)	(4,881		)
Net Cash Flows Provided by/(Used in) Financing Activities										19,045			(203,315		)	224,937
Net (Decrease)/Increase in Cash										(551		)	5,522			(1,299		)
Cash - Beginning of Year	1,057			2,356			7,237			6,579			1,057			2,356
Cash - End of Year	$	6,579		$	1,057		$	2,356		$	6,028		$	6,579		$	1,057

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

Company Report on Internal Controls Over Financial Reporting

NSTAR Electric Company

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, NSTAR Electric conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, ~~2016.~~2017.

February ~~22, 2017~~23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of NSTAR Electric Company and subsidiary (the ~~"Company"~~“Company”) as of December 31, ~~2016~~2017 and ~~2015, and~~2016, the related consolidated statements of income, comprehensive income, common ~~stockholder's~~stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the ~~financial statement~~related notes and the schedule listed in the Index at Item 15 of Part ~~IV.~~ IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of a Matter

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

Basis for Opinion

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of NSTAR Electric Company and subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February ~~22, 2017~~23, 2018

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

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	As of December 31,				As of December 31,
(Thousands of Dollars)	2016		2015		2017			2016

ASSETS
Current Assets:
Cash and Cash Equivalents	$	3,494	$	3,346	$	1,763		$	3,494
Receivables, Net	257,557		229,936		341,341			312,497
Accounts Receivable from Affiliated Companies	8,581		4,034		40,723			17,771
Unbilled Revenues	31,632		29,464		49,865			46,961
Taxes Receivable	39,738		70,236
Materials, Supplies and Inventory	62,288		75,487		95,517			70,907
Regulatory Assets	289,400		348,408		333,882			353,522
Prepayments and Other Current Assets	14,906		11,448		24,499			56,066
Total Current Assets	707,596		772,359		887,590			861,218

Property, Plant and Equipment, Net	6,051,835		5,655,458		8,246,494			7,730,096

Deferred Debits and Other Assets:
Regulatory Assets	1,057,746		1,112,977		1,190,575			1,185,037
Prepaid PBOP	95,073		—		126,948			91,607
Other Long-Term Assets	60,572		62,467		84,766			89,635
Total Deferred Debits and Other Assets	1,213,391		1,175,444		1,402,289			1,366,279

Total Assets	$	7,972,822	$	7,603,261	$	10,536,373		$	9,957,593

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	126,500	$	62,500	$	234,000		$	126,500
Notes Payable to Eversource Parent					—			51,000
Long-Term Debt – Current Portion	400,000		200,000		—			400,000
Accounts Payable	232,599		228,250		340,115			288,634
Accounts Payable to Affiliated Companies	91,532		38,648		91,260			105,775
Obligations to Third Party Suppliers	55,863		56,718		88,721			66,371
Renewable Portfolio Standards Compliance Obligations	75,571		104,847		111,524			95,954
Regulatory Liabilities	63,653		3,281		79,562			78,541
Other Current Liabilities	71,122		72,007		79,916			84,933
Total Current Liabilities	1,116,840		766,251		1,025,098			1,297,708

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	1,836,292		1,760,339		1,275,814			2,327,085
Regulatory Liabilities	391,823		264,352		1,514,451			409,050
Accrued Pension, SERP and PBOP	111,827		209,153
Accrued Pension and SERP					89,995			128,751
Other Long-Term Liabilities	123,194		120,939		198,176			164,503
Total Deferred Credits and Other Liabilities	2,463,136		2,354,783		3,078,436			3,029,389

Capitalization:
Long-Term Debt	1,678,116		1,829,766		2,943,759			2,244,653

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

Common Stockholder's Equity:
Common Stock	—		—		—			—
Capital Surplus, Paid In	1,045,378		995,378		1,502,942			1,500,642
Retained Earnings	1,625,984		1,613,538		1,944,961			1,844,195
Accumulated Other Comprehensive Income	368		545
Accumulated Other Comprehensive Loss					(1,823		)	(1,994		)
Common Stockholder's Equity	2,671,730		2,609,461		3,446,080			3,342,843
Total Capitalization	4,392,846		4,482,227		6,432,839			5,630,496

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	7,972,822	$	7,603,261	$	10,536,373		$	9,957,593

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

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME


	For the Years Ended December 31,								For the Years Ended December 31,
(Thousands of Dollars)	2016		2015			2014			2017		2016		2015

Operating Revenues	$	2,557,878	$	2,681,342		$	2,536,677		$	2,980,629	$	3,041,588	$	3,198,887

Operating Expenses:
Purchased Power and Transmission	953,356		1,190,191			1,122,298			1,025,414		1,084,324		1,366,779
Operations and Maintenance	393,170		306,528			326,972			463,737		489,882		392,888
Depreciation	213,115		196,770			188,693			274,008		259,262		240,132
Amortization of Regulatory Assets/(Liabilities), Net	30,083		(12,989		)	(6,330		)
Amortization of Regulatory Assets, Net									33,831		34,332		1,556
Energy Efficiency Programs	277,608		224,755			193,516			294,053		321,787		267,622
Taxes Other Than Income Taxes	136,759		133,260			133,072			181,959		177,837		171,563
Total Operating Expenses	2,004,091		2,038,515			1,958,221			2,273,002		2,367,424		2,440,540
Operating Income	553,787		642,827			578,456			707,627		674,164		758,347
Interest Expense	84,005		75,347			77,878			105,729		108,428		100,139
Other Income, Net	10,690		5,106			4,491			14,913		10,830		7,854
Income Before Income Tax Expense	480,472		572,586			505,069			616,811		576,566		666,062
Income Tax Expense	187,767		228,044			201,981			242,085		225,789		265,014
Net Income	$	292,705	$	344,542		$	303,088		$	374,726	$	350,777	$	401,048

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,							For the Years Ended December 31,
(Thousands of Dollars)	2016			2015		2014		2017			2016			2015

Net Income	$	292,705		$	344,542	$	303,088	$	374,726		$	350,777		$	401,048
Other Comprehensive (Loss)/Income, Net of Tax:
Other Comprehensive Income, Net of Tax:
Changes in Funded Status of SERP Benefit Plan	(177		)	103		442		(264		)	(177		)	103
Other Comprehensive (Loss)/Income, Net of Tax	(177		)	103		442
Qualified Cash Flow Hedging Instruments								438			437			380
Changes in Unrealized (Losses)/Gains on Marketable Securities								(3		)	22			(25		)
Other Comprehensive Income, Net of Tax								171			282			458
Comprehensive Income	$	292,528		$	344,645	$	303,530	$	374,897		$	351,059		$	401,506

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

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY


	Common Stock			Capital Surplus, Paid In			Retained Earnings			Accumulated Other Comprehensive Income				Total Common Stockholder's Equity			Common Stock			Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount				Stock							Amount
Balance as of January 1, 2014	100	$	—			$		992,625		$	1,420,828					$	—	$	2,413,453
Net Income							303,088							303,088
Dividends on Preferred Stock							(1,961		)					(1,961		)
Dividends on Common Stock							(253,000		)					(253,000		)
Other Changes in Stockholder's Equity				1,505										1,505
Other Comprehensive Income										442				442
Balance as of December 31, 2014	100	—		994,130			1,468,955			442				2,463,527
Balance as of January 1, 2015																	200	$	—	$	1,396,252	$	1,647,790		$	(2,734	)	$	3,041,308
Net Income							344,542							344,542								401,048						401,048
Dividends on Preferred Stock							(1,960		)					(1,960		)						(1,960		)				(1,960		)
Dividends on Common Stock							(197,999		)					(197,999		)						(235,200		)				(235,200		)
Other Changes in Stockholder's Equity				1,248										1,248						1,390								1,390
Other Comprehensive Income										103				103											458			458
Balance as of December 31, 2015	100	—		995,378			1,613,538			545				2,609,461			200	—		1,397,642		1,811,678			(2,276		)	3,207,044
Net Income							292,705							292,705								350,777						350,777
Dividends on Preferred Stock							(1,960		)					(1,960		)						(1,960		)				(1,960		)
Dividends on Common Stock							(278,299		)					(278,299		)						(316,300		)				(316,300		)
Capital Contributions from Eversource Parent				50,000										50,000						103,000								103,000
Other Comprehensive Loss										(177		)		(177		)
Other Comprehensive Income																									282			282
Balance as of December 31, 2016	100	$	—	$	1,045,378		$	1,625,984		$	368			$	2,671,730		200	—		1,500,642		1,844,195			(1,994		)	3,342,843
Net Income																						374,726						374,726
Dividends on Preferred Stock																						(1,960		)				(1,960		)
Dividends on Common Stock																						(272,000		)				(272,000		)
Capital Contributions from Eversource Parent																				2,300								2,300
Other Comprehensive Income																									171			171
Balance as of December 31, 2017																	200	$	—	$	1,502,942	$	1,944,961		$	(1,823	)	$	3,446,080

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

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,									For the Years Ended December 31,
(Thousands of Dollars)	2016			2015			2014			2017			2016			2015

Operating Activities:
Net Income	$	292,705		$	344,542		$	303,088		$	374,726		$	350,777		$	401,048
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	213,115			196,770			188,693			274,008			259,262			240,132
Deferred Income Taxes	80,200			173,155			108,133			110,499			101,698			212,583
Pension, SERP and PBOP (Income)/Expense, Net	(327		)	10,786			6,760			(9,509		)	(771		)	11,639
Pension and PBOP Contributions	(37,305		)	(9,886		)	(120,306		)	(90,721		)	(37,305		)	(9,886		)
Regulatory Over/(Under) Recoveries, Net	117,795			(124,323		)	57,696
Amortization of Regulatory Assets/(Liabilities), Net	30,083			(12,989		)	(6,330		)
Regulatory (Under)/Over Recoveries, Net										(20,009		)	118,385			(141,824		)
Amortization of Regulatory Assets, Net										33,831			34,332			1,556
Bad Debt Expense	27,978			14,228			24,740			21,252			31,728			19,168
Refunds Related to Spent Nuclear Fuel	4,983			783			30,193
Refunds/(Payments) Related to Spent Nuclear Fuel										—			8,536			(56,001		)
Other	(52,326		)	(56,063		)	(51,478		)	(24,868		)	(59,359		)	(68,275		)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(58,591		)	(35,525		)	(18,853		)	(50,896		)	(70,302		)	(17,028		)
Materials, Supplies and Inventory	13,198			406			(29,943		)	(24,610		)	10,571			19
Taxes Receivable/Accrued, Net	27,434			77,429			(122,746		)	39,205			60,774			62,148
Accounts Payable	(32,969		)	21,961			9,753			(20,421		)	18,000			(5,510		)
Accounts Receivable from/Payable to Affiliates, Net	48,337			11,450			115,092
Other Current Assets and Liabilities, Net	(32,920		)	44,302			38,535			25,913			(17,607		)	50,283
Net Cash Flows Provided by Operating Activities	641,390			657,026			533,027			638,400			808,719			700,052

Investing Activities:
Investments in Property, Plant and Equipment	(524,306		)	(469,466		)	(465,028		)	(719,623		)	(664,932		)	(604,018		)
Proceeds from Sales of Marketable Securities										3,934			2,479			186,444
Purchases of Marketable Securities										(3,869		)	(2,426		)	(128,861		)
Other Investing Activities										(3,617		)	—			—
Net Cash Flows Used in Investing Activities	(524,306		)	(469,466		)	(465,028		)	(723,175		)	(664,879		)	(546,435		)

Financing Activities:
Cash Dividends on Common Stock	(278,299		)	(197,999		)	(253,000		)	(272,000		)	(316,300		)	(235,200		)
Cash Dividends on Preferred Stock	(1,960		)	(1,960		)	(1,961		)	(1,960		)	(1,960		)	(1,960		)
Increase/(Decrease) in Short-Term Debt	64,000			(239,500		)	198,500			56,500			(28,400		)	(117,500		)
Capital Contributions from Eversource Parent	50,000			—			—			2,300			103,000			—
Issuance of Long-Term Debt	250,000			250,000			300,000			700,000			300,000			250,000
Retirements of Long-Term Debt	(200,000		)	(4,700		)	(301,650		)	(400,000		)	(200,000		)	(54,700		)
Other Financing Activities	(677		)	(2,828		)	(5,136		)	(1,796		)	(866		)	(2,850		)
Net Cash Flows Used in Financing Activities	(116,936		)	(196,987		)	(63,247		)
Net Increase/(Decrease) in Cash and Cash Equivalents	148			(9,427		)	4,752
Net Cash Flows Provided by/(Used in) Financing Activities										83,044			(144,526		)	(162,210		)
Net Decrease in Cash and Cash Equivalents										(1,731		)	(686		)	(8,593		)
Cash and Cash Equivalents - Beginning of Year	3,346			12,773			8,021			3,494			4,180			12,773
Cash and Cash Equivalents - End of Year	$	3,494		$	3,346		$	12,773		$	1,763		$	3,494		$	4,180

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

Company Report on Internal Controls Over Financial Reporting

Public Service Company of New Hampshire

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, PSNH conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, ~~2016.~~2017.

February ~~22, 2017~~23, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Public Service Company of New Hampshire and subsidiary (the ~~"Company"~~“Company”) as of December 31, ~~2016~~2017 and ~~2015, and~~2016, the related consolidated statements of income, comprehensive income, common ~~stockholder's~~stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the ~~financial statement~~related notes and the schedule listed in the Index at Item 15 of Part ~~IV.~~ IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Public Service Company of New Hampshire and subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

February ~~22, 2017~~23, 2018

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	As of December 31,						As of December 31,
(Thousands of Dollars)	2016			2015			2017			2016

ASSETS
Current Assets:
Cash	$	4,646		$	1,733		$	900		$	4,646
Receivables, Net	84,450			77,546			92,774			84,450
Accounts Receivable from Affiliated Companies	4,185			2,352			5,297			4,185
Unbilled Revenues	41,004			38,207			49,448			41,004
Taxes Receivable	6,177			43,128
Fuel, Materials, Supplies and Inventory	162,354			156,868			40,285			162,354
Regulatory Assets	117,240			104,971			130,134			117,240
Prepayments and Other Current Assets	22,731			24,302			28,931			28,908
Assets Held for Sale							219,550			—
Total Current Assets	442,787			449,107			567,319			442,787

Property, Plant and Equipment, Net	3,039,313			2,855,363			2,642,274			3,039,313

Deferred Debits and Other Assets:
Regulatory Assets	245,525			257,873			810,677			245,525
Other Long-Term Assets	37,720			34,176			42,391			37,720
Total Deferred Debits and Other Assets	283,245			292,049			853,068			283,245

Total Assets	$	3,765,345		$	3,596,519		$	4,062,661		$	3,765,345

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent	$	160,900		$	231,300		$	262,900		$	160,900
Long-Term Debt – Current Portion	70,000			—			110,000			70,000
Accounts Payable	85,716			87,925			128,685			85,716
Accounts Payable to Affiliated Companies	29,154			24,214			24,676			29,154
Dividends Payable to Eversource Parent							150,000			—
Regulatory Liabilities	12,659			6,898			6,251			12,659
Other Current Liabilities	43,253			43,921			67,924			43,253
Total Current Liabilities	401,682			394,258			750,436			401,682

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	785,385			705,894			443,468			785,385
Regulatory Liabilities	44,779			47,851			444,397			44,779
Accrued Pension, SERP and PBOP	94,652			89,579			124,639			94,652
Other Long-Term Liabilities	49,442			50,746			56,689			49,442
Total Deferred Credits and Other Liabilities	974,258			894,070			1,069,193			974,258

Capitalization:
Long-Term Debt	1,002,048			1,071,017			892,438			1,002,048

Common Stockholder's Equity:
Common Stock	—			—			—			—
Capital Surplus, Paid In	843,134			748,634			843,134			843,134
Retained Earnings	549,286			494,901			511,382			549,286
Accumulated Other Comprehensive Loss	(5,063		)	(6,361		)	(3,922		)	(5,063		)
Common Stockholder's Equity	1,387,357			1,237,174			1,350,594			1,387,357
Total Capitalization	2,389,405			2,308,191			2,243,032			2,389,405

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization	$	3,765,345		$	3,596,519		$	4,062,661		$	3,765,345

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME


	For the Years Ended December 31,							For the Years Ended December 31,
(Thousands of Dollars)	2016		2015		2014			2017			2016		2015

Operating Revenues	$	959,482	$	972,203	$	959,500		$	981,624		$	959,482	$	972,203

Operating Expenses:
Purchased Power, Fuel and Transmission	210,786		247,721		313,732			237,478			210,786		247,721
Operations and Maintenance	260,779		276,554		261,848			257,185			260,779		276,554
Depreciation	116,519		105,372		98,436			128,192			116,519		105,372
Amortization of Regulatory Assets/(Liabilities), Net	11,170		16,276		(29,602		)
Amortization of Regulatory (Liabilities)/Assets, Net								(16,577		)	11,170		16,276
Energy Efficiency Programs	14,204		14,324		14,286			13,788			14,204		14,324
Taxes Other Than Income Taxes	82,964		81,779		71,417			89,760			82,964		81,779
Total Operating Expenses	696,422		742,026		730,117			709,826			696,422		742,026
Operating Income	263,060		230,177		229,383			271,798			263,060		230,177
Interest Expense	50,040		45,990		45,349			51,007			50,040		45,990
Other Income, Net	1,329		3,315		2,045			3,880			1,329		3,315
Income Before Income Tax Expense	214,349		187,502		186,079			224,671			214,349		187,502
Income Tax Expense	82,364		73,060		72,135			88,675			82,364		73,060
Net Income	$	131,985	$	114,442	$	113,944		$	135,996		$	131,985	$	114,442

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,							For the Years Ended December 31,
(Thousands of Dollars)	2016		2015			2014		2017			2016		2015

Net Income	$	131,985	$	114,442		$	113,944	$	135,996		$	131,985	$	114,442
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments	1,162		1,162			1,162		1,162			1,162		1,162
Changes in Unrealized Gains/(Losses) on Marketable Securities	136		(154		)	19
Changes in Unrealized (Losses)/Gains on Marketable Securities								(21		)	136		(154		)
Other Comprehensive Income, Net of Tax	1,298		1,008			1,181		1,141			1,298		1,008
Comprehensive Income	$	133,283	$	115,450		$	115,125	$	137,137		$	133,283	$	115,450

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY


	Common Stock			Capital Surplus, Paid In			Retained Earnings			Accumulated Other Comprehensive Loss				Total Common Stockholder's Equity			Common Stock				Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)	Stock	Amount				Stock				Accumulated Other Comprehensive Loss			Amount								Capital Surplus, Paid In		Retained Earnings			Accumulated Other Comprehensive Loss			Total Common Stockholder's Equity
Balance as of January 1, 2014	301	$	—	Capital Surplus, Paid In		$	Retained Earnings	701,911		$	438,515			Total Common Stockholder's Equity		$	(8,550	)	$	1,131,876
Net Income							113,944							113,944
Dividends on Common Stock							(66,000		)					(66,000		)
Capital Contributions from Eversource Parent				45,000										45,000
Allocation of Benefits - ESOP				1,329										1,329
Other Comprehensive Income										1,181				1,181
Balance as of December 31, 2014	301	—		748,240			486,459			(7,369		)		1,227,330
Balance as of January 1, 2015																	301		$	—	$	748,240	$	486,459		$	(7,369	)	$	1,227,330
Net Income							114,442							114,442									114,442						114,442
Dividends on Common Stock							(106,000		)					(106,000		)							(106,000		)				(106,000		)
Allocation of Benefits - ESOP				394										394							394								394
Other Comprehensive Income										1,008				1,008												1,008			1,008
Balance as of December 31, 2015	301	—		748,634			494,901			(6,361		)		1,237,174			301		—		748,634		494,901			(6,361		)	1,237,174
Net Income							131,985							131,985									131,985						131,985
Dividends on Common Stock							(77,600		)					(77,600		)							(77,600		)				(77,600		)
Capital Contributions from Eversource Parent				94,500										94,500							94,500								94,500
Other Comprehensive Income										1,298				1,298												1,298			1,298
Balance as of December 31, 2016	301	$	—	$	843,134		$	549,286		$	(5,063	)		$	1,387,357		301		—		843,134		549,286			(5,063		)	1,387,357
Net Income																							135,996						135,996
Dividends on Common Stock																							(173,900		)				(173,900		)
Other Comprehensive Income																										1,141			1,141
Balance as of December 31, 2017																	301		$	—	$	843,134	$	511,382		$	(3,922	)	$	1,350,594

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

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,									For the Years Ended December 31,
(Thousands of Dollars)	2016			2015			2014			2017			2016			2015

Operating Activities:
Net Income	$	131,985		$	114,442		$	113,944		$	135,996		$	131,985		$	114,442
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation	116,519			105,372			98,436			128,192			116,519			105,372
Deferred Income Taxes	87,345			83,776			94,813			63,883			87,345			83,776
Pension, SERP and PBOP Expense	875			4,580			7,197			1,368			875			4,580
Pension and PBOP Contributions	(17,078		)	(982		)	(2,482		)
Pension Contributions										(800		)	(17,078		)	(982		)
Regulatory (Under)/Over Recoveries, Net	(4,491		)	41			(11,875		)	(30,788		)	(4,491		)	41
Amortization of Regulatory Assets/(Liabilities), Net	11,170			16,276			(29,602		)
Amortization of Regulatory (Liabilities)/Assets, Net										(16,577		)	11,170			16,276
Refunds Related to Spent Nuclear Fuel	3,926			979			14,453			—			3,926			979
Other	6,521			8,677			10,095			(10,088		)	6,521			8,677
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net	(18,822		)	(4,750		)	(15,576		)	(22,055		)	(18,822		)	(4,750		)
Fuel, Materials, Supplies and Inventory	(5,485		)	(8,729		)	(19,403		)	5,519			(5,485		)	(8,729		)
Taxes Receivable/Accrued, Net	32,303			(23,909		)	(23,857		)	339			32,303			(23,909		)
Accounts Payable	11,353			(22,203		)	17,796			29,453			11,353			(22,203		)
Other Current Assets and Liabilities, Net	5,651			953			(5,972		)	16,458			5,651			953
Net Cash Flows Provided by Operating Activities	361,772			274,523			247,967			300,900			361,772			274,523

Investing Activities:
Investments in Property, Plant and Equipment	(305,430		)	(308,036		)	(256,159		)	(312,720		)	(305,430		)	(308,036		)
Other Investing Activities	326			306			(1,152		)	199			326			306
Net Cash Flows Used in Investing Activities	(305,104		)	(307,730		)	(257,311		)	(312,521		)	(305,104		)	(307,730		)

Financing Activities:
Cash Dividends on Common Stock	(77,600		)	(106,000		)	(66,000		)	(23,900		)	(77,600		)	(106,000		)
(Decrease)/Increase in Notes Payable to Eversource Parent	(70,400		)	140,800			4,000
Issuance of Long-Term Debt	—			—			75,000
Increase/(Decrease) in Notes Payable to Eversource Parent										102,000			(70,400		)	140,800
Retirements of Long-Term Debt	—			—			(50,000		)	(70,000		)	—			—
Capital Contributions from Eversource Parent	94,500			—			45,000			—			94,500			—
Other Financing Activities	(255		)	(349		)	1,703			(225		)	(255		)	(349		)
Net Cash Flows (Used in)/Provided by Financing Activities	(53,755		)	34,451			9,703
Net Increase in Cash	2,913			1,244			359
Net Cash Flows Provided by/(Used in) Financing Activities										7,875			(53,755		)	34,451
Net (Decrease)/Increase in Cash										(3,746		)	2,913			1,244
Cash - Beginning of Year	1,733			489			130			4,646			1,733			489
Cash - End of Year	$	4,646		$	1,733		$	489		$	900		$	4,646		$	1,733

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

~~Company Report on Internal Controls Over Financial Reporting~~

~~Western Massachusetts Electric Company~~

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, WMECO conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in ~~Internal Control – Integrated Framework (2013)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2016.

~~February 22, 2017~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

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

We have audited the accompanying balance sheets of Western Massachusetts Electric Company (the "Company") as of December 31, 2016 and 2015, and the related statements of income, comprehensive income, common stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15 of Part IV. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

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

In our opinion, such financial statements present fairly, in all material respects, the financial position of Western Massachusetts Electric Company as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

~~/s/ Deloitte & Touche LLP~~

~~Hartford, Connecticut~~

~~February 22, 2017~~

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

~~BALANCE SHEETS~~

As of December 31,
(Thousands of Dollars) 2016 2015

ASSETS
Current Assets:
Cash $ —
$ 834
Receivables, Net 54,940
50,912
Accounts Receivable from Affiliated Companies 14,425
18,633
Unbilled Revenues 15,329
15,065
Taxes Receivable 1,067
33,407
Materials, Supplies and Inventory 8,618
5,992
Regulatory Assets 64,123
56,166
Prepayments and Other Current Assets 1,528
1,890
Total Current Assets 160,030
182,899

Property, Plant and Equipment, Net 1,678,262
1,575,306

Deferred Debits and Other Assets:
Regulatory Assets 127,291
135,010
Other Long-Term Assets 29,062
24,875
Total Deferred Debits and Other Assets 156,353
159,885

Total Assets $ 1,994,645
$ 1,918,090

LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent $ 51,000
$ 143,400
Accounts Payable 56,036
58,364
Accounts Payable to Affiliated Companies 19,478
19,896
Obligations to Third Party Suppliers 10,508
9,654
Renewable Portfolio Standards Compliance Obligations 20,383
6,395
Regulatory Liabilities 14,888
13,122
Other Current Liabilities 14,984
13,878
Total Current Liabilities 187,277
264,709

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes 490,793
470,539
Regulatory Liabilities 17,227
11,597
Accrued Pension, SERP and PBOP 20,390
19,515
Other Long-Term Liabilities 41,308
36,819
Total Deferred Credits and Other Liabilities 569,718
538,470

Capitalization:
Long-Term Debt 566,536
517,329

Common Stockholder's Equity:
Common Stock 10,866
10,866
Capital Surplus, Paid In 444,398
391,398
Retained Earnings 218,212
198,140
Accumulated Other Comprehensive Loss (2,362 ) (2,822 )
Common Stockholder's Equity 671,114
597,582
Total Capitalization 1,237,650
1,114,911

Commitments and Contingencies (Note 11)

Total Liabilities and Capitalization $ 1,994,645
$ 1,918,090

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

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

~~STATEMENTS OF INCOME~~

For the Years Ended December 31,
(Thousands of Dollars) 2016 2015 2014

Operating Revenues $ 484,192
$ 518,128
$ 493,423

Operating Expenses:
Purchased Power and Transmission 131,449
177,172
172,876
Operations and Maintenance 96,712
86,360
89,406
Depreciation 46,147
43,362
41,886
Amortization of Regulatory Assets/(Liabilities), Net 4,249
14,545
(6,228 )
Energy Efficiency Programs 44,179
42,867
42,937
Taxes Other Than Income Taxes 41,079
38,302
34,907
Total Operating Expenses 363,815
402,608
375,784
Operating Income 120,377
115,520
117,639
Interest Expense 24,425
24,792
24,931
Other Income, Net 142
2,748
2,379
Income Before Income Tax Expense 96,094
93,476
95,087
Income Tax Expense 38,022
36,970
37,268
Net Income $ 58,072
$ 56,506
$ 57,819

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

~~STATEMENTS OF COMPREHENSIVE INCOME~~

For the Years Ended December 31,
(Thousands of Dollars) 2016 2015 2014

Net Income $ 58,072
$ 56,506
$ 57,819
Other Comprehensive Income, Net of Tax:
Qualified Cash Flow Hedging Instruments 438
379
338
Changes in Unrealized Gains/(Losses) on Marketable Securities 22
(25 ) 3
Other Comprehensive Income, Net of Tax 460
354
341
Comprehensive Income $ 58,532
$ 56,860
$ 58,160

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

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

~~STATEMENTS OF COMMON STOCKHOLDER'S EQUITY~~

Common Stock
Capital
Surplus,
Paid In

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information) Stock Amount
Balance as of January 1, 2014 434,653
$ 10,866
$ 390,743
$ 181,014
$ (3,517 ) $ 579,106
Net Income

57,819
57,819
Dividends on Common Stock

(59,999 ) (59,999 )
Allocation of Benefits - ESOP

513
513
Other Comprehensive Income

341
341
Balance as of December 31, 2014 434,653
10,866
391,256
178,834
(3,176 ) 577,780
Net Income

56,506
56,506
Dividends on Common Stock

(37,200 ) (37,200 )
Allocation of Benefits - ESOP

142
142
Other Comprehensive Income

354
354
Balance as of December 31, 2015 434,653
10,866
391,398
198,140
(2,822 ) 597,582
Net Income

58,072
58,072
Dividends on Common Stock

(38,000 ) (38,000 )
Capital Contributions from Eversource Parent

53,000
53,000
Other Comprehensive Income

460
460
Balance as of December 31, 2016 434,653
$ 10,866
$ 444,398
$ 218,212
$ (2,362 ) $ 671,114

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

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

~~STATEMENTS OF CASH FLOWS~~

For the Years Ended December 31,
(Thousands of Dollars) 2016 2015 2014

Operating Activities:
Net Income $ 58,072
$ 56,506
$ 57,819
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation 46,147
43,362
41,886
Deferred Income Taxes 21,498
39,428
34,108
Regulatory Over/(Under) Recoveries, Net 590
(17,501 ) 1,925
Amortization of Regulatory Assets/(Liabilities), Net 4,249
14,545
(6,228 )
Refunds/(Payments) Related to Spent Nuclear Fuel, Net 3,553
(56,784 ) 18,883
Other (3,726 ) (6,421 ) (2,005 )
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net (7,164 ) (17,822 ) 39,872
Taxes Receivable/Accrued, Net 33,340
(15,281 ) (22,454 )
Accounts Payable (1,915 ) (2,602 ) 1,269
Other Current Assets and Liabilities, Net 12,686
5,594
(11,796 )
Net Cash Flows Provided by Operating Activities 167,330
43,024
153,279

Investing Activities:
Investments in Property, Plant and Equipment (140,626 ) (134,551 ) (116,205 )
Proceeds from Sales of Marketable Securities 2,479
186,444
73,198
Purchases of Marketable Securities (2,426 ) (128,861 ) (73,888 )
Other Investing Activities —
—
3,200
Net Cash Flows Used in Investing Activities (140,573 ) (76,968 ) (113,695 )

Financing Activities:
Cash Dividends on Common Stock (38,000 ) (37,200 ) (59,999 )
Issuance of Long-Term Debt 50,000
—
—
Retirements of Long-Term Debt —
(50,000 ) —
Capital Contributions from Eversource Parent 53,000
—
—
(Decrease)/Increase in Notes Payable to Eversource Parent (92,400 ) 122,000
21,400
Other Financing Activities (191 ) (22 ) (985 )
Net Cash Flows (Used in)/Provided by Financing Activities (27,591 ) 34,778
(39,584 )
Net (Decrease)/Increase in Cash (834 ) 834
—
Cash - Beginning of Year 834
��
—
Cash - End of Year $ —
$ 834
$ —

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

EVERSOURCE ENERGY AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY

NSTAR ELECTRIC COMPANY AND SUBSIDIARY

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY

~~WESTERN MASSACHUSETTS ELECTRIC COMPANY~~

COMBINED NOTES TO FINANCIAL STATEMENTS

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

~~Eversource Energy:~~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 ~~WMECO,~~(electric utilities), Yankee Gas and NSTAR ~~Gas.~~Gas (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately ~~3.7~~4 million electric, ~~and~~ natural gas and water customers through ~~these six~~eight regulated utilities in Connecticut, Massachusetts and New Hampshire.

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

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

Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~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. ~~The Regulated~~Eversource's regulated companies are subject to regulation of rates, accounting and other matters by the FERC and/or applicable state regulatory commissions (the PURA for CL&P and Yankee Gas, the DPU for NSTAR Electric ~~WMECO~~ and NSTAR Gas, the NHPUC for PSNH, and the PURA, the DPU and the NHPUC for ~~PSNH)~~Aquarion).

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

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

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

B. Basis of Presentation

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

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

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

Certain reclassifications of prior year data were made in the accompanying financial statements to conform to the current year ~~presentation and as a result of the adoption of new accounting guidance. See Note 1C, "Summary of Significant Accounting Policies – Accounting Standards," for further information.~~

presentation.

In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric, which are not owned by Eversource or its consolidated subsidiaries and are not subject to mandatory redemption, have been presented as noncontrolling interests in the financial statements of Eversource. The Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities and permanent shareholders' equity on the balance sheets of Eversource, CL&P and NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR Electric Boards of Directors, respectively, should certain conditions exist, such as if preferred dividends are in arrears for a specified amount of time. The Net Income reported in the statements of income and cash flows represents net income prior to apportionment to noncontrolling interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric.

As of December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource's carrying amount of goodwill was approximately $4.4 billion and $3.5 ~~billion.~~billion, respectively. Eversource performs an assessment for possible impairment of its goodwill at least annually. Eversource completed its annual goodwill impairment test for each of its reporting units as of October 1, ~~2016~~2017 and determined that no impairment exists. See Note ~~22, "Goodwill,~~22B, "Acquisition of Aquarion and Goodwill - Goodwill," for further information.

C. Northern Pass

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

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

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

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

D. Accounting Standards

A~~ccounting~~Accounting Standards Issued but Not Yet ~~Effective~~Effective:

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

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

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

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

After taking into consideration this identified change, the Company has concluded that the new guidance will not have a material impact on the amounts or timing of ~~recognizing revenues from billings to protected customers that may not meet the collectibility threshold for~~ revenue recognition. ~~Therefore, while the effects~~Implementation of ~~implementing~~ the ASU will not have a material effect on the results of operations, ~~are not expected to be material, there may be changes in the timing of revenue recognition on the~~ financial ~~statements~~position or cash flows of Eversource, CL&P, NSTAR Electric ~~PSNH~~or PSNH. Significant additional disclosures of the nature, amount, timing and ~~WMECO.~~uncertainty of revenues and cash flows arising from contracts with customers will be presented beginning in the first quarter of 2018.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities, which is required to be implemented in the first quarter of 2018. The ASU will remove the available-for-sale designation for equity securities, whereby changes in fair value are recorded in accumulated other comprehensive income within shareholders' equity, and will require changes in fair value of all equity securities to be recorded in earnings beginning on January 1, 2018, with the unrealized gain or loss on available-for-sale equity securities as of that date reclassified to retained earnings as a cumulative effect of adoption. The fair value of available-for-sale equity securities subject to this guidance as of December 31, ~~2016~~2017 was approximately ~~$48~~$51 million with an unrealized loss of $0.1 million. The unrealized loss recorded in AOCI will be recorded as an adjustment to the opening balance of retained earnings as of January 1, 2018. The remaining available-for-sale equity securities included in marketable securities on the balance sheet are held in nuclear decommissioning trusts and are subject to regulatory accounting treatment and will not be impacted by this guidance. Implementation of the ASU for other financial instruments is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric ~~PSNH and WMECO.~~or PSNH.

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

~~Recently Adopted Accounting Standards~~

In March ~~2016,~~2017, the FASB issued ASU ~~2016-09,~~2017-07, Compensation ~~- Stock Compensation: Improvements~~– Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, required to ~~Employee Share-Based Payment Accounting~~ ~~to simplify some aspects of the accounting for share-based payment transactions. The Company~~be implemented ~~this guidance~~ in the first quarter of ~~2016,~~2018. The ASU requires separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as ~~permitted. Beginning~~non-operating income and not subject to capitalization. The ASU is required to be applied retrospectively for the separate presentation in the ~~first quarter~~income statement of ~~2016, the excess tax benefits associated with the distribution of stock compensation awards, previously recognized~~service costs and other components and prospectively in ~~Capital Surplus, Paid In within Common Shareholders' Equity on~~ the balance sheet ~~are recognized in income tax expense in the income statement. The impact of this ASU reduced income tax expense by $19.1 million~~ for the ~~year ended December 31, 2016. Also, in~~capitalization of only the ~~statement~~service cost component. The implementation of ~~cash flows,~~ the ~~excess tax benefits are presented as~~ASU will not have an operating activity rather than a financing activity beginning in 2016, and cash paid to satisfy the statutory income tax withholding obligation previously reflected within operating activities in 2015 and 2014 was retrospectively adjusted and is now treated as a financing activity. The cash payments to satisfy this obligation for the years ended December 31, 2016, 2015 and 2014 were $26.6 million, $9.7 million and $16.5 million, respectively, and are included in Other Financing Activitiesimpact on the ~~statements~~net income of ~~cash flows.~~ Eversource, CL&P, NSTAR Electric or PSNH.

D.E. Cash and Cash Equivalents

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

E.F. Provision for Uncollectible Accounts

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

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

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


	Total Provision for Uncollectible Accounts				Uncollectible Hardship				Total Provision for Uncollectible Accounts				Uncollectible Hardship
	As of December 31,				As of December 31,				As of December 31,				As of December 31,
(Millions of Dollars)	2016		2015		2016		2015		2017		2016		2017		2016
Eversource	$	200.6	$	190.7	$	119.9	$	118.5	$	195.7	$	200.6	$	122.5	$	119.9
CL&P	86.4		79.5		67.7		68.1		78.9		86.4		65.5		67.7
NSTAR Electric	54.8		52.6		26.2		25.3		69.7		70.3		40.3		36.1
PSNH	9.9		8.7		—		—		10.5		9.9		—		—
WMECO	15.5		14.0		9.9		7.4

F.G. Fuel, Materials, Supplies and Inventory

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

PSNH is subject to federal and state laws and regulations that regulate emissions of air pollutants, including SO₂, CO₂, and NO_x related to its regulated generation units, and ~~uses~~used SO₂, CO₂, and NO_x emissions allowances. ~~At the end of each compliance period, PSNH is required to relinquish~~ SO₂, CO₂, and NO_x emissions allowances ~~corresponding to the actual respective emissions emitted by its generating units over the compliance period. SO~~₂ ~~and NO~~_x ~~emissions allowances are obtained through an annual allocation from the federal and state regulators that are granted at no cost and through purchases from third parties. CO~~₂ ~~emissions allowances are obtained through an annual allocation from the state regulator that are granted at no cost and are acquired through auctions and through purchases from third parties. SO~~₂~~, CO~~₂~~, and NO~~_x ~~emissions allowances are~~were charged to expense based on their average cost as they ~~are~~were utilized against emissions volumes at PSNH's generating units. SO₂~~, CO~~₂,

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

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


	As of December 31,																				As of December 31,
	2016										2015										2017								2016
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Current:
Fuel	$	135.7	$	—	$	—	$	99.9	$	—	$	152.5	$	—	$	—	$	103.4	$	—	$	29.7	$	—	$	—	$	—	$	135.7	$	—	$	—	$	99.9
Materials and Supplies	142.7		48.2		34.5		47.3		5.2		131.2		43.1		32.2		44.6		5.4		117.1		44.4		45.1		18.5		142.7		48.2		39.7		47.3
RECs	47.9		3.9		27.8		12.8		3.4		50.9		—		43.3		7.0		0.6		76.3		4.0		50.4		21.8		47.9		3.9		31.2		12.8
Emission Allowances	2.4		—		—		2.4		—		1.9		—		—		1.9		—		—		—		—		—		2.4		—		—		2.4
Long-Term:
Emission Allowances	17.5		—		—		17.5		—		17.5		—		—		17.5		—		—		—		—		—		17.5		—		—		17.5

G.H. Deposits

As of December 31, ~~2016,~~2017, Eversource, CL&P, NSTAR Electric and PSNH had ~~$21.7~~$24.5 million, ~~$1.4~~$3.1 million, ~~$11.8~~$12.8 million and $0.5 million, respectively, of cash collateral posted not subject to master netting agreements, with ISO-NE related to energy transactions, which was included in Prepayments and Other Current Assets on the balance sheets. As of December 31, ~~2015,~~2016, these amounts were ~~$17.1~~$21.7 million, ~~$0.7~~$1.4 million, ~~$8.5~~$11.8 million and ~~$1.5~~$0.5 million for Eversource, CL&P, NSTAR Electric and PSNH, respectively.

H.I. Fair Value Measurements

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

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

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

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

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

Certain investments held in the Pension and PBOP plans have been valued using net asset value ("NAV") as a practical expedient. These investments are not traded on an exchange and are typically structured as investment companies offering shares or units to multiple investors for the purpose of providing a return. They include commingled funds, private equity funds, real estate funds and hedge funds. In 2016, Eversource retrospectively adopted new accounting guidance that requires investments for which fair value is measured using the NAV practical expedient no longer be classified within the fair value hierarchy. Investments valued using the NAV practical expedient are included separately in fair value disclosures and are not classified within any of the fair value hierarchy levels. Prior to the adoption of this guidance, these investments were reported within Level 2 or Level 3 of the fair value hierarchy. The adoption of this guidance changes fair value disclosures, but does not impact the methodology for valuing these investments, or the financial statement results. See Note 9A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other than Pensions" for the fair value disclosures of the Pension and PBOP plan assets.

Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," Note 6, "Asset Retirement Obligations," Note 9A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pensions," and Note 14, "Fair Value of Financial Instruments" to the financial statements.

I.J. Derivative Accounting

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

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

The judgment applied in the election of a contract as normal (and resulting accrual accounting) includes the conclusion that it is probable at the inception of the contract and throughout its term that it will result in physical delivery of the underlying product and that the quantities will be used or sold by the business in the normal course of business. If facts and circumstances change and management can no longer support this conclusion, then a contract cannot be considered normal and accrual accounting is terminated, and fair value accounting is applied prospectively.

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

All changes in the fair value of derivative contracts are recorded as regulatory assets or liabilities and do not impact net income.

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

J.K. Investments

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

Strategic, Infrastructure and Other Investments: As of December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource had investments totaling ~~$236.9~~$277.6 million and ~~$48.0~~$236.9 million, respectively. As of December 31, 2017 and 2016, ~~Eversource had~~Eversource's investments included a 15 percent ownership interest in a FERC-regulated natural gas transmission business of $159.6 million and $154.6 ~~million. As of December 31, 2016 and 2015, Eversource's investments included~~million, respectively, a 40 percent ownership interest in Access Northeast of ~~$30.9~~$31.3 million and ~~$10.7~~$30.9 million, respectively, a 37.2 percent (14.5 percent of which related to NSTAR Electric) ownership interest in two companies that transmit ~~electricity~~hydro-electricity imported from the Hydro-Quebec system in Canada of ~~$7.7~~$17.7 million and ~~$7.0~~$7.7 million, respectively, and other investments totaling ~~$43.7~~$69.0 million and ~~$30.3~~$43.7 million, respectively. NSTAR Electric's investments totaled ~~$3.0~~$6.9 million and ~~$2.7~~$3.0 million, respectively, as of December 31, ~~2016~~2017 and ~~2015.~~2016.

Regional Decommissioned Nuclear Companies: CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH own common stock in three regional nuclear generation companies (CYAPC, YAEC and MYAPC, collectively referred to as the "Yankee Companies"), each of which owned a single nuclear generating facility that has been decommissioned. For CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, the respective investments in CYAPC, YAEC and MYAPC are accounted for under the equity method and are included in Other Long-Term Assets on their respective balance sheets. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's ~~PSNH's~~ and ~~WMECO's~~PSNH's combined ownership interest in each of these entities is greater than 50 percent. For further information on the Yankee Companies, see Note 11C, "Commitments and Contingencies – Spent Nuclear Fuel Obligations – Yankee Companies," to the financial statements.

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

L. Revenues

~~Regulated Companies'~~ Retail Revenues: ~~The Regulated companies' retail~~Retail revenues are based on rates approved by ~~their~~ respective state regulatory commissions. In general, rates can only be changed through formal proceedings with the state regulatory commissions. ~~The Regulated companies'~~These rates are designed to recover the costs to provide service to ~~their~~ customers, and include a return on investment. ~~The Regulated companies also utilize regulatory~~Regulatory commission-approved tracking mechanisms are also used to recover certain costs on a fully-reconciling basis. These tracking mechanisms require rates to be changed periodically to ensure recovery of actual costs incurred.

Certain Eversource electric, natural gas and water companies, including CL&P ~~WMECO~~ and NSTAR ~~Gas each~~Electric (for a portion of its customers), have a regulatory commission approved revenue decoupling ~~mechanism. NSTAR Gas' decoupling~~ mechanism ~~was effective January 1, 2016.~~("decoupled companies"). Distribution revenues are decoupled from customer sales volumes, where applicable, which breaks the relationship between sales volumes and revenues recognized. ~~CL&P, WMECO and NSTAR Gas~~The decoupled companies reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues. Any difference between the allowed level of distribution revenue and the actual amount ~~incurred~~realized is adjusted through rates in a subsequent period.

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

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

The Regulated companies estimate unbilled sales volumes monthly by first allocating billed sales volumes to the current calendar month based on the daily load (for electric distribution companies) or the daily send-out (for natural gas distribution companies) for each billing cycle. The billed sales volumes are then subtracted from total month load or send-out, net of delivery losses, to estimate unbilled sales volumes. Unbilled revenues are ~~estimated~~recognized by ~~first~~ allocating estimated unbilled sales volumes to the respective customer classes, and then applying an estimated rate by customer class to those sales volumes. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer rates in effect for customer classes, and the timing of customer billing. The estimate of unbilled revenues can significantly impact the amount of revenues recorded at ~~NSTAR Electric, PSNH and Yankee Gas because they~~the companies that do not have a revenue decoupling mechanism. ~~CL&P, WMECO and NSTAR Gas~~Companies that do have a decoupling mechanism record a regulatory deferral to reflect the actual allowed amount of revenue associated with their respective decoupled distribution rate design.

~~Regulated Companies'~~ Transmission Revenues - Wholesale Rates: The Eversource ~~transmission owning~~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 ~~has~~and NSTAR Electric each have two sets of local rates ~~one for the combined transmission revenue requirements of CL&P, PSNH and WMECO, and the other for NSTAR Electric. These local rates~~that recover the companies' total transmission revenue requirements, less revenues received from regional rates and other sources, and are collected from Eversource's distribution businesses and other transmission customers. The distribution businesses of Eversource, in turn, recover the ~~FERC~~FERC- approved charges from retail customers through annual or semiannual tracking mechanisms. The transmission formula rates provide for the annual reconciliation and recovery or refund of estimated costs to actual costs. The financial impacts of differences between actual and estimated costs are deferred for future recovery from, or ~~refunded~~refund to, transmission customers. See Note 11E, "Commitments and Contingencies – FERC ROE Complaints," for complaints filed at the FERC relating to Eversource's ROE.

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

L.M. Operating Expenses

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

For the Years Ended December 31,
(Millions of Dollars) 2016 2015 2014
Eversource - Natural Gas and Fuel $ 372.2
$ 516.7
$ 599.4
PSNH - Fuel 45.0
85.4
113.4



	For the Years Ended December 31,
(Millions of Dollars)	2017		2016		2015
Eversource - Natural Gas and Fuel	$	432.5	$	372.2	$	516.7
PSNH - Fuel	43.4		45.0		85.4

N. Allowance for Funds Used During Construction

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

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


Eversource	For the Years Ended December 31,									For the Years Ended December 31,
(Millions of Dollars, except percentages)	2016			2015			2014			2017			2016			2015
Borrowed Funds	$	10.8		$	7.2		$	5.8		$	12.5		$	10.8		$	7.2
Equity Funds	26.2			18.8			13.7			34.4			26.2			18.8
Total AFUDC	$	37.0		$	26.0		$	19.5		$	46.9		$	37.0		$	26.0
Average AFUDC Rate	4.4		%	3.9		%	3.4		%	5.1		%	4.4		%	3.9		%


	For the Years Ended December 31,																																				For the Years Ended December 31,
	2016												2015												2014												2017									2016									2015
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Borrowed Funds	$	3.3		$	4.6		$	0.8		$	0.6		$	2.6		$	2.0		$	1.0		$	1.0		$	1.9		$	2.0		$	0.6		$	0.9		$	5.1		$	4.8		$	0.7		$	3.3		$	5.3		$	0.8		$	2.6		$	3.0		$	1.0
Equity Funds	6.3			10.2			0.3			—			5.2			4.3			1.2			1.7			2.9			3.8			0.6			1.7			12.1			10.2			—			6.3			10.2			0.3			5.2			6.0			1.2
Total AFUDC	$	9.6		$	14.8		$	1.1		$	0.6		$	7.8		$	6.3		$	2.2		$	2.7		$	4.8		$	5.8		$	1.2		$	2.6		$	17.2		$	15.0		$	0.7		$	9.6		$	15.5		$	1.1		$	7.8		$	9.0		$	2.2
Average AFUDC Rate	4.7		%	3.9		%	1.0		%	0.8		%	5.5		%	3.2		%	1.8		%	4.4		%	3.4		%	2.5		%	1.8		%	5.6		%	6.2		%	5.0		%	0.7		%	4.7		%	3.2		%	1.0		%	5.5		%	3.5		%	1.8		%

N.O. Other Income, Net

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

O.P. Other Taxes

~~Gross~~Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut ~~are collected by CL&P and Yankee Gas~~ from their ~~respective~~ customers. These gross receipts taxes are shown 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,						For the Years Ended December 31,
(Millions of Dollars)	2016		2015		2014		2017		2016		2015
Eversource	$	162.7	$	147.2	$	148.2	$	157.4	$	162.7	$	147.2
CL&P	145.2		128.5		127.9		137.5		145.2		128.5

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

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

Q. Supplemental Cash Flow Information


Eversource (Millions of Dollars)	As of and For the Years Ended December 31,							As of and For the Years Ended December 31,
	2016			2015		2014		2017		2016			2015
Cash Paid/(Received) During the Year for:
Interest, Net of Amounts Capitalized	$	398.1		$	365.9	$	349.6	$	419.1	$	398.1		$	365.9
Income Taxes	(135.5		)	10.3		334.2		30.8		(135.5		)	10.3
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of)	301.5			216.6		181.9		379.5		301.5			216.6



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

As of and For the Years Ended December 31,
2016 2015 2014
(Millions of Dollars) CL&P
NSTAR
Electric
PSNH WMECO CL&P
NSTAR
Electric
PSNH WMECO CL&P
NSTAR
Electric
PSNH WMECO
Cash Paid/(Received) During the Year for:
Interest, Net of Amounts Capitalized $ 143.3
$ 88.2
$ 46.5
$ 24.7
$ 144.4
$ 75.7
$ 42.3
$ 26.7
$ 144.1
$ 75.3
$ 41.1
$ 25.9
Income Taxes (73.9 ) 80.7
(36.0 ) (14.7 ) 55.2
(19.8 ) 14.4
14.7
135.4
217.1
2.3
25.1
Non-Cash Investing Activities:
Plant Additions Included in Accounts Payable (As of) 116.2
60.9
37.9
26.1
76.0
23.5
46.5
27.0
63.5
34.6
39.3
14.2

In 2016, as a result of damages awarded to the Yankee Companies for spent nuclear fuel lawsuits against the DOE described in Note 11C, "Commitments and Contingencies – Spent Nuclear Fuel Obligations – Yankee Companies," CYAPC and YAEC received total proceeds of $52.2 million, which were classified as operating activities on the Eversource consolidated statements of cash flows. CYAPC returned $6.8 million of these proceeds to its non-affiliated member companies. In addition, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH received a total distribution of $14.4 million from MYAPC as a result of DOE Phase III proceeds and a distribution from its spent nuclear fuel trust.

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

Q.R. Related Parties

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

As of both December 31, ~~2016~~2017 and ~~2015,~~2016, CL&P, ~~PSNH~~NSTAR Electric and ~~WMECO~~PSNH had long-term receivables from Eversource Service in the amounts of ~~$25~~$25.0 million, $3.8 million and $5.5 million, respectively, which were included in Other Long-Term Assets on the balance sheets. These amounts related to the funding of investments held in trust by Eversource Service in connection with certain postretirement benefits for CL&P, ~~PSNH~~NSTAR Electric and ~~WMECO~~PSNH employees and have been eliminated in consolidation on the Eversource financial statements.

Included in the CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH balance sheets as of December 31, ~~2016~~2017 and ~~2015~~2016 were Accounts Receivable from Affiliated Companies and Accounts Payable to Affiliated Companies relating to transactions between CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH and other subsidiaries that are wholly-owned by Eversource. These amounts have been eliminated in consolidation on the Eversource financial statements.

2. REGULATORY ACCOUNTING

Eversource's ~~Regulated~~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~~regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's ~~Regulated~~regulated companies are designed to collect each company's costs to provide service, including a return on investment.

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

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


Eversource (Millions of Dollars)	As of December 31,				As of December 31,
	2016		2015		2017		2016
Benefit Costs	$	1,817.8	$	1,828.2	$	2,068.8	$	1,817.8
Deferred Costs from Generation Asset Sale					516.1		—
Derivative Liabilities	423.3		388.0		367.2		423.3
Income Taxes, Net	644.5		650.9		768.9		644.5
Storm Restoration Costs	385.3		436.9		404.8		385.3
Goodwill-related	464.4		484.9		365.2		464.4
Regulatory Tracker Mechanisms	576.6		526.5		509.9		576.6
Contractual Obligations - Yankee Companies	84.9		134.4
Asset Retirement Obligations					101.0		99.3
Other Regulatory Assets	129.5		134.0		137.4		115.1
Total Regulatory Assets	4,526.3		4,583.8		5,239.3		4,526.3
Less: Current Portion	887.6		845.8		741.9		887.6
Total Long-Term Regulatory Assets	$	3,638.7	$	3,738.0	$	4,497.4	$	3,638.7


	As of December 31,																As of December 31,
	2016								2015								2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Benefit Costs	$	429.3	$	438.6	$	184.2	$	86.7	$	413.6	$	479.9	$	164.2	$	84.9	$	469.2	$	560.7	$	212.3	$	429.3	$	525.3	$	184.2
Deferred Costs from Generation Asset Sale																	—		—		516.1		—		—		—
Derivative Liabilities	420.5		2.8		—		—		380.8		1.3		—		—		362.3		—		—		420.5		2.8		—
Income Taxes, Net	437.0		89.7		24.2		30.8		444.4		85.7		34.5		31.8		453.8		113.2		21.7		437.0		120.5		24.2
Storm Restoration Costs	239.8		112.5		17.1		15.9		271.4		110.9		31.5		23.1		216.7		146.6		41.5		239.8		128.4		17.1
Goodwill-related	—		398.7		—		—		—		416.3		—		—		—		313.6		—		—		398.7		—
Regulatory Tracker Mechanisms	123.9		257.3		104.5		46.7		45.1		311.0		101.2		40.1		85.3		273.0		116.4		123.9		304.0		104.5
Asset Retirement Obligations																	30.3		39.0		17.0		33.2		36.1		16.2
Other Regulatory Assets	76.6		47.5		32.7		11.3		82.0		56.3		31.5		11.3		27.6		78.4		15.8		43.4		22.7		16.5
Total Regulatory Assets	1,727.1		1,347.1		362.7		191.4		1,637.3		1,461.4		362.9		191.2		1,645.2		1,524.5		940.8		1,727.1		1,538.5		362.7
Less: Current Portion	335.5		289.4		117.2		64.1		268.3		348.4		105.0		56.2		200.3		333.9		130.1		335.5		353.5		117.2
Total Long-Term Regulatory Assets	$	1,391.6	$	1,057.7	$	245.5	$	127.3	$	1,369.0	$	1,113.0	$	257.9	$	135.0	$	1,444.9	$	1,190.6	$	810.7	$	1,391.6	$	1,185.0	$	245.5

Benefit Costs: Eversource's Pension, SERP and PBOP Plans are accounted for in accordance with accounting guidance on defined benefit pension and other PBOP plans. The liability (or asset) recorded by the ~~Regulated~~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~~regulated companies, as these amounts are also recoverable. As these regulatory assets or regulatory liabilities do not represent a cash outlay for the ~~Regulated~~regulated companies, no carrying charge is recovered from customers.

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

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

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

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

Storm Restoration Costs: The storm restoration cost deferrals relate to costs incurred for major storm events at CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH that each company expects to recover from customers. A storm must meet certain criteria to qualify as a major storm with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies as a major storm, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover pre-staging storm costs. Of the total deferred storm restoration costs, $239 million is pending regulatory approval (including $33 million at CL&P, $124 million at NSTAR Electric, $78 million at PSNH, and $4 million at WMECO). Management believes the storm restoration costs were prudent and meet the criteria for specific cost recovery in Connecticut, Massachusetts and New Hampshire, and that recovery from customers is

probable through the applicable regulatory recovery process. Each electric utility has sought, or is seeking, recovery of its deferred storm restoration costs through its applicable regulatory recovery process. Each electric utility company either ~~records~~recovers a carrying charge on its deferred storm restoration cost regulatory asset balance or the regulatory asset balance is included in rate base.

Goodwill-related: The goodwill regulatory asset originated from a 1999

transaction, and the DPU allowed its recovery in NSTAR Electric and NSTAR Gas rates. This regulatory asset is currently being amortized and recovered from customers in rates without a carrying charge over a 40-year period, and, as of December 31, ~~2016,~~2017, there were 2322 years of amortization remaining.

Regulatory Tracker Mechanisms: The ~~Regulated~~regulated companies' approved rates are designed to recover costs incurred to provide service to customers. The ~~Regulated~~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 ~~recorded~~recovered in rates on all material regulatory tracker mechanisms.

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

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

~~Contractual Obligations - Yankee Companies:~~Asset Retirement Obligations: ~~CL&P, NSTAR Electric, PSNH and WMECO are responsible for their proportionate share~~The costs associated with the depreciation of the ~~remaining costs, including nuclear fuel storage,~~regulated companies' ARO assets and accretion of the ~~CYAPC, YAEC and MYAPC nuclear facilities. A portion of these costs was~~ARO liabilities are recorded as a regulatory ~~asset. Amounts for CL&P~~assets in accordance with regulatory accounting guidance. The regulated companies' ARO assets, regulatory assets and liabilities offset and are ~~earning a return and~~excluded from rate base. These costs are being recovered ~~through~~over the CTA. Amounts for NSTAR Electric and WMECO are being recovered without a return through the transition charge. Amounts for PSNH were fully recovered in 2006. As a result of Eversource's consolidation of CYAPC and YAEC, Eversource's regulatory asset balance also includes the regulatory assets of CYAPC and YAEC, which totaled $70.9 million and $110.9 million as of December 31, 2016 and 2015, respectively. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidationlife of the ~~Eversource financial statements.~~underlying property, plant and equipment.

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

Regulatory Costs in ~~Other~~ Long-Term Assets: Eversource's ~~Regulated~~regulated companies had $105.8 million (including $18.2 million for CL&P, $42.7 million for NSTAR Electric and $27.2 million for PSNH) and $86.3 million (including $5.9 million for CL&P, ~~$35.0~~$55.1 million for NSTAR Electric and $8.2 million for ~~PSNH and $20.1 million for WMECO) and $75.3 million (including $3.1 million for CL&P, $35.4 million for NSTAR Electric, $4.8 million for PSNH, and $16.7 million for WMECO)~~PSNH) of additional regulatory costs as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively, that were included in ~~Other Long-Term Assets~~long-term assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.

Equity Return on Regulatory Assets: For rate-making purposes, the ~~Regulated~~regulated companies recover the carrying costs related to their regulatory assets. For certain regulatory assets, the carrying cost recovered includes an equity return component. This equity return, which is not recorded on the balance sheets, totaled ~~$1.2~~$1.0 million and ~~$1.5~~$1.2 million for CL&P as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively. These carrying costs will be recovered from customers in future rates.

As of December 31, ~~2016~~2017 and ~~2015,~~2016, this equity return, which is not recorded on the balance sheets, totaled ~~$44.9~~$42.0 million and ~~$48.3~~$44.9 million, respectively, for PSNH. These amounts include $25 million of equity return on the Clean Air Project costs that PSNH has agreed not to bill customers as part of a generation divestiture settlement agreement.

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


Eversource (Millions of Dollars)	As of December 31,				As of December 31,
	2016		2015		2017		2016
Cost of Removal	$	459.7	$	437.1	$	502.1	$	459.7
Benefit Costs					132.3		136.2
Regulatory Tracker Mechanisms	145.3		99.7		136.7		145.3
Benefit Costs	136.2		—
AFUDC - Transmission	65.8		66.1		67.1		65.8
Other Regulatory Liabilities	42.1		18.5		45.2		42.1
Total Regulatory Liabilities(1)	849.1		621.4		883.4		849.1
Less: Current Portion	146.8		107.8		128.1		146.8
Total Long-Term Regulatory Liabilities(1)	$	702.3	$	513.6	$	755.3	$	702.3


	As of December 31,																As of December 31,
	2016								2015								2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Cost of Removal	$	38.8	$	271.6	$	44.1	$	8.6	$	24.1	$	257.4	$	47.2	$	2.8	$	23.2	$	293.8	$	37.9	$	38.8	$	280.2	$	44.1
Benefit Costs	—		113.1		—		—		—		—		—		—		—		112.6		—		—		113.1		—
Regulatory Tracker Mechanisms	37.2		63.7		10.7		14.7		56.2		3.3		3.4		12.9		34.6		77.8		5.0		37.2		78.4		10.7
AFUDC - Transmission	50.2		6.9		—		8.7		51.5		5.7		—		8.9		48.8		18.3		—		50.2		15.6		—
Other Regulatory Liabilities	21.0		0.2		2.7		0.1		4.2		1.3		4.2		0.1		12.9		3.7		2.7		21.0		0.3		2.7
Total Regulatory Liabilities(1)	147.2		455.5		57.5		32.1		136.0		267.7		54.8		24.7		119.5		506.2		45.6		147.2		487.6		57.5
Less: Current Portion	47.1		63.7		12.7		14.9		61.2		3.3		6.9		13.1		39.0		79.6		6.3		47.1		78.5		12.7
Total Long-Term Regulatory Liabilities(1)	$	100.1	$	391.8	$	44.8	$	17.2	$	74.8	$	264.4	$	47.9	$	11.6	$	80.5	$	426.6	$	39.3	$	100.1	$	409.1	$	44.8

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

Cost of Removal: Eversource's ~~Regulated~~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. ~~Expended costs that exceed amounts collected from customers are recognized as regulatory assets, as they are probable of recovery in future rates.~~

AFUDC - Transmission: Regulatory liabilities were recorded by CL&P and WMECO for AFUDC accrued on certain reliability-related transmission projects to reflect local rate base recovery as a result of a FERC-approved transmission tariff. A regulatory liability was recorded by NSTAR Electric for AFUDC accrued on certain reliability-related transmission projects to reflect local rate base recovery. These regulatory liabilities ~~for CL&P, NSTAR Electric and WMECO~~ will be amortized over the depreciable life of the related transmission assets.

~~2016 Regulatory Developments:~~

FERC ROE ~~Complaints:~~Complaints: As of December 31, ~~2016,~~2017, Eversource has a reserve established for the first and second ROE complaints in the pending FERC ROE complaint proceedings, which was recorded as a regulatory liability. The cumulative pre-tax reserve (excluding interest) as of December 31, ~~2016,~~2017, which includes the impact of refunds given to customers, totaled $39.1 million for Eversource (including $21.4 million for CL&P, ~~$8.5~~$14.6 million for NSTAR Electric and $3.1 million for ~~PSNH, and $6.1 million for WMECO)~~PSNH). See Note 11E, "Commitments and Contingencies – FERC ROE Complaints," for further information on developments in the pending ROE complaint proceedings.

Recent Regulatory Developments:

~~Transmission Merger Cost Recovery Filing:~~NSTAR Electric Distribution Rate Case Decision: On November 30, 2017, the DPU issued its decision in the NSTAR Electric distribution rate case, which approved an annual distribution rate increase of $37 million, with rates effective February 1, 2018. On January ~~31, 2017, FERC issued~~3, 2018, NSTAR Electric filed a motion to reflect a revenue requirement reduction of $56 million (due to the decrease in the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act"), resulting in an ~~order accepting~~annual net decrease in rates of $19 million.

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

Among other items, the DPU approved the recovery of previously expensed merger-related costs (which were incurred by Eversource ~~Service on November 22, 2016, which included~~parent in prior years) over a 10-year period and the recovery ~~through transmission rates~~ of ~~$27.5~~previously deferred storm costs with carrying charges at the prime rate, but disallowed certain property taxes. The rate case decision resulted in the recognition of an aggregate $44.1 million ~~of costs, over the period June 1, 2016 through May 31,~~pre-tax benefit recorded in 2017 ~~associated with the merger of Northeast Utilities and NSTAR. Eversource recorded the $27.5 million as a regulatory asset~~ ($~~13.2 million at CL&P, $7.8~~14.1 million at NSTAR Electric, $3.0 million at PSNH and $3.5 million at WMECO) and as a reduction to Operations and Maintenance expense on the Eversource statements of income in 2016. The remaining regulatory asset, after amortization, as of December 31, 2016 was $11.5 million at Eversource ($5.5 million at CL&P, $3.2 million at NSTAR Electric, $1.3 million at PSNH and $1.5 million at WMECO)Electric).

~~Spent Nuclear Fuel Litigation - Yankee Companies:~~ As a result of damages awarded to the Yankee Companies for spent nuclear fuel lawsuits against the DOE described in Note 11C, "Commitments and Contingencies - Spent Nuclear Fuel Obligations - Yankee Companies," the Yankee Companies returned a portion of the DOE Phase III Damages proceeds to Eversource's utility subsidiaries, for the benefit of their respective customers, and MYAPC also refunded an additional amount from its spent nuclear fuel trust to Eversource's utility subsidiaries. Proceeds received from the Yankee Companies to CL&P, NSTAR Electric, PSNH and WMECO were $13.6 million, ~~$5.0 million, $3.9 million and $3.6 million, respectively, and the corresponding refund obligation to customers was recorded as a regulatory liability.~~

CL&P ~~2016 Unbilled Revenues Order:~~Rate Case Settlement: ~~Pursuant to~~On January 11, 2018, CL&P filed a distribution rate case settlement agreement for approval by PURA, which included, among other things, rate increases of $97.1 million, $32.7 million and $24.7 million, effective May 1, 2018, 2019, and 2020, respectively, an ~~order received~~authorized regulatory ROE of 9.25 percent, 53 percent common equity in ~~2016, unbilled revenues~~CL&P's capital structure, and a new capital tracker through 2020 for capital additions, system resiliency, and grid modernization. The rate increases associated with ~~CL&P's retail transmission and by-passable FMCC regulatory tracker reconciliation deferrals~~the settlement agreement will be ~~recovered~~reduced by the impact of the decrease in ~~rates~~the federal corporate income tax rate, as part of the "Tax Cuts and Jobs Act," while amounts related to ADIT will be addressed in ~~2017 and are therefore classified within current regulatory assets.~~a separate manner. CL&P expects to receive final approval from PURA in the second quarter of 2018. No actions arose from this settlement that had an impact on previously deferred costs.

3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

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

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

Eversource As of December 31,
(Millions of Dollars) 2016 2015
Distribution - Electric $ 13,716.9
$ 13,054.8
Distribution - Natural Gas 3,010.4
2,727.2
Transmission - Electric 8,517.4
7,691.9
Generation 1,224.2
1,194.1
Electric and Natural Gas Utility 26,468.9
24,668.0
Other ⁽¹⁾
591.6
558.6
Property, Plant and Equipment, Gross 27,060.5
25,226.6
Less: Accumulated Depreciation
Electric and Natural Gas Utility (6,480.4 ) (6,141.1 )
Other (242.0 ) (255.6 )
Total Accumulated Depreciation (6,722.4 ) (6,396.7 )
Property, Plant and Equipment, Net 20,338.1
18,829.9
Construction Work in Progress 1,012.4
1,062.5
Total Property, Plant and Equipment, Net $ 21,350.5
$ 19,892.4

~~(1)~~ ~~These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.~~



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


	As of December 31,																								As of December 31,
	2016												2015												2017									2016
(Millions of Dollars)	CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Distribution	$	5,562.9		$	5,402.3		$	1,949.8		$	841.9		$	5,377.2		$	5,100.5		$	1,804.8		$	812.3		$	5,888.3		$	6,479.0		$	2,083.4		$	5,562.9		$	6,244.2		$	1,949.8
Transmission	3,912.9			2,435.8			1,059.3			1,061.1			3,618.0			2,131.3			928.2			964.9			4,239.9			3,821.2			1,161.3			3,912.9			3,496.9			1,059.3
Generation	—			—			1,188.2			36.0			—			—			1,158.1			36.0
Generation and Solar ⁽²⁾																									—			36.2			—			—			36.0			1,188.2
Property, Plant and Equipment, Gross	9,475.8			7,838.1			4,197.3			1,939.0			8,995.2			7,231.8			3,891.1			1,813.2			10,128.2			10,336.4			3,244.7			9,475.8			9,777.1			4,197.3
Less: Accumulated Depreciation	(2,082.4		)	(2,025.4		)	(1,254.7		)	(338.8		)	(2,041.9		)	(1,886.8		)	(1,171.0		)	(307.0		)	(2,239.0		)	(2,550.2		)	(751.8		)	(2,082.4		)	(2,364.2		)	(1,254.7		)
Property, Plant and Equipment, Net	7,393.4			5,812.7			2,942.6			1,600.2			6,953.3			5,345.0			2,720.1			1,506.2			7,889.2			7,786.2			2,492.9			7,393.4			7,412.9			2,942.6
Construction Work in Progress	239.0			239.1			96.7			78.1			203.5			310.5			135.3			69.1			381.8			460.3			149.4			239.0			317.2			96.7
Total Property, Plant and Equipment, Net	$	7,632.4		$	6,051.8		$	3,039.3		$	1,678.3		$	7,156.8		$	5,655.5		$	2,855.4		$	1,575.3		$	8,271.0		$	8,246.5		$	2,642.3		$	7,632.4		$	7,730.1		$	3,039.3


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

⁽²⁾

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


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

Depreciation of utility assets is calculated on a straight-line basis using composite rates based on the estimated remaining useful lives of the various classes of property (estimated useful life for PSNH ~~distribution)~~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, ~~(other than PSNH Generation),~~ 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)	2016		2015		2014		2017		2016		2015
Eversource	3.0	%	2.9	%	3.0	%	3.0	%	3.0	%	2.9	%
CL&P	2.7	%	2.7	%	2.7	%	2.8	%	2.7	%	2.7	%
NSTAR Electric	3.0	%	3.0	%	3.0	%	2.9	%	2.9	%	2.9	%
PSNH	3.1	%	3.2	%	3.0	%	3.1	%	3.1	%	3.2	%
WMECO	2.7	%	2.7	%	3.3	%

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


	As of December 31, 2016					As of December 31, 2017
(Years)	Eversource	CL&P	NSTAR Electric	PSNH	WMECO	Eversource	CL&P	NSTAR Electric	PSNH
Distribution	35.1	37.7	32.0	31.3	30.7	34.6	35.8	31.7	31.3
Transmission	41.5	38.0	43.8	43.5	49.7	40.9	37.2	44.7	43.5
Generation	29.0	—	—	29.1	25.0
Water						32.0	—	—	—
Solar						25.0	—	25.0	—
Other	11.0	—	—	—	—	12.7	—	—	—

4. DERIVATIVE INSTRUMENTS

The ~~Regulated~~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. ~~The Regulated~~These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts.

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

Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets. For the ~~Regulated~~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,																		As of December 31,
	2016									2015									2017									2016
(Millions of Dollars)	Commodity Supply and Price Risk Management			Netting ⁽¹⁾			Net Amount Recorded as a Derivative			Commodity Supply and Price Risk Management			Netting ⁽¹⁾			Net Amount Recorded as a Derivative			Commodity Supply and Price Risk Management			Netting ⁽¹⁾			Net Amount Recorded as a Derivative			Commodity Supply and Price Risk Management			Netting ⁽¹⁾				Net Amount Recorded as a Derivative
Current Derivative Assets:
Level 2:
Eversource	$	6.0		$	—		$	6.0		$	—		$	—		$	—		$	—		$	—		$	—		$	6.0		$	—			$	6.0
Level 3:
Eversource, CL&P	13.9			(9.4		)	4.5			16.7			(10.9		)	5.8
CL&P																			9.5			(7.1		)	2.4			13.9			(9.4		)		4.5
Long-Term Derivative Assets:
Level 2:
Eversource	$	0.3		$	(0.1	)	$	0.2		$	0.1		$	—		$	0.1		$	—		$	—		$	—		$	0.3		$	(0.1	)		$	0.2
Level 3:
Eversource	77.3			(11.7		)	65.6			62.0			(19.3		)	42.7
CL&P	77.3			(11.7		)	65.6			60.7			(19.3		)	41.4			71.9			(5.3		)	66.6			77.3			(11.7		)		65.6
NSTAR Electric	—			—			—			1.3			—			1.3
Current Derivative Liabilities:
Level 2:
Eversource	$	—		$	—		$	—		$	(5.8	)	$	—		$	(5.8	)	$	(4.5	)	$	—		$	(4.5	)	$	—		$	—			$	—
Level 3:
Eversource	(79.7		)	—			(79.7		)	(92.3		)	—			(92.3		)	(54.4		)	—			(54.4		)	(79.7		)	—				(79.7		)
CL&P	(77.8		)	—			(77.8		)	(91.8		)	—			(91.8		)	(54.4		)	—			(54.4		)	(77.8		)	—				(77.8		)
NSTAR Electric	(1.9		)	—			(1.9		)	(0.5		)	—			(0.5		)
Long-Term Derivative Liabilities:	Long-Term Derivative Liabilities:																		Long-Term Derivative Liabilities:
Level 2:
Eversource																			$	(0.4	)	$	—		$	(0.4	)	$	—		$	—		—	$	—
Level 3:
Eversource	$	(413.7	)	$	—		$	(413.7	)	$	(337.1	)	$	—		$	(337.1	)	(376.9		)	—			(376.9		)	(413.7		)	—				(413.7		)
CL&P	(412.8		)	—			(412.8		)	(336.2		)	—			(336.2		)	(376.9		)	—			(376.9		)	(412.8		)	—				(412.8		)
NSTAR Electric	(0.9		)	—			(0.9		)	(0.9		)	—			(0.9		)


⁽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, ~~2016, Eversource's and~~2017, CL&P's derivative assets were exposed to counterparty credit risk. Of ~~Eversource's and~~ CL&P's derivative assets, ~~$76.2~~$69.0 million ~~and $70.0 million, respectively, were~~was contracted with investment grade entities.

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

Derivative Contracts Atat Fair Value with Offsetting Regulatory Amounts

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

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

As of December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource had NYMEX financial contracts for natural gas futures in order to reduce variability associated with the purchase price of ~~9.2~~9.5 million and ~~9.1~~9.2 million MMBtu of natural gas, respectively.

For the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014,~~2015, there were losses of $29.0 million, $125.5 million and $60.2 ~~million and gains of $134.4~~ million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts.

Credit Risk

Certain of Eversource's derivative contracts contain credit risk contingent provisions. These provisions require Eversource to maintain investment grade credit ratings from the major rating agencies and to post collateral for contracts in a net liability position over specified credit limits. As of December 31, ~~2015,~~2017, Eversource had ~~$5.8~~$3.4 million of derivative contracts in a net liability position that were subject to credit risk contingent provisions and would have been required to post additional collateral of ~~$5.8~~$3.7 million if Eversource's unsecured debt credit ratings had been downgraded to below investment grade. As of December 31, 2016, Eversource had no derivative contracts in a net liability position that were subject to credit risk contingent provisions.

Fair Value Measurements of Derivative Instruments

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

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

As of December 31,
2016 2015
Range Period Covered Range Period Covered
Capacity Prices:

Eversource $ 5.50
— 8.70 per kW-Month 2020 - 2026 $ 10.81
— 15.82 per kW-Month 2016 - 2026
CL&P 5.50 — 8.70 per kW-Month 2020 - 2026 10.81 — 12.60 per kW-Month 2019 - 2026
Forward Reserve:

Eversource, CL&P $ 1.40
— 2.00 per kW-Month 2017 - 2024 $2.00 per kW-Month 2016 - 2024
REC Prices:

Eversource, NSTAR Electric $ 24
— 29 per REC 2017 - 2018 $ 45
— 51 per REC 2016 - 2018



	As of December 31,
	2017						2016
CL&P	Range					Period Covered	Range					Period Covered
Capacity Prices	$	5.00	—	8.70	per kW-Month	2021 - 2026	$	5.50	—	8.70	per kW-Month	2020 - 2026
Forward Reserve	1.00		—	2.00	per kW-Month	2018 - 2024	1.40		—	2.00	per kW-Month	2017 - 2024

Exit price premiums of 36 percent through 2018 percent are also applied on these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts.

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


(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			Eversource			CL&P
Derivatives, Net:
Fair Value as of January 1, 2015	$	(415.4	)	$	(410.9	)	$	(4.5	)
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities	(52.1		)	(51.3		)	(0.8		)
Settlements	86.6			81.4			5.2
Fair Value as of December 31, 2015	$	(380.9	)	$	(380.8	)	$	(0.1	)
Fair Value as of January 1, 2016										$	(380.9	)	$	(380.8	)
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities	(130.7		)	(122.7		)	(8.0		)	(130.7		)	(122.7		)
Settlements	88.3			83.0			5.3			88.3			83.0
Fair Value as of December 31, 2016	$	(423.3	)	$	(420.5	)	$	(2.8	)	$	(423.3	)	$	(420.5	)
Transfer out of Level 3										1.2			—
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities										(11.4		)	(9.5		)
Settlements										71.2			67.7
Fair Value as of December 31, 2017										$	(362.3	)	$	(362.3	)

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

5. MARKETABLE SECURITIES

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

Trading Securities: Eversource has elected to record certain equity securities as trading securities, with the changes in fair values recorded in Other Income, Net on the statements of income. As of December 31, 2016, ~~and 2015,~~ these securities were classified as Level 1 in the fair value hierarchy and totaled $9.6 ~~million~~million. These securities were sold during 2017 and ~~$14.2 million, respectively.~~were no longer held as of December 31, 2017. For the years ended December 31, 2016 ~~2015~~ and ~~2014,~~2015, net gains on these securities of $0.6 million ~~$2.0 million~~ and ~~$1.9~~$2.0 million, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded in Other Income, Net when dividends are declared.

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


	As of December 31,																		As of December 31,
	2016									2015									2017									2016
(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
Eversource
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	$	296.2	$	1.1	$	(2.1	)	$	295.2	$	256.5	$	4.5	$	(0.6	)	$	260.4	$	284.9	$	3.2	$	(1.1	)	$	287.0	$	296.2	$	1.1	$	(2.1	)	$	295.2
Equity Securities	203.3		62.3		(1.2		)	264.4		215.3		59.2		(3.4		)	271.1		216.1		97.8		(0.1		)	313.8		203.3		62.3		(1.2		)	264.4

Eversource's debt and equity securities include CYAPC's and YAEC's marketable securities held in nuclear decommissioning trusts in the amounts of ~~$466.7~~$503.6 million and ~~$436.9~~$466.7 million as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively. Unrealized gains and losses for these nuclear decommissioning trusts are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.

Unrealized Losses and Other-than-Temporary Impairment: There have been no significant unrealized losses, other-than-temporary impairments or credit losses in ~~2016~~2017 or ~~2015.~~2016. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment, adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated.

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

Contractual Maturities: As of December 31, ~~2016,~~2017, the contractual maturities of available-for-sale debt securities were as follows:


Eversource (Millions of Dollars)	Amortized Cost		Fair Value			Amortized Cost			Fair Value
Eversource (Millions of Dollars)	Amortized Cost					Amortized Cost			Fair Value
Less than one year ⁽¹⁾	$	60.5	Fair Value	$	60.3		$	40.2		$	40.1
One to five years	45.4		45.8			46.7			47.5
Six to ten years	59.7		58.3			64.7			65.6
Greater than ten years	130.6		130.8			133.3			133.8
Total Debt Securities	$	296.2	$	295.2		$	284.9		$	287.0


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

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


Eversource (Millions of Dollars)	As of December 31,				As of December 31,
Eversource (Millions of Dollars)	2016		2015		2017		2016
Level 1:
Mutual Funds and Equities	$	274.0	$	285.3	$	313.8	$	274.0
Money Market Funds	54.8		26.9		23.3		54.8
Total Level 1	$	328.8	$	312.2	$	337.1	$	328.8
Level 2:
U.S. Government Issued Debt Securities (Agency and Treasury)	$	63.0	$	46.6	$	70.2	$	63.0
Corporate Debt Securities	41.1		43.9		50.9		41.1
Asset-Backed Debt Securities	18.5		20.0		21.2		18.5
Municipal Bonds	107.5		111.4		110.7		107.5
Other Fixed Income Securities	10.3		11.6		10.7		10.3
Total Level 2	$	240.4	$	233.5	$	263.7	$	240.4
Total Marketable Securities	$	569.2	$	545.7	$	600.8	$	569.2

U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar ~~instrument~~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. ASSET RETIREMENT OBLIGATIONS

Eversource, including CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~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, ~~and~~even if it is conditional on a future event. Settlement dates and future costs are reasonably estimated when sufficient information becomes available. Management has identified various categories of AROs, primarily certain assets containing asbestos and hazardous contamination, and has performed fair value calculations reflecting expected probabilities for settlement scenarios.

The fair value of an ARO is recorded as a liability in Other Long-Term Liabilities with a corresponding amount included in Property, Plant and Equipment, Net on the balance sheets. The ARO assets are depreciated, and the ARO liabilities are accreted over the estimated life of the obligation and the corresponding credits are recorded as accumulated depreciation and ARO liabilities, respectively. As the ~~Regulated~~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 ~~the Regulated~~these companies' AROs are recorded as increases to Regulatory Assets on the balance sheets.

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


Eversource (Millions of Dollars)	As of December 31,						As of December 31,
Eversource (Millions of Dollars)	2016			2015			2017			2016
Balance as of Beginning of Year	$	430.1		$	426.3		$	426.4		$	430.1
Liabilities Incurred During the Year	1.3			6.6			0.2			1.3
Liabilities Settled During the Year	(19.0		)	(18.2		)	(19.3		)	(19.0		)
Accretion	22.9			26.5			26.3			22.9
Revisions in Estimated Cash Flows	(8.9		)	(11.1		)	(14.5		)	(8.9		)
Balance as of End of Year	$	426.4		$	430.1		$	419.1		$	426.4


	As of December 31,																						As of December 31,
	2016										2015												2017								2016
(Millions of Dollars)	CL&P		NSTAR Electric			PSNH		WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH		CL&P		NSTAR Electric			PSNH
Balance as of Beginning of Year	$	33.8	$	35.3		$	21.6	$	5.7		$	35.3		$	34.3		$	20.6		$	5.9		$	36.0		$	42.6		$	23.5	$	33.8	$	41.0		$	21.6
Liabilities Incurred During the Year	—		—			0.5		—			—			6.2			0.4			—			0.1			0.1			—		—		—			0.5
Liabilities Settled During the Year	—		(0.3		)	—		(0.1		)	—			(1.5		)	—			(0.1		)	(1.0		)	(0.2		)	—		—		(0.4		)	—
Accretion	2.2		1.7			1.4		0.3			2.2			1.8			1.3			0.4			2.3			2.1			1.5		2.2		2.0			1.4
Revisions in Estimated Cash Flows	—		—			—		—			(3.7		)	(5.5		)	(0.7		)	(0.5		)	(5.9		)	—			—		—		—			—
Balance as of End of Year	$	36.0	$	36.7		$	23.5	$	5.9		$	33.8		$	35.3		$	21.6		$	5.7		$	31.5		$	44.6		$	25.0	$	36.0	$	42.6		$	23.5

Eversource's amounts include CYAPC and YAEC's AROs of ~~$308.6~~$301.5 million and ~~$319.1~~$308.6 million as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively. The fair value of the ARO for CYAPC and YAEC includes uncertainties of the fuel off-load dates related to the DOE's timing of performance regarding its obligation to dispose of the spent nuclear fuel and high level waste. The incremental asset recorded as an offset to the ARO liability was fully depreciated since the plants have no remaining useful life. Any changes in the assumptions used to calculate the fair value of the ARO liability are recorded with a corresponding offset to the related regulatory asset. The assets held in the CYAPC and YAEC nuclear decommissioning trusts are restricted for settling the ARO and all other decommissioning obligations. For further information on the assets held in the nuclear decommissioning trusts, see Note 5, "Marketable Securities," to the financial statements.

7. SHORT-TERM DEBT

Short-Term Debt Borrowing Limits: The amount of short-term borrowings that may be incurred by CL&P, NSTAR Electric ~~WMECO~~ and NPT is subject to periodic approval by the FERC. ~~As a result of~~Because the NHPUC ~~having~~has jurisdiction over PSNH's short-term debt, PSNH is not currently required to obtain FERC approval for its short-term borrowings. On ~~June 16, 2015,~~November 30, 2017, the FERC granted authorization that allows CL&P ~~and WMECO~~ to ~~incur~~issue total short-term borrowings upin an aggregate principal amount not to ~~a maximum of~~exceed $600 million ~~and $300 million, respectively,~~outstanding at any one time, through December 31, ~~2017.~~2019. On ~~August 8, 2016,~~November 30, 2017, the FERC granted authorization ~~to allow~~that allows NSTAR Electric to issue total short-term ~~debt securities~~borrowings in an aggregate principal amount not to exceed $655 million outstanding at any one time, through ~~October 23, 2018.~~December 30, 2019. On November 3, 2016, FERC authorized NPT to issue up to an aggregate of $800 million in short-term debt and long-term debt through December 31, 2018.

PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant plus an additional $60 million until further ordered by the NHPUC. As of December 31, ~~2016,~~2017, PSNH's short-term debt authorization under the 10 percent of net fixed plant test plus $60 million totaled approximately ~~$349~~$364 million.

CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur, including limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization. As of December 31, ~~2016,~~2017, CL&P had ~~$557.6~~$607.4 million of unsecured debt capacity available under this authorization.

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

Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. As of December 31, 2016 and 2015, Eversource parent had approximately $1.0 billion and approximately $1.1 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $428.0 million and $351.5 million of available borrowing capacity as of December 31, 2016 and 2015, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 and 2015 was 0.88 percent and 0.72 percent, respectively. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH, and $51.0 million to WMECO. As of December 31, 2015, there were intercompany loans from Eversource parent of $277.4 million to CL&P, $231.3 million to PSNH and $143.4 million to WMECO. Eversource parent, CL&P, PSNH, ~~WMECO,~~ NSTAR Gas and Yankee Gas are also parties to a five-year $1.45 billion revolving credit facility. ~~Effective September 26, 2016,~~On December 8, 2017, Eversource parent amended and restated the revolving credit ~~facility's termination date was extended for one additional year to September 4, 2021.~~facility. The ~~revolving~~amended and restated credit facility terminates on December 8, 2022 and serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, ~~2016~~2017 or ~~2015.~~2016.

NSTAR Electric has a ~~$450~~$650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. ~~As of~~On December ~~31, 2016 and 2015,~~8, 2017, NSTAR Electric ~~had $126.5 million and $62.5 million, respectively, in short-term borrowings outstanding under~~increased its commercial paper program ~~leaving $323.5~~from $450 million and $387.5 million of available borrowing capacity as of December 31, 2016 and 2015, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 and 2015 was 0.71 percent and 0.40 percent, respectively.to $650 million. NSTAR Electric is also a party to a five-year ~~$450~~$650 million revolving credit facility. ~~Effective September 26, 2016,~~On December 8, 2017, NSTAR Electric amended and restated the revolving credit ~~facility's termination date was extended for one additional year~~facility, increasing it from $450 million to ~~September 4, 2021.~~$650 million. The ~~revolving~~amended and restated credit facility terminates on December 8, 2022 and serves to backstop NSTAR Electric's ~~$450~~$650 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of December 31, ~~2016~~2017 or ~~2015.~~2016.

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



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

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

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

As of December 31, 2017, there were intercompany loans from Eversource parent of $69.5 million to CL&P and $262.9 million to PSNH. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and ~~WMECO~~$51.0 million to NSTAR Electric. These intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and are classified in current liabilities on

~~their~~ the respective subsidiary's balance sheets. Intercompany loans from Eversource ~~to CL&P, PSNH and WMECO~~parent are eliminated in consolidation on Eversource's balance sheets.

Under the credit facilities described above, Eversource and its subsidiaries must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization ratio. As of December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource and its subsidiaries were in compliance with these covenants. If Eversource or its subsidiaries were not in compliance with these covenants, an event of default would occur requiring all outstanding borrowings by such borrower to be repaid, and additional borrowings by such borrower would not be permitted under its respective credit facility.

8. LONG-TERM DEBT

Details of long-term debt outstanding are as follows:

CL&P
(Millions of Dollars)
As of December 31,
2016 2015
First Mortgage Bonds:
7.875% 1994 Series D due 2024 $ 139.8
$ 139.8
5.750% 2004 Series B due 2034 130.0
130.0
5.625% 2005 Series B due 2035 100.0
100.0
6.350% 2006 Series A due 2036 250.0
250.0
5.375% 2007 Series A due 2017 150.0
150.0
5.750% 2007 Series B due 2037 150.0
150.0
5.750% 2007 Series C due 2017 100.0
100.0
6.375% 2007 Series D due 2037 100.0
100.0
5.650% 2008 Series A due 2018 300.0
300.0
5.500% 2009 Series A due 2019 250.0
250.0
2.500% 2013 Series A due 2023 400.0
400.0
4.300% 2014 Series A due 2044 250.0
250.0
4.150% 2015 Series A due 2045 350.0
350.0
Total First Mortgage Bonds 2,669.8
2,669.8
Pollution Control Revenue Bonds:
4.375% Fixed Rate Tax Exempt due 2028 120.5
120.5
Less Amounts due Within One Year (250.0 ) —
Unamortized Premiums and Discounts, Net (10.0 ) (10.7 )
Unamortized Debt Issuance Costs (14.3 ) (15.9 )
CL&P Long-Term Debt $ 2,516.0
$ 2,763.7

NSTAR Electric
(Millions of Dollars)
As of December 31,
2016 2015
Debentures:
5.750% due 2036 $ 200.0
$ 200.0
5.625% due 2017 400.0
400.0
5.500% due 2040 300.0
300.0
2.375% due 2022 400.0
400.0
Variable Rate due 2016 (0.6036% as of December 31, 2015) —
200.0
4.400% due 2044 300.0
300.0
3.250% due 2025 250.0
250.0
2.700% due 2026 250.0
—
Total Debentures 2,100.0
2,050.0
Less Amounts due Within One Year (400.0 ) (200.0 )
Unamortized Premiums and Discounts, Net (9.1 ) (8.5 )
Unamortized Debt Issuance Costs (12.8 ) (11.7 )
NSTAR Electric Long-Term Debt $ 1,678.1
$ 1,829.8

PSNH
(Millions of Dollars)
As of December 31,
2016 2015
First Mortgage Bonds:
5.600% Series M due 2035 $ 50.0
$ 50.0
6.150% Series N due 2017 70.0
70.0
6.000% Series O due 2018 110.0
110.0
4.500% Series P due 2019 150.0
150.0
4.050% Series Q due 2021 122.0
122.0
3.200% Series R due 2021 160.0
160.0
3.500% Series S due 2023 325.0
325.0
Total First Mortgage Bonds 987.0
987.0
Pollution Control Revenue Bonds:
Adjustable Rate Tax Exempt Series A due 2021
(1.138% and 0.193% as of December 31, 2016 and 2015, respectively)
89.3
89.3
Less Amounts due Within One Year (70.0 ) —
Unamortized Premiums and Discounts, Net 0.1
0.1
Unamortized Debt Issuance Costs (4.4 ) (5.4 )
PSNH Long-Term Debt $ 1,002.0
$ 1,071.0

WMECO
(Millions of Dollars)
As of December 31,
2016 2015
Notes:
5.900% Senior Notes Series B due 2034 $ 50.0
$ 50.0
6.700% Senior Notes Series D due 2037 40.0
40.0
5.100% Senior Notes Series E due 2020 95.0
95.0
3.500% Senior Notes Series F due 2021 250.0
250.0
3.880% Senior Notes Series G due 2023 80.0
80.0
2.750% Senior Notes Series H due 2026 50.0
—
Total Notes 565.0
515.0
Unamortized Premiums and Discounts, Net 4.2
5.2
Unamortized Debt Issuance Costs (2.7 ) (2.9 )
WMECO Long-Term Debt $ 566.5
$ 517.3



CL&P (Millions of Dollars)	As of December 31,
	2017			2016
First Mortgage Bonds:
7.875% 1994 Series D due 2024	$	139.8		$	139.8
5.750% 2004 Series B due 2034	130.0			130.0
5.625% 2005 Series B due 2035	100.0			100.0
6.350% 2006 Series A due 2036	250.0			250.0
5.375% 2007 Series A due 2017	—			150.0
5.750% 2007 Series B due 2037	150.0			150.0
5.750% 2007 Series C due 2017	—			100.0
6.375% 2007 Series D due 2037	100.0			100.0
5.650% 2008 Series A due 2018	300.0			300.0
5.500% 2009 Series A due 2019	250.0			250.0
2.500% 2013 Series A due 2023	400.0			400.0
4.300% 2014 Series A due 2044	475.0			250.0
4.150% 2015 Series A due 2045	350.0			350.0
3.200% 2017 Series A due 2027	300.0			—
Total First Mortgage Bonds	2,944.8			2,669.8
Pollution Control Revenue Bonds:
4.375% Fixed Rate Tax Exempt due 2028	120.5			120.5
Less Amounts due Within One Year	(300.0		)	(250.0		)
Unamortized Premiums and Discounts, Net	11.5			(10.0		)
Unamortized Debt Issuance Costs	(17.7		)	(14.3		)
CL&P Long-Term Debt	$	2,759.1		$	2,516.0

OTHER
(Millions of Dollars)
As of December 31,
2016 2015
Yankee Gas - First Mortgage Bonds:
8.480% Series B due 2022 $ 20.0
$ 20.0
5.260% Series H due 2019 50.0
50.0
5.350% Series I due 2035 50.0
50.0
6.900% Series J due 2018 100.0
100.0
4.870% Series K due 2020 50.0
50.0
4.820% Series L due 2044 100.0
100.0
3.350% Series M due 2025 75.0
75.0
Total First Mortgage Bonds 445.0
445.0
Unamortized Premium 0.4
0.4
Unamortized Debt Issuance Costs (1.5 ) (1.7 )
Yankee Gas Long-Term Debt 443.9
443.7

NSTAR Gas - First Mortgage Bonds:
9.950% Series J due 2020 25.0
25.0
7.110% Series K due 2033 35.0
35.0
7.040% Series M due 2017 25.0
25.0
4.460% Series N due 2020 125.0
125.0
4.350% Series O due 2045 100.0
100.0
Total First Mortgage Bonds 310.0
310.0
Less Amounts due Within One Year (25.0 ) —
Unamortized Debt Issuance Costs (0.7 ) (0.8 )
NSTAR Gas Long-Term Debt 284.3
309.2

Eversource Parent - Notes and Debentures:
4.500% Debentures due 2019 350.0
350.0
1.450% Senior Notes Series E due 2018 300.0
300.0
2.800% Senior Notes Series F due 2023 450.0
450.0
1.600% Senior Notes Series G due 2018 150.0
150.0
3.150% Senior Notes Series H due 2025 300.0
300.0
2.500% Senior Notes Series I due 2021 250.0
—
3.350% Senior Notes Series J due 2026 250.0
—
Total Eversource Parent Notes and Debentures 2,050.0
1,550.0
Pre-1983 Spent Nuclear Fuel Obligation (CYAPC) 180.0
179.5
Fair Value Adjustment⁽¹⁾
144.6
173.5
Less Fair Value Adjustment - Current Portion ⁽¹⁾
(28.9 ) (28.9 )
Unamortized Premiums and Discounts, Net (2.2 ) (1.3 )
Unamortized Debt Issuance Costs (4.9 ) (1.9 )
Total Other Long-Term Debt $ 3,066.8
$ 2,623.8

Total Eversource Long-Term Debt $ 8,829.4
$ 8,805.6



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



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



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

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


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

~~Long-Term Debt Issuances:~~ In March 2016, Eversource parent issued $250 million of 2.50 percent Series I Senior Notes due to mature in 2021 and $250 million of 3.35 percent Series J Senior Notes due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings under the Eversource parent commercial paper program.

In May 2016, NSTAR Electric issued $250 million of 2.70 percent debentures, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings under the NSTAR Electric commercial paper program and fund capital expenditures and working capital.

~~In June 2016, WMECO issued $50 million of 2.75 percent Series H Senior Notes, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings.~~

~~Long-Term Debt Repayments:~~ ~~In May 2016, NSTAR Electric repaid at maturity $200 million variable rate debentures, using short term borrowings.~~

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



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


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


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


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


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


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

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

Long-Term Debt Issuance Authorizations: On ~~November 3, 2016, FERC authorized NPT~~January 4, 2017, PURA approved CL&P's request for authorization to issue up to ~~an aggregate of $800~~$1.325 billion in long-term debt through December 31, 2020. On March 30, 2017, the DPU approved NSTAR Electric's request for authorization to issue up to $700 million in ~~short-term debt and~~ long-term debt through December 31, 2018. On December ~~28, 2016,~~20, 2017, PURA approved Yankee Gas' request to extend the authorization period for issuance of up to ~~$125~~$50 million in long-term debt from December 31, ~~2016~~2017 to December 31, ~~2017. On January 4, 2017, PURA approved CL&P's request for authorization up to $1.325 billion in long-term debt through December 31, 2020.~~2018.

Long-Term Debt Provisions: The utility plant of CL&P, PSNH, Yankee Gas and NSTAR Gas is subject to the lien of each company's respective first mortgage bond indenture. The Eversource parent and NSTAR Electric ~~and WMECO~~ 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 ~~WMECO~~NSTAR Electric and NSTAR Gas. Under the equity requirements, ~~WMECO~~NSTAR Electric's senior notes must maintain a certain consolidated indebtedness to capitalization ratio as of the end of any fiscal quarter and NSTAR Gas' outstanding long-term debt must not exceed equity.

CL&P's obligation to repay the PCRBs is secured by first mortgage bonds. The first mortgage bonds contain similar terms and provisions as the applicable series of PCRBs. If CL&P fails to meet its obligations under the first mortgage bonds, then the holder of the first mortgage bonds (the issuer of the PCRBs) would have rights under the first mortgage bonds. CL&P's tax-exempt PCRBs will be subject to redemption at par on or after September 1, 2021. All other long-term debt securities are subject to make-whole provisions.

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

~~WMECO~~

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

Eversource, NSTAR Electric and Yankee Gas have certain long-term debt agreements that contain cross-default provisions. No other debt issuances contain cross-default provisions as of December 31, ~~2016.~~2017.

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

As of December 31, 2017 and 2016, as a result of consolidating CYAPC, Eversource has consolidated ~~$180.0~~$181.4 million and ~~$179.5~~$180.0 million, respectively, in pre-1983 spent nuclear fuel obligations to the ~~DOE, which~~DOE. These obligations include accumulated interest costs of ~~$131.2~~$132.6 million and ~~$130.7~~$131.2 million as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively. CYAPC maintains a trust to fund amounts due to the DOE for the disposal of pre-1983 spent nuclear fuel. For further information, see Note 5, "Marketable Securities," to the financial statements.

Long-Term Debt Maturities: Long-term debt maturities on debt outstanding for the years ~~2017~~2018 through ~~2021~~2022 and thereafter are shown below. These amounts exclude the CYAPC pre-1983 spent nuclear fuel obligation, net unamortized premiums, discounts and debt issuance costs, and other fair value adjustments as of December 31, ~~2016:~~2017:


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH
2017	$	745.0	$	250.0	$	400.0	$	70.0	$	—
2018	960.0		300.0		—		110.0		—		$	961.0	$	300.0	$	—	$	110.0
2019	800.0		250.0		—		150.0		—		801.0		250.0		—		150.0
2020	295.0		—		—		—		95.0		296.1		—		95.0		—
2021	871.3		—		—		371.3		250.0		922.8		—		250.0		371.3
2022											1,188.9		—		400.0		—
Thereafter	5,665.3		1,990.3		1,700.0		375.0		220.0		7,643.1		2,515.3		2,220.0		375.0
Total	$	9,336.6	$	2,790.3	$	2,100.0	$	1,076.3	$	565.0	$	11,812.9	$	3,065.3	$	2,965.0	$	1,006.3

9. EMPLOYEE BENEFITS

A. Pension Benefits and Postretirement Benefits Other Than Pensions

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

Eversource ~~Service~~ also ~~sponsored a~~provides defined benefit postretirement ~~plan (PBOP)~~plans (the "PBOP Plans") that provided certain benefits, primarily medical, dental and life insurance to eligible employees that met certain age and service eligibility requirements. In August 2016, ~~the Company~~Eversource Service amended its PBOP Plan, which standardized separate benefit structures that existed within the plan and made other benefit changes. The new plan provides life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses. The benefits provided under the PBOP ~~Plan~~Plans are not vested, and the Company has the right to modify any benefit provision subject to applicable laws at that time. Eversource annually funds postretirement costs through tax deductible contributions to external trusts.

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

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

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


	Pension and SERP						Pension and SERP
Eversource	As of December 31,
							As of December 31, 2017												As of December 31, 2016
(Millions of Dollars)	2016			2015			Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P			NSTAR Electric			PSNH
Change in Benefit Obligation:
Benefit Obligation as of Beginning of Year	$	(5,080.1	)	$	(5,486.2	)	$	(5,242.3	)	$	(1,170.2	)	$	(1,217.3	)	$	(572.2	)	$	(5,080.1	)	$	(1,157.6	)	$	(1,187.3	)	$	(547.6	)
Plan Amendment	(9.0		)	—			—			—			—			—			(9.0		)	—			(2.8		)	—
Employee Transfers							—			8.2			5.5			(0.7		)	—			8.8			1.3			2.4
Service Cost	(75.0		)	(91.4		)	(71.3		)	(18.5		)	(15.5		)	(9.7		)	(75.0		)	(18.8		)	(16.3		)	(9.9		)
Interest Cost	(185.5		)	(227.0		)	(188.0		)	(41.6		)	(42.7		)	(21.2		)	(185.5		)	(41.6		)	(42.2		)	(20.7		)
Actuarial Gain/(Loss)	(151.8		)	331.5
Actuarial Loss							(548.7		)	(116.9		)	(143.5		)	(65.1		)	(151.8		)	(23.9		)	(37.2		)	(21.5		)
Benefits Paid - Pension	254.0			238.5			243.7			63.5			55.4			26.4			254.0			62.6			67.0			24.9
Benefits Paid - Lump Sum	—			149.5			18.4			—			6.8			—			—			—			—			—
Benefits Paid - SERP	5.1			5.0			20.4			0.3			0.3			0.3			5.1			0.3			0.2			0.2
Increase due to acquisition of Aquarion							(168.7		)	—			—			—			—			—			—			—
Benefit Obligation as of End of Year	$	(5,242.3	)	$	(5,080.1	)	$	(5,936.5	)	$	(1,275.2	)	$	(1,351.0	)	$	(642.2	)	$	(5,242.3	)	$	(1,170.2	)	$	(1,217.3	)	$	(572.2	)
Change in Pension Plan Assets:
Fair Value of Pension Plan Assets as of Beginning of Year	$	3,905.4		$	4,126.5		$	4,076.0		$	905.5		$	1,088.3		$	494.0		$	3,905.4		$	913.5		$	1,053.7		$	470.5
Employee Transfers							—			(8.2		)	(5.5		)	0.7			—			(8.8		)	(1.3		)	(2.4		)
Employer Contributions	146.2			154.6			235.2			2.5			85.4			0.8			146.2			0.4			28.4			17.1
Actual Return on Pension Plan Assets	278.4			12.3			589.7			126.7			154.8			70.4			278.4			63.0			74.5			33.7
Benefits Paid	(254.0		)	(238.5		)	(243.7		)	(63.5		)	(55.4		)	(26.4		)	(254.0		)	(62.6		)	(67.0		)	(24.9		)
Benefits Paid - Lump Sum	—			(149.5		)	(18.4		)	—			(6.8		)	—			—			—			—			—
Increase due to acquisition of Aquarion							100.7			—			—			—			—			—			—			—
Fair Value of Pension Plan Assets as of End of Year	$	4,076.0		$	3,905.4		$	4,739.5		$	963.0		$	1,260.8		$	539.5		$	4,076.0		$	905.5		$	1,088.3		$	494.0
Funded Status as of December 31st	$	(1,166.3	)	$	(1,174.7	)	$	(1,197.0	)	$	(312.2	)	$	(90.2	)	$	(102.7	)	$	(1,166.3	)	$	(264.7	)	$	(129.0	)	$	(78.2	)

Pension and SERP
As of December 31, 2016 As of December 31, 2015
(Millions of Dollars) CL&P
NSTAR
Electric
PSNH WMECO CL&P
NSTAR
Electric
PSNH WMECO
Change in Benefit Obligation:

Benefit Obligation as of Beginning of Year $ (1,157.6 ) $ (949.7 ) $ (547.6 ) $ (237.6 ) $ (1,230.1 ) $ (982.6 ) $ (580.7 ) $ (249.4 )
Plan Amendment —
(2.8 ) —
—
—
—
—
—
Change due to transfer of employees 8.8
(0.6 ) 2.4
1.9
(4.6 ) 6.2
(1.9 ) (1.3 )
Service Cost (18.8 ) (13.2 ) (9.9 ) (3.1 ) (24.7 ) (14.9 ) (12.1 ) (4.3 )
Interest Cost (41.6 ) (33.8 ) (20.7 ) (8.4 ) (51.1 ) (40.2 ) (24.3 ) (10.4 )
Actuarial Gain/(Loss) (23.9 ) (33.3 ) (21.5 ) (3.9 ) 77.8
34.1
38.9
12.6
Benefits Paid - Pension 62.6
53.8
24.9
13.2
60.2
47.6
23.2
12.7
Benefits Paid - Lump Sum —
—
—
—
14.5
—
9.1
2.5
Benefits Paid - SERP 0.3
0.2
0.2
—
0.4
0.1
0.2
—
Benefit Obligation as of End of Year $ (1,170.2 ) $ (979.4 ) $ (572.2 ) $ (237.9 ) $ (1,157.6 ) $ (949.7 ) $ (547.6 ) $ (237.6 )
Change in Pension Plan Assets:
Fair Value of Pension Plan Assets as of Beginning of Year $ 913.5
$ 832.9
$ 470.5
$ 220.8
$ 980.8
$ 879.0
$ 498.4
$ 234.0
Change due to transfer of employees (8.8 ) 0.6
(2.4 ) (1.9 ) 4.6
(6.2 ) 1.9
1.3
Employer Contributions 0.4
28.4
17.1
—
—
5.0
1.0
—
Actual Return on Pension Plan Assets 63.0
59.2
33.7
15.3
2.8
2.7
1.5
0.7
Benefits Paid (62.6 ) (53.8 ) (24.9 ) (13.2 ) (60.2 ) (47.6 ) (23.2 ) (12.7 )
Benefits Paid - Lump Sum —
—
—
—
(14.5 ) —
(9.1 ) (2.5 )
Fair Value of Pension Plan Assets as of End of Year $ 905.5
$ 867.3

$ 494.0

$ 221.0
$ 913.5
$ 832.9
$ 470.5
$ 220.8
Funded Status as of December 31st $ (264.7 ) $ (112.1 ) $ (78.2 ) $ (16.9 ) $ (244.1 ) $ (116.8 ) $ (77.1 ) $ (16.8 )
In 2017, there was a decrease to the discount rate used to calculate the funded status of the Eversource pension liability, which resulted in an increase to Eversource's pension liability of approximately $390 million as of December 31, 2017.

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

In 2015, there was an increase in the discount rate used to calculate the funded status and a revised scale for the mortality table for the Eversource pension liability, resulting in a decrease of the estimated benefits to be provided to plan participants and a decrease to Eversource's liability of approximately $267 million and $48 million, respectively, as of December 31, 2015. In August 2015, Eversource made a total lump-sum payout of $149.5 million, which reduced the projected benefit obligation and Pension Plan assets by a corresponding amount. The lump-sum payment had no impact on the net Accrued Pension Liability reflected on the Eversource, CL&P, PSNH and WMECO balance sheets as of December 31, 2015.

The pension and SERP Plans' funded status includes the current portion of the SERP liability totaling ~~$24.8~~$8.4 million and ~~$6.6~~$24.8 million as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively, which is included in Other Current Liabilities on the ~~accompanying~~ balance sheets.

As of December 31, ~~2016~~2017 and ~~2015,~~2016, the accumulated benefit obligation for the Pension and SERP Plans is as follows:


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH
2017											$	5,583.6	$	1,179.2	$	1,260.1	$	597.2
2016	$	4,829.6	$	1,065.2	$	904.8	$	518.9	$	220.0	4,829.6		1,065.2		1,124.8		518.9
2015	4,733.2		1,062.7		888.8		506.4		222.3

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


	Pension and SERP							Pension and SERP
	As of December 31,							As of December 31,
		2016			2015				2017			2016
Discount Rate		4.01%	—	4.33%	4.21%	—	4.60%		3.43%	—	3.75%	4.01%	—	4.33%
Compensation/Progression Rate		3.50%			3.50%				3.50%	—	4.00%	3.50%

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

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

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


	Pension and SERP															Pension and SERP
	For the Year Ended December 31, 2016															For the Year Ended December 31, 2017
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	75.0		$	18.8		$	13.2		$	9.9		$	3.1		$	71.3		$	18.5		$	15.5		$	9.7
Interest Cost	185.5			41.6			33.8			20.7			8.4			188.0			41.6			42.7			21.2
Expected Return on Pension Plan Assets	(317.9		)	(72.1		)	(67.6		)	(38.6		)	(17.5		)	(334.1		)	(71.7		)	(87.6		)	(40.0		)
Actuarial Loss	125.7			25.4			34.4			9.9			5.5			135.2			27.7			41.1			11.6
Prior Service Cost	3.6			1.5			—			0.5			0.3			4.5			1.5			0.6			0.5
Total Net Periodic Benefit Expense/(Income)	$	71.9		$	15.2		$	13.8		$	2.4		$	(0.2	)
Total Net Periodic Benefit Expense																$	64.9		$	17.6		$	12.3		$	3.0
Intercompany Allocations	N/A			$	13.8		$	8.9		$	4.0		$	2.5		N/A			$	9.8		$	9.1		$	3.3
Capitalized Pension Expense	$	22.1		$	9.3		$	7.6		$	1.4		$	0.4		$	22.0		$	9.7		$	7.6		$	1.5


	Pension and SERP															Pension and SERP
	For the Year Ended December 31, 2015															For the Year Ended December 31, 2016
(Millions of Dollars)	Eversource ⁽¹⁾			CL&P			NSTAR Electric			PSNH ⁽¹⁾			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	91.4		$	24.7		$	14.9		$	12.1		$	4.3		$	75.0		$	18.8		$	16.3		$	9.9
Interest Cost	227.0			51.1			40.2			24.3			10.4			185.5			41.6			42.2			20.7
Expected Return on Pension Plan Assets	(335.9		)	(78.9		)	(70.0		)	(40.4		)	(18.9		)	(317.9		)	(72.1		)	(85.1		)	(38.6		)
Actuarial Loss	148.5			32.2			35.8			11.6			6.4			125.7			25.4			39.9			9.9
Prior Service Cost/(Credit)	3.7			1.5			(0.1		)	0.5			0.3
Prior Service Cost																3.6			1.5			0.3			0.5
Total Net Periodic Benefit Expense	$	134.7		$	30.6		$	20.8		$	8.1		$	2.5		$	71.9		$	15.2		$	13.6		$	2.4
Intercompany Allocations	N/A			$	22.5		$	13.6		$	6.7		$	4.4		N/A			$	13.8		$	11.4		$	4.0
Capitalized Pension Expense	$	41.0		$	18.8		$	11.4		$	3.5		$	1.9		$	22.1		$	9.3		$	8.0		$	1.4


	Pension and SERP															Pension and SERP
	For the Year Ended December 31, 2014															For the Year Ended December 31, 2015
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource ⁽¹⁾			CL&P			NSTAR Electric			PSNH ⁽¹⁾
Service Cost	$	79.9		$	20.2		$	13.6		$	9.7		$	3.5		$	91.4		$	24.7		$	19.2		$	12.1
Interest Cost	225.7			50.5			41.3			23.8			10.3			227.0			51.1			50.6			24.3
Expected Return on Pension Plan Assets	(310.8		)	(75.4		)	(63.0		)	(38.1		)	(17.9		)	(335.9		)	(78.9		)	(88.9		)	(40.4		)
Actuarial Loss	128.4			33.7			23.5			11.6			6.9			148.5			32.2			42.2			11.6
Prior Service Cost	4.4			1.8			—			0.7			0.4			3.7			1.5			0.2			0.5
Total Net Periodic Benefit Expense	$	127.6		$	30.8		$	15.4		$	7.7		$	3.2		$	134.7		$	30.6		$	23.3		$	8.1
Intercompany Allocations	N/A			$	26.7		$	10.4		$	7.6		$	5.1		N/A			$	22.5		$	18.0		$	6.7
Capitalized Pension Expense	$	35.2		$	17.6		$	7.9		$	3.0		$	2.4		$	41.0		$	18.8		$	13.3		$	3.5


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

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


	Pension and SERP											Pension and SERP
	For the Years Ended December 31,											For the Years Ended December 31,
	2016					2015	2014					2017			2016			2015
Discount Rate	3.27	%	—	4.89	%	4.20%	4.85	%	—	5.03	%	3.20%	—	3.90%	3.27%	—	4.89%	4.20	%
Expected Long-Term Rate of Return	8.25%					8.25%	8.25%					8.25%			8.25%			8.25	%
Compensation/Progression Rate	3.50%					3.50%	3.50	%	—	4.00	%	3.50%			3.50%			3.50	%

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


	Regulatory Assets						OCI						Regulatory Assets						OCI
	For the Years Ended December 31,												For the Years Ended December 31,
(Millions of Dollars)	2016			2015			2016			2015			2017			2016			2017			2016
Actuarial Losses/(Gains) Arising During the Year	$	184.6		$	(2.0	)	$	6.8		$	(6.2	)
Actuarial Losses Arising During the Year													$	333.0		$	184.6		$	9.3		$	6.8
Actuarial Losses Reclassified as Net Periodic Benefit Expense	(119.9		)	(142.3		)	(5.8		)	(6.2		)	(129.5		)	(119.9		)	(5.7		)	(5.8		)
Prior Service Cost Arising During the Year	7.1			—			1.9			—
Prior Service Cost/(Credit) Arising During the Year													1.0			7.1			(0.4		)	1.9
Prior Service Cost Reclassified as Net Periodic Benefit Expense	(3.4		)	(3.5		)	(0.2		)	(0.2		)	(4.1		)	(3.4		)	(0.4		)	(0.2		)

The following is a summary of the remaining Regulatory Assets and Accumulated Other Comprehensive Loss amounts that have not been recognized as components of net periodic benefit expense as of December 31, ~~2016~~2017 and ~~2015,~~2016, as well as the amounts that are expected to be recognized as components in ~~2017:~~2018:


	Regulatory Assets as of December 31,				Expected 2017 Expense				AOCL as of December 31,								Expected 2017 Expense	Regulatory Assets as of December 31,						Expected 2018 Expense		AOCL as of December 31,				Expected 2018 Expense
(Millions of Dollars)	2016		2015					2016				2015				2017			2016			2017				2016				Expected 2018 Expense
Actuarial Loss	$	1,732.3	$	1,667.6	Expected 2017 Expense	$	128.5			$	82.1			$	81.1		Expected 2017 Expense	$	5.8	$	1,935.8		$	Expected 2018 Expense	1,732.3	$	141.8	$	85.7	$	82.1	$	5.8
Prior Service Cost	13.4		9.7		4.1				2.3				0.6				0.2	10.3			13.4			4.2		1.5		2.3		0.3

PBOP ~~Plan:~~Plans: The PBOP ~~Plan is~~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 ~~plan.~~plans. The following ~~tables provide~~table provides information on the PBOP Plan benefit obligations, fair values of plan assets, and funded status:


	PBOP						PBOP
Eversource	As of December 31,
							As of December 31,
							2017												2016
(Millions of Dollars)	2016			2015			Eversource			CL&P			NSTAR Electric			PSNH			Eversource			CL&P			NSTAR Electric			PSNH
Change in Benefit Obligation:
Benefit Obligation as of Beginning of Year	$	(1,051.4	)	$	(1,147.9	)	$	(810.0	)	$	(165.0	)	$	(270.0	)	$	(89.7	)	$	(1,051.4	)	$	(164.0	)	$	(447.2	)	$	(88.5	)
Plan Amendment	244.0			—			—			—			—			—			244.0			(12.5		)	193.6			(6.7		)
Employee Transfers							—			2.4			1.5			0.2			—			1.3			0.5			0.3
Service Cost	(12.2		)	(16.3		)	(9.5		)	(1.9		)	(1.7		)	(1.3		)	(12.2		)	(2.0		)	(3.4		)	(1.3		)
Interest Cost	(32.9		)	(47.2		)	(27.1		)	(5.3		)	(8.7		)	(3.0		)	(32.9		)	(5.3		)	(13.3		)	(2.9		)
Actuarial Gain/(Loss)	(17.7		)	106.0			(81.8		)	(18.5		)	(13.2		)	(11.9		)	(17.7		)	3.6			(23.5		)	3.6
Benefits Paid	60.2			54.0			41.5			9.9			13.5			4.6			60.2			13.9			23.3			5.8
Increase due to acquisition of Aquarion							(61.7		)	—			—			—			—			—			—			—
Benefit Obligation as of End of Year	$	(810.0	)	$	(1,051.4	)	$	(948.6	)	$	(178.4	)	$	(278.6	)	$	(101.1	)	$	(810.0	)	$	(165.0	)	$	(270.0	)	$	(89.7	)
Change in Plan Assets:
Fair Value of Plan Assets as of Beginning of Year	$	812.2		$	862.6		$	815.8		$	129.2		$	361.6		$	73.2		$	812.2		$	136.7		$	352.0		$	75.8
Employee Transfers							—			(1.5		)	(0.8		)	—			—			(0.8		)	(0.6		)	(0.2		)
Actual Return on Plan Assets	51.3			(4.3		)	118.0			18.1			52.9			10.4			51.3			7.2			24.6			3.4
Employer Contributions	12.5			7.9			7.6			—			5.3			—			12.5			—			8.9			—
Benefits Paid	(60.2		)	(54.0		)	(41.5		)	(9.9		)	(13.5		)	(4.6		)	(60.2		)	(13.9		)	(23.3		)	(5.8		)
Increase due to acquisition of Aquarion							22.3			—			—			—			—			—			—			—
Fair Value of Plan Assets as of End of Year	$	815.8		$	812.2		$	922.2		$	135.9		$	405.5		$	79.0		$	815.8		$	129.2		$	361.6		$	73.2
Funded Status as of December 31st	$	5.8		$	(239.2	)	$	(26.4	)	$	(42.5	)	$	126.9		$	(22.1	)	$	5.8		$	(35.8	)	$	91.6		$	(16.5	)

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

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

PBOP
As of December 31,
2016 2015
(Millions of Dollars) CL&P
NSTAR
Electric
PSNH WMECO CL&P
NSTAR
Electric
PSNH WMECO
Change in Benefit Obligation:
Benefit Obligation as of Beginning of Year $ (164.0 ) $ (412.8 ) $ (88.5 ) $ (34.4 ) $ (173.9 ) $ (468.7 ) $ (91.8 ) $ (36.6 )
Plan Amendment (12.5 ) 195.3
(6.7 ) (1.7 ) —
—
—
—
Change due to transfer of employees 1.3
0.3
0.3
0.2
0.1
2.3
(0.3 ) —
Service Cost (2.0 ) (3.0 ) (1.3 ) (0.4 ) (2.1 ) (5.4 ) (1.4 ) (0.4 )
Interest Cost (5.3 ) (12.2 ) (2.9 ) (1.1 ) (7.2 ) (19.0 ) (3.9 ) (1.5 )
Actuarial Gain/(Loss) 3.6
(24.6 ) 3.6
1.1
7.2
59.1
3.6
1.5
Benefits Paid 13.9
20.3
5.8
3.0
11.9
18.9
5.3
2.6
Benefit Obligation as of End of Year $ (165.0 ) $ (236.7 ) $ (89.7 ) $ (33.3 ) $ (164.0 ) $ (412.8 ) $ (88.5 ) $ (34.4 )
Change in Plan Assets:
Fair Value of Plan Assets as of Beginning of Year $ 136.7
$ 320.3
$ 75.8
$ 31.7
$ 149.0
$ 336.5
$ 80.9
$ 34.4
Change due to transfer of employees (0.8 ) (0.3 ) (0.2 ) (0.3 ) —
0.6
0.2
—
Actual Return on Plan Assets 7.2
23.2
3.4
1.4
(0.4 ) (2.8 ) —
(0.1 )
Employer Contributions —
8.9
—
—
—
4.9
—
—
Benefits Paid (13.9 ) (20.3 ) (5.8 ) (3.0 ) (11.9 ) (18.9 ) (5.3 ) (2.6 )
Fair Value of Plan Assets as of End of Year $ 129.2
$ 331.8
$ 73.2
$ 29.8
$ 136.7
$ 320.3
$ 75.8
$ 31.7
Funded Status as of December 31st $ (35.8 ) $ 95.1
$ (16.5 ) $ (3.5 ) $ (27.3 ) $ (92.5 ) $ (12.7 ) $ (2.7 )

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

In 2015, there was an increase in the discount rate used to calculate the funded status of the Eversource PBOP liability and a revised scale for the mortality table resulting in a decrease of the estimated benefits to be provided to plan participants, both of which resulted in a decrease to Eversource's liability of approximately $60 million and $23 million, respectively, as of December 31, 2015.

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

PBOP
As of December 31,
2016 2015
Discount Rate 4.21 % 4.62 %
Health Care Cost Trend Rate N/A
6.25 %



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

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

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

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

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

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


	PBOP															PBOP
	For the Year Ended December 31, 2016															For the Year Ended December 31, 2017
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	12.2		$	2.0		$	3.0		$	1.3		$	0.4		$	9.5		$	1.9		$	1.7		$	1.3
Interest Cost	32.9			5.3			12.2			2.9			1.1			27.1			5.3			8.7			3.0
Expected Return on Plan Assets	(62.9		)	(10.1		)	(25.7		)	(5.5		)	(2.4		)	(63.7		)	(9.7		)	(28.6		)	(5.5		)
Actuarial Loss	9.0			1.5			3.2			0.7			0.1			9.1			1.0			3.4			0.6
Prior Service (Credit)/Cost	(9.1		)	0.5			(7.2		)	0.2			0.1			(21.6		)	1.1			(17.0		)	0.6
Total Net Periodic Benefit Income	$	(17.9	)	$	(0.8	)	$	(14.5	)	$	(0.4	)	$	(0.7	)
Total Net Periodic Benefit Expense/(Income)																$	(39.6	)	$	(0.4	)	$	(31.8	)	$	—
Intercompany Allocations	N/A			$	0.3		$	(0.2	)	$	(0.1	)	$	0.1		N/A			$	(0.7	)	$	(1.1	)	$	(0.5	)
Capitalized PBOP Expense/(Income)	$	(8.0	)	$	(0.5	)	$	(6.4	)	$	0.1		$	(0.3	)	$	(19.1	)	$	(0.5	)	$	(16.2	)	$	0.2


	PBOP															PBOP
	For the Year Ended December 31, 2015															For the Year Ended December 31, 2016
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	16.3		$	2.1		$	5.4		$	1.4		$	0.4		$	12.2		$	2.0		$	3.4		$	1.3
Interest Cost	47.2			7.2			19.0			3.9			1.5			32.9			5.3			13.3			2.9
Expected Return on Plan Assets	(67.4		)	(11.1		)	(27.3		)	(6.0		)	(2.5		)	(62.9		)	(10.1		)	(28.1		)	(5.5		)
Actuarial Loss	6.8			0.7			2.3			0.5			—			9.0			1.5			3.3			0.7
Prior Service Credit	(0.5		)	—			(0.2		)	—			—
Total Net Periodic Benefit Expense/(Income)	$	2.4		$	(1.1	)	$	(0.8	)	$	(0.2	)	$	(0.6	)
Prior Service (Credit)/Cost																(9.1		)	0.5			(7.1		)	0.2
Total Net Periodic Benefit Income																$	(17.9	)	$	(0.8	)	$	(15.2	)	$	(0.4	)
Intercompany Allocations	N/A			$	1.9		$	0.8		$	0.4		$	0.3		N/A			$	0.3		$	(0.1	)	$	(0.1	)
Capitalized PBOP Expense/(Income)	$	0.1		$	(0.2	)	$	(0.2	)	$	0.2		$	(0.2	)	$	(8.0	)	$	(0.5	)	$	(6.7	)	$	0.1


	PBOP															PBOP
	For the Year Ended December 31, 2014															For the Year Ended December 31, 2015
(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Service Cost	$	12.5		$	2.2		$	3.1		$	1.3		$	0.4		$	16.3		$	2.1		$	5.8		$	1.4
Interest Cost	49.5			8.1			19.4			4.3			1.7			47.2			7.2			20.5			3.9
Expected Return on Plan Assets	(63.3		)	(10.5		)	(25.9		)	(5.4		)	(2.3		)	(67.4		)	(11.1		)	(29.8		)	(6.0		)
Actuarial Loss/(Gain)	12.2			4.2			(0.5		)	2.2			0.5
Actuarial Loss																6.8			0.7			2.3			0.5
Prior Service Credit	(2.8		)	—			(1.9		)	—			—			(0.5		)	—			(0.2		)	—
Total Net Periodic Benefit Expense/(Income)	$	8.1		$	4.0		$	(5.8	)	$	2.4		$	0.3		$	2.4		$	(1.1	)	$	(1.4	)	$	(0.2	)
Intercompany Allocations	N/A			$	3.8		$	0.8		$	1.0		$	0.7		N/A			$	1.9		$	1.1		$	0.4
Capitalized PBOP Expense/(Income)	$	1.4		$	1.8		$	(2.3	)	$	0.8		$	0.2		$	0.1		$	(0.2	)	$	(0.4	)	$	0.2

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


	PBOP										PBOP
	For the Years Ended December 31,										For the Years Ended December 31,
		2016			2015	2014					2017			2016			2015
Discount Rate		2.88%	—	4.09%	4.22%	4.78	%	—	5.10	%	3.48%	—	4.64%	2.88%	—	4.09%	4.22%
Expected Long-Term Rate of Return		8.25%			8.25%	8.25%					8.25%			8.25%			8.25%

The health care cost trend rate assumption used to calculate the PBOP expense amount for the Eversource PBOP Plan was 6.25 percent and 6.5 percent for the years ended December 31, 2016 and 2015, respectively. The effect of increasing the assumed health care cost trend rate by one percentage point for the year ended December 31, 2016 would have increased service and interest cost components of PBOP expense by a total of $4.4 million. A decrease of one percentage point in the assumed health care cost trend rate would have decreased the service and interest cost components of PBOP expense by a total of $3.4 million. Effective January 1, 2017, the health care trend rate no longer has an impact on the PBOP expense on the Eversource Service PBOP Plan due to the benefit design changes effective with the 2016 plan amendment.

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


	Regulatory Assets						OCI						Regulatory Assets						OCI
	For the Years Ended December 31,												For the Years Ended December 31,
(Millions of Dollars)	2016			2015			2016			2015			2017			2016			2017			2016
Actuarial Losses/(Gains) Arising During the Year	$	32.4		$	(34.1	)	$	(2.0	)	$	0.7		$	44.8		$	32.4		$	2.6		$	(2.0	)
Actuarial (Losses)/Gains Reclassified as Net Periodic Benefit (Expense)/Income	(9.2		)	(6.4		)	0.2			(0.4		)	(8.6		)	(9.2		)	(0.5		)	0.2
Prior Service (Credit)/Cost Arising During the Year	(247.9		)	—			4.0			—			(4.0		)	(247.9		)	(0.1		)	4.0
Prior Service Credit/(Cost) Reclassified as Net Periodic Benefit Income/(Expense)	9.7			0.5			(0.6		)	—			22.3			9.7			(0.7		)	(0.6		)


	Regulatory Assets as of December 31,						Expected 2017 Expense				AOCL as of December 31,								Expected 2017 Expense	Regulatory Assets as of December 31,							Expected 2018 Expense			AOCL as of December 31,				Expected 2018 Expense
(Millions of Dollars)	2016			2015						2016				2015				2017			2016				2017					2016				Expected 2018 Expense
Actuarial Loss	$	175.4		$	152.2		Expected 2017 Expense	$	7.9			$	4.5			$	6.3		Expected 2017 Expense	$	0.4		$	211.6		$	Expected 2018 Expense	175.4		$	8.8	$	6.6	$	4.5	$	0.3
Prior Service (Credit)/Cost	(239.5		)	(1.3		)	(21.7		)		3.4				—				0.2	(221.2		)		(239.5	)		(21.7		)	2.6		3.4		0.2

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


(Millions of Dollars)	2017		2018		2019		2020		2021		2022-2026		2018		2019		2020		2021		2022		2023 - 2027
Pension and SERP	$	284.5	$	277.0	$	284.3	$	290.4	$	298.9	$	1,562.9	$	296.5	$	304.7	$	311.1	$	320.8	$	329.4	$	1,739.7
PBOP	54.8		55.0		55.1		55.4		55.4		270.7		56.8		57.1		57.3		57.5		57.4		279.3

Eversource Contributions: Based on the current status of the Pension ~~Plan~~Plans and federal pension funding requirements, Eversource currently expects to make contributions of approximately ~~$175~~$180 million in ~~2017,~~2018, of which approximately $2$82 million and ~~$25~~$6 million, will be contributed by CL&P and ~~NSTAR Electric,~~PSNH, respectively. The remaining ~~$148~~$92 million is expected to be contributed by other Eversource subsidiaries, primarily Eversource Service. Eversource expects to make ~~$7.6~~approximately $10 million in contributions to the PBOP Plan in ~~2017,~~2018, of which approximately $5 million will be contributed by NSTAR Electric.

Fair Value of Pension and PBOP Plan Assets: Pension and PBOP funds are held in external trusts. Trust assets, including accumulated earnings, must be used exclusively for Pension and PBOP payments. Eversource's investment strategy for its Pension and PBOP Plans is to maximize the long-term rates of return on these plans' assets within an acceptable level of risk. The investment strategy for each asset category includes a diversification of asset types, fund strategies and fund managers and it establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP assets are comprised of assets held in the PBOP Plan, as well as specific assets within the Pension Plan trust (401(h) assets). The investment policy and strategy of the 401(h) assets is consistent with that of the defined benefit pension plan. Eversource's expected long-term rates of return on Pension and PBOP Plan assets are based on target asset allocation assumptions and related expected long-term rates of return. In developing its expected long-term rate of return assumptions for the Pension and PBOP Plans, Eversource evaluated input from consultants, as well as long-term inflation assumptions and historical returns. For the year ended December 31, ~~2016,~~2017, management has assumed long-term rates of return of 8.25 percent for the Eversource Pension and PBOP Plan assets. These long-term rates of return are based on the assumed rates of return for the target asset allocations as follows:


					As of December 31,
	As of December 31, 2016 and 2015				2017				2016
	Pension Plan and Tax-Exempt Assets Within PBOP Plan				Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan				Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan
	Target Asset Allocation		Assumed Rate of Return		Target Asset Allocation		Assumed Rate of Return		Target Asset Allocation		Assumed Rate of Return
Equity Securities:
United States	22.0	%	8.5	%	21.5	%	8.5	%	22.0	%	8.5	%
International	13.0	%	8.5	%	11.0	%	8.5	%	13.0	%	8.5	%
Emerging Markets	5.0	%	10.0	%	4.5	%	10.0	%	5.0	%	10.0	%
Private Equity	12.0	%	12.0	%	15.0	%	12.0	%	12.0	%	12.0	%
Debt Securities:
Fixed Income	12.0	%	4.5	%	11.0	%	4.0	%	12.0	%	4.5	%
High Yield Fixed Income	13.0	%	8.5	%
Public High Yield Fixed Income					4.0	%	6.5	%	3.0	%	7.0	%
Private Debt					15.0	%	9.0	%	10.0	%	9.0	%
Emerging Markets Debt	5.0	%	7.5	%	2.0	%	6.5	%	5.0	%	7.5	%
Real Estate and Other Assets	10.0	%	7.5	%	12.0	%	7.5	%	10.0	%	7.5	%
Hedge Funds	8.0	%	7.0	%	4.0	%	6.0	%	8.0	%	7.0	%

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

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


	Pension Plan																		Pension Plan
	Fair Value Measurements as of December 31,																		Fair Value Measurements as of December 31,
(Millions of Dollars)	2016									2015									2017									2016
Asset Category:	Level 1		Level 2		Uncategorized		Total			Level 1		Level 2		Uncategorized		Total			Level 1		Level 2		Uncategorized		Total			Level 1		Level 2		Uncategorized		Total
Equity Securities⁽¹⁾	$	455.5	$	—	$	1,279.7	$	1,735.2		$	396.5	$	62.2	$	1,228.7	$	1,687.4		$	535.4	$	—	$	1,653.3	$	2,188.7		$	455.5	$	—	$	1,279.7	$	1,735.2
Private Equity	6.0		—		518.4		524.4			7.6		—		464.7		472.3			11.2		—		641.8		653.0			6.0		—		518.4		524.4
Fixed Income ⁽²⁾	—		183.0		1,099.4		1,282.4			—		208.6		1,008.2		1,216.8			56.6		215.9		1,218.3		1,490.8			—		183.0		1,099.4		1,282.4
Real Estate and Other Assets	77.2		—		325.9		403.1			—		85.9		291.9		377.8			101.6		—		374.4		476.0			77.2		—		325.9		403.1
Hedge Funds	—		—		335.0		335.0			—		—		340.5		340.5			—		—		165.5		165.5			—		—		335.0		335.0
Total	$	538.7	$	183.0	$	3,558.4	$	4,280.1		$	404.1	$	356.7	$	3,334.0	$	4,094.8		$	704.8	$	215.9	$	4,053.3	$	4,974.0		$	538.7	$	183.0	$	3,558.4	$	4,280.1
Less: 401(h) PBOP Assets⁽³⁾							(204.1		)							(189.4		)							(234.5		)							(204.1		)
Total Pension Assets							$	4,076.0								$	3,905.4								$	4,739.5								$	4,076.0


	PBOP Plan																PBOP Plan
	Fair Value Measurements as of December 31,																Fair Value Measurements as of December 31,
(Millions of Dollars)	2016								2015								2017								2016
Asset Category:	Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total		Level 1		Level 2		Uncategorized		Total
Equity Securities ⁽¹⁾	$	88.6	$	—	$	214.1	$	302.7	$	109.7	$	—	$	199.4	$	309.1	$	115.3	$	—	$	241.9	$	357.2	$	88.6	$	—	$	214.1	$	302.7
Private Equity	—		—		32.2		32.2		—		—		32.9		32.9		—		—		31.3		31.3		—		—		32.2		32.2
Fixed Income⁽²⁾	9.5		44.8		132.3		186.6		9.7		50.5		131.0		191.2		23.4		44.0		133.9		201.3		9.5		44.8		132.3		186.6
Real Estate and Other Assets	15.5		—		27.5		43.0		—		6.6		30.8		37.4		22.4		—		29.0		51.4		15.5		—		27.5		43.0
Hedge Funds	—		—		47.2		47.2		—		—		52.2		52.2		—		—		46.5		46.5		—		—		47.2		47.2
Total	$	113.6	$	44.8	$	453.3	$	611.7	$	119.4	$	57.1	$	446.3	$	622.8	$	161.1	$	44.0	$	482.6	$	687.7	$	113.6	$	44.8	$	453.3	$	611.7
Add: 401(h) PBOP Assets⁽³⁾							204.1								189.4								234.5								204.1
Total PBOP Assets							$	815.8							$	812.2							$	922.2							$	815.8


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


⁽²⁾	Fixed Income investments that are uncategorized include investments in commingled funds, fixed income funds that invest in a variety of opportunistic fixed income strategies, and hedge funds that are overlayed with fixed income futures.


⁽³⁾	The assets of the Pension Plan include a 401(h) account that has been allocated to provide health and welfare postretirement benefits under the PBOP Plan.

The Company values assets based on observable inputs when available. Equity securities, exchange traded funds and futures contracts classified as Level 1 in the fair value hierarchy are priced based on the closing price on the primary exchange as of the balance sheet date.

Fixed income securities, such as government issued securities, corporate bonds and high yield bond funds, are included in Level 2 and are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The pricing models utilize observable inputs such as recent trades for the same or similar instruments, yield curves, discount margins and bond structures. Swaps are valued using pricing models that incorporate interest rates and equity and fixed income index closing prices to determine a net present value of the cash flows.

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

B. Defined Contribution Plan

Eversource maintains ~~one~~ defined contribution ~~plan~~plans on behalf of eligible ~~participants, the Eversource 401k Plan.~~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. ~~Beginning in 2014 for~~For newly hired employees, the Eversource 401k Plan provides employer matching contributions of 100 percent up to a maximum of three percent of eligible compensation.

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

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


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH
2017											$	34.5	$	4.6	$	8.5	$	3.7
2016	$	31.8	$	4.5	$	7.0	$	3.4	$	1.1	31.8		4.5		8.1		3.4
2015	30.4		4.8		6.3		3.4		1.0		30.4		4.8		7.3		3.4
2014	29.7		5.0		6.3		3.2		1.0

C. Share-Based Payments

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

Eversource Incentive Plans: Eversource maintains long-term equity-based incentive plans in which Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH employees, officers and board members are eligible to participate. The incentive plans authorize Eversource to grant up to 8,000,000 new shares for various types of awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource had ~~2,692,350~~2,445,110 and ~~3,005,010~~2,692,350 common shares, respectively, available for issuance under these plans.

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

RSUs - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period based upon the fair value of Eversource's common shares at the date of grant. The par value of RSUs is reclassified to Common Stock from APIC as RSUs become issued as common shares.

Performance Shares - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period. Performance shares vest based upon the extent to which Company goals are achieved. Vesting of outstanding performance shares is based upon both the Company's EPS growth over the requisite service period and the total shareholder return as compared to the Edison Electric Institute ("EEI") Index during the requisite service period. The fair value of performance shares is determined at the date of grant using a lattice model.

Stock Options - ~~Stock~~All outstanding stock options ~~currently outstanding are fully vested.~~

~~ESPP - For shares sold under the ESPP, no compensation expense was recorded as the ESPP qualified as a non-compensatory plan. The ESPP ended as of February 1, 2016.~~were exercised during 2017.

RSUs: Eversource granted RSUs under the annual long-term incentive programs that are subject to three-year graded vesting schedules for employees, and one-year graded vesting schedules, or immediate vesting, for board members. RSUs are paid in shares, reduced by amounts sufficient to satisfy withholdings for income taxes, subsequent to vesting. A summary of RSU transactions is as follows:


	RSUs (Units)		Weighted Average Grant-Date Fair Value		RSUs (Units)		Weighted Average Grant-Date Fair Value
Outstanding as of December 31, 2015	729,308		$	43.45
Outstanding as of December 31, 2016					724,270		$	47.86
Granted	305,340		$	54.67	299,285		$	55.97
Shares Issued	(270,060	)	$	44.94	(289,635	)	$	52.26
Forfeited	(40,318	)	$	53.99	(16,881	)	$	55.60
Outstanding as of December 31, 2016	724,270		$	47.86
Outstanding as of December 31, 2017					717,039		$	49.29

The weighted average grant-date fair value of RSUs granted for the years ended December 31, 2017, 2016 and 2015 was $55.97, $54.67 and ~~2014 was $54.67,~~ $54.57, ~~and $42.27,~~ respectively. As of December 31, ~~2016~~2017 and ~~2015,~~2016, the number and weighted average grant-date fair value of unvested RSUs was 388,269 and $56.15 per share, and 322,158 and $53.47 per share, ~~and 469,772 and $48.58 per share,~~ respectively. During ~~2016,~~2017, there were ~~402,263~~306,087 RSUs at a weighted average grant-date fair value of ~~$48.96~~$52.75 per share that vested during the year and were either paid or deferred. As of December 31, ~~2016, 402,112~~2017, 328,770 RSUs were fully vested and deferred and an additional ~~306,050~~368,856 are expected to vest.

Performance Shares: Eversource granted performance shares under the annual long-term incentive programs that vest based upon the extent to which Company goals are achieved at the end of three-year performance measurement periods. Performance shares are paid in shares, after the performance measurement period. A summary of performance share transactions is as follows:


	Performance Shares (Units)		Weighted Average Grant-Date Fair Value		Performance Shares (Units)		Weighted Average Grant-Date Fair Value
Outstanding as of December 31, 2015	528,428		$	46.30
Outstanding as of December 31, 2016					522,934		$	51.09
Granted	222,139		$	53.64	180,032		$	55.70
Shares Issued	(201,826	)	$	40.93	(173,914	)	$	43.48
Forfeited	(25,807	)	$	54.48	(18,487	)	$	47.06
Outstanding as of December 31, 2016	522,934		$	51.09
Outstanding as of December 31, 2017					510,565		$	55.45

The weighted average grant-date fair value of performance shares granted for the years ended December 31, 2017, 2016 and 2015 was $55.70, $53.64 and ~~2014 was $53.64,~~ $55.04, ~~and $43.40,~~ respectively. As of December 31, ~~2016~~2017 and ~~2015,~~2016, the number and weighted average grant-date fair value of unvested performance shares was 331,207 and $55.79 per share, and 301,363 and $51.52 per share, ~~and 528,428 and $46.30 per share,~~ respectively. During ~~2016,~~2017, there were ~~423,025~~131,308 performance shares at a weighted average grant-date fair value of ~~$45.94~~$47.12 per share that vested during the year and were either paid or deferred. As of December 31, ~~2016, 221,571~~2017, 179,358 performance shares were fully vested and deferred.

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


Eversource	For the Years Ended December 31,						For the Years Ended December 31,
(Millions of Dollars)	2016		2015		2014		2017		2016		2015
Compensation Expense	$	23.6	$	23.1	$	24.6	$	19.7	$	23.6	$	23.1
Future Income Tax Benefit	9.6		9.4		10.3		8.0		9.6		9.4


	For the Years Ended December 31,																								For the Years Ended December 31,
	2016								2015								2014								2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Compensation Expense	$	9.1	$	6.5	$	3.5	$	1.7	$	9.3	$	5.8	$	3.2	$	1.7	$	8.1	$	7.4	$	3.0	$	1.3	$	7.0	$	7.0	$	3.2	$	9.1	$	8.2	$	3.5	$	9.3	$	7.5	$	3.2
Future Income Tax Benefit	3.7		2.6		1.4		0.7		3.8		2.4		1.3		0.7		3.4		3.1		1.3		0.5		2.9		2.8		1.3		3.7		3.3		1.4		3.8		3.1		1.3

As of December 31, ~~2016,~~2017, there was ~~$13.9~~$20.1 million of total unrecognized compensation expense related to nonvested share-based awards for Eversource, including ~~$5.1~~$7.3 million for CL&P, ~~$3.8~~$7.1 million for NSTAR Electric ~~$2.0~~and $3.1 million for ~~PSNH and $0.9 million for WMECO.~~PSNH. This cost is expected to be recognized ratably over a weighted-average period of ~~1.76~~1.83 years for Eversource ~~CL&P,~~and NSTAR Electric, ~~and PSNH, and 1.75~~1.84 years for ~~WMECO.~~CL&P and 1.82 years for PSNH.

An income tax rate of 40 percent iswas used to estimate the tax effect on total share-based payments determined under the ~~fair value-based~~fair-value based method for all awards. The Company generally settles ~~stock option exercises and~~ fully vested RSUs and performance shares with the issuance of common shares purchased in the open market.

In 2016, the Company adopted new accounting guidance, which prospectively changed the accounting for excess tax benefits associated with the distribution of stock compensation awards and also changed the presentation of excess tax benefits on the statement of cash flows from a financing activity to an operating activity. For the ~~year~~years ended December 31, 2017 and 2016, the impact of the ASU was to reduce income tax expense by $2.9 million and $19.1 million, respectively, which increased cash flows from operating activities on the statement of cash flows. ~~See Note 1C, "Summary of Significant Accounting Policies - Accounting Standards," for further information.~~ For ~~each of~~ the ~~years~~year ended December 31, 2015, ~~and 2014,~~ changes in excess tax benefits totaling $9.5 million increased cash flows from financing activities.

Stock Options: ~~Stock~~All remaining outstanding stock options ~~currently outstanding granted~~ under the NSTAR Incentive Plan ~~expire ten years from the date of grant and are fully vested. The weighted average remaining contractual lives for the options outstanding as of December 31, 2016 is 2.0 years.~~were exercised during 2017. A summary of stock option transactions is as follows:


	Options		Weighted Average Exercise Price		Intrinsic Value (Millions)		Options		Weighted Average Exercise Price		Intrinsic Value (Millions)
Outstanding and Exercisable - December 31, 2015	171,872		$	26.47	$	4.2
Outstanding and Exercisable - December 31, 2016							124,640		$	25.84	$	3.7
Exercised	(47,232	)	$	28.12	$	1.3	(124,640	)	$	25.84	$	4.4
Outstanding and Exercisable - December 31, 2016	124,640		$	25.84	$	3.7
Outstanding and Exercisable - December 31, 2017							—		$	—	$	—

Cash received for options exercised during the year ended December 31, ~~2016~~2017 totaled ~~$1.3~~$3.2 million. The tax benefit realized from stock options exercised totaled ~~$0.5~~$1.8 million for the year ended December 31, ~~2016.~~

~~Employee Share Purchase Plan:~~ Eversource maintained an ESPP for eligible employees, which allowed for Eversource common shares to be purchased by employees at the end of successive six-month offering periods at 95 percent of the closing market price on the last day of each six-month period. The ESPP qualified as a non-compensatory plan under accounting guidance for share-based payments, and no compensation expense was recorded for ESPP purchases.

During 2016, employees purchased 16,014 shares at a discounted price of $51.11. Employees purchased 33,715 shares in 2015 at discounted prices of $52.80 and $47.23. As of December 31, 2015, 743,260 shares were available for future issuance under the ESPP. The ESPP ended as of February 1, 2016.2017.

D. Other Retirement Benefits

Eversource provides retirement and other benefits for certain current and past company officers. These benefits are accounted for on an accrual basis and expensed over a period equal to the service lives of the employees. The actuarially-determined liability for these benefits, which is included in Other Long-Term Liabilities on the balance sheets, as well as the related expense included in Operations and Maintenance Expense on the income statements, are as follows:


Eversource (Millions of Dollars)	As of and For the Years Ended December 31,						As of and For the Years Ended December 31,
	2016		2015		2014		2017		2016		2015
Actuarially-Determined Liability	$	54.2	$	55.2	$	57.5	$	53.4	$	54.2	$	55.2
Other Retirement Benefits Expense	2.9		3.9		4.5		2.8		2.9		3.9


	As of and For the Years Ended December 31,																								As of and For the Years Ended December 31,
	2016								2015								2014								2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Actuarially-Determined Liability	$	0.3	$	—	$	2.0	$	0.1	$	0.4	$	—	$	2.4	$	0.2	$	0.4	$	—	$	2.6	$	0.2	$	0.3	$	0.1	$	1.9	$	0.3	$	0.1	$	2.0	$	0.4	$	0.2	$	2.4
Other Retirement Benefits Expense	1.1		0.7		0.6		0.2		1.5		1.0		0.7		0.3		2.1		0.3		0.9		0.4		1.0		1.0		0.5		1.1		0.9		0.6		1.5		1.3		0.7

10. INCOME TAXES

The components of income tax expense are as follows:


Eversource (Millions of Dollars)	For the Years Ended December 31,									For the Years Ended December 31,
Eversource (Millions of Dollars)	2016			2015			2014			2017			2016			2015
Current Income Taxes:
Federal	$	38.9		$	6.2		$	4.4		$	58.9		$	38.9		$	6.2
State	53.0			45.7			24.5			31.6			53.0			45.7
Total Current	91.9			51.9			28.9			90.5			91.9			51.9
Deferred Income Taxes, Net:
Federal	427.9			436.1			406.8			433.0			427.9			436.1
State	38.6			55.6			36.5			58.6			38.6			55.6
Total Deferred	466.5			491.7			443.3			491.6			466.5			491.7
Investment Tax Credits, Net	(3.4		)	(3.6		)	(3.9		)	(3.2		)	(3.4		)	(3.6		)
Income Tax Expense	$	555.0		$	540.0		$	468.3		$	578.9		$	555.0		$	540.0


	For the Years Ended December 31,																																				For the Years Ended December 31,
	2016												2015												2014												2017								2016									2015
(Millions of Dollars)	CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH		CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Current Income Taxes:
Federal	$	27.3		$	73.9		$	(13.7	)	$	12.5		$	26.9		$	36.3		$	(16.7	)	$	(3.5	)	$	(0.2	)	$	75.0		$	(22.6	)	$	1.9		$	50.9		$	107.8		$	18.6	$	27.3		$	86.4		$	(13.7	)	$	26.9		$	32.8		$	(16.7	)
State	13.3			35.0			8.8			4.5			15.8			19.8			6.0			1.6			4.3			20.2			(0.1		)	1.8			17.4			25.6			6.2		13.3			39.5			8.8			15.8			21.4			6.0
Total Current	40.6			108.9			(4.9		)	17.0			42.7			56.1			(10.7		)	(1.9		)	4.1			95.2			(22.7		)	3.7			68.3			133.4			24.8		40.6			125.9			(4.9		)	42.7			54.2			(10.7		)
Deferred Income Taxes, Net:
Federal	157.6			78.3			79.5			18.3			135.8			147.5			74.5			33.4			138.0			88.0			79.6			28.1			123.9			88.1			52.7		157.6			96.6			79.5			135.8			180.9			74.5
State	11.3			1.9			7.8			3.2			0.2			25.7			9.3			6.0			(7.1		)	20.1			15.2			6.0			(4.6		)	22.4			11.2		11.3			5.1			7.8			0.2			31.7			9.3
Total Deferred	168.9			80.2			87.3			21.5			136.0			173.2			83.8			39.4			130.9			108.1			94.8			34.1			119.3			110.5			63.9		168.9			101.7			87.3			136.0			212.6			83.8
Investment Tax Credits, Net	(1.2		)	(1.3		)	—			(0.5		)	(1.3		)	(1.3		)	—			(0.5		)	(1.5		)	(1.3		)	—			(0.5		)	(1.0		)	(1.8		)	—		(1.2		)	(1.8		)	—			(1.3		)	(1.8		)	—
Income Tax Expense	$	208.3		$	187.8		$	82.4		$	38.0		$	177.4		$	228.0		$	73.1		$	37.0		$	133.5		$	202.0		$	72.1		$	37.3		$	186.6		$	242.1		$	88.7	$	208.3		$	225.8		$	82.4		$	177.4		$	265.0		$	73.1

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


Eversource (Millions of Dollars, except percentages)	For the Years Ended December 31,									For the Years Ended December 31,
	2016			2015			2014			2017			2016			2015
Income Before Income Tax Expense	$	1,504.8		$	1,425.9		$	1,295.4		$	1,574.4		$	1,504.8		$	1,425.9

Statutory Federal Income Tax Expense at 35%	526.7			499.1			453.4			551.0			526.7			499.1
Tax Effect of Differences:
Depreciation	(3.4		)	(4.6		)	(5.6		)	(10.8		)	(3.4		)	(4.6		)
Investment Tax Credit Amortization	(3.4		)	(3.6		)	(3.9		)	(3.2		)	(3.4		)	(3.6		)
Other Federal Tax Credits	(3.5		)	(3.8		)	(3.5		)	—			(3.5		)	(3.8		)
State Income Taxes, Net of Federal Impact	56.2			61.1			42.5			47.7			56.2			61.1
Dividends on ESOP	(8.4		)	(8.1		)	(8.0		)	(8.4		)	(8.4		)	(8.1		)
Tax Asset Valuation Allowance/Reserve Adjustments	3.3			4.7			(2.9		)	7.0			3.3			4.7
Excess Stock Benefit ⁽¹⁾	(19.1		)	—			—			(2.9		)	(19.1		)	—
Other, Net	6.6			(4.8		)	(3.7		)	(1.5		)	6.6			(4.8		)
Income Tax Expense	$	555.0		$	540.0		$	468.3		$	578.9		$	555.0		$	540.0
Effective Tax Rate	36.9		%	37.9		%	36.2		%	36.8		%	36.9		%	37.9		%


	For the Years Ended December 31,																																				For the Years Ended December 31,
	2016												2015												2014												2017									2016									2015
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			WMECO			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Income Before Income Tax Expense	$	542.6		$	480.5		$	214.3		$	96.1		$	476.8		$	572.6		$	187.5		$	93.5		$	421.2		$	505.1		$	186.1		$	95.1		$	563.4		$	616.8		$	224.7		$	542.6		$	576.6		$	214.3		$	476.8		$	666.1		$	187.5

Statutory Federal Income Tax Expense at 35%	189.9			168.2			75.0			33.6			166.9			200.4			65.6			32.7			147.4			176.8			65.1			33.3			197.2			215.9			78.6			189.9			201.8			75.0			166.9			233.1			65.6
Tax Effect of Differences:
Depreciation	1.6			(3.4		)	1.0			0.3			(1.7		)	(1.4		)	0.5			(0.3		)	(3.6		)	(1.3		)	0.3			(0.2		)	(5.2		)	(3.0		)	1.1			1.6			(3.1		)	1.0			(1.7		)	(1.7		)	0.5
Investment Tax Credit Amortization	(1.2		)	(1.3		)	—			(0.5		)	(1.3		)	(1.3		)	—			(0.5		)	(1.5		)	(1.3		)	—			(0.5		)	(1.0		)	(1.8		)	—			(1.2		)	(1.8		)	—			(1.3		)	(1.8		)	—
Other Federal Tax Credits	—			—			(3.5		)	—			—			—			(3.8		)	—			—			—			(3.5		)	—			—			—			—			—			—			(3.5		)	—			—			(3.8		)
State Income Taxes, Net of Federal Impact	14.5			24.0			10.8			5.0			9.2			29.6			9.9			4.9			4.4			26.2			9.8			5.0			4.5			31.2			11.3			14.5			29.0			10.8			9.2			34.5			9.9
Tax Asset Valuation Allowance/Reserve Adjustments	1.5			—			—			—			1.2			—			—			—			(6.3		)	—			—			—			(9.5		)	—			—			1.5			—			—			1.2			—			—
Excess Stock Benefit ⁽¹⁾	(0.9		)	(1.0		)	(0.4		)	(0.2		)	—			—			—			—			—			—			—			—			(0.7		)	(0.7		)	(0.3		)	(0.9		)	(1.2		)	(0.4		)	—			—			—
Other, Net	2.9			1.3			(0.5		)	(0.2		)	3.1			0.7			0.9			0.2			(6.9		)	1.6			0.4			(0.3		)	1.3			0.5			(2.0		)	2.9			1.1			(0.5		)	3.1			0.9			0.9
Income Tax Expense	$	208.3		$	187.8		$	82.4		$	38.0		$	177.4		$	228.0		$	73.1		$	37.0		$	133.5		$	202.0		$	72.1		$	37.3		$	186.6		$	242.1		$	88.7		$	208.3		$	225.8		$	82.4		$	177.4		$	265.0		$	73.1
Effective Tax Rate	38.4		%	39.1		%	38.4		%	39.6		%	37.2		%	39.8		%	39.0		%	39.6		%	31.7		%	40.0		%	38.7		%	39.2		%	33.1		%	39.2		%	39.5		%	38.4		%	39.2		%	38.4		%	37.2		%	39.8		%	39.0		%

⁽¹⁾

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

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

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


Eversource (Millions of Dollars)	As of December 31,				As of December 31,
	2016		2015		2017		2016
Deferred Tax Assets:
Employee Benefits	$	640.6	$	637.5	$	442.1	$	640.6
Derivative Liabilities	192.6		172.7		111.8		192.6
Regulatory Deferrals - Liabilities	290.9		243.5		205.6		290.9
Allowance for Uncollectible Accounts	76.6		60.5		50.1		76.6
Tax Effect - Tax Regulatory Liabilities	11.8		9.7		832.6		11.8
Federal Net Operating Loss Carryforwards	—		5.4		47.8		—
Purchase Accounting Adjustment	112.2		119.3		69.9		112.2
Other	170.5		197.1		149.5		170.5
Total Deferred Tax Assets	1,495.2		1,445.7		1,909.4		1,495.2
Less: Valuation Allowance	5.1		3.7		14.6		5.1
Net Deferred Tax Assets	$	1,490.1	$	1,442.0	$	1,894.8	$	1,490.1
Deferred Tax Liabilities:
Accelerated Depreciation and Other Plant-Related Differences	$	5,001.2	$	4,602.6	$	3,562.0	$	5,001.2
Property Tax Accruals	81.9		76.7		56.7		81.9
Regulatory Amounts:
Regulatory Deferrals - Assets	1,321.8		1,289.1		924.9		1,321.8
Tax Effect - Tax Regulatory Assets	252.6		249.3		243.1		252.6
Goodwill Regulatory Asset - 1999 Merger	186.7		194.9		99.8		186.7
Derivative Assets	29.5		17.7		17.4		29.5
Other	223.6		159.4		288.4		223.6
Total Deferred Tax Liabilities	$	7,097.3	$	6,589.7	$	5,192.3	$	7,097.3


	As of December 31,																As of December 31,
	2016								2015								2017						2016
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	138.8	$	58.4	$	46.5	$	11.1	$	126.1	$	91.3	$	37.1	$	10.0	$	112.3	$	34.0	$	38.0	$	138.8	$	69.5	$	46.5
Derivative Liabilities	191.5		1.1		—		—		165.7		0.6		—		—		110.5		0.3		—		191.5		1.1		—
Regulatory Deferrals - Liabilities	6.3		186.4		36.7		8.5		36.0		109.4		42.1		6.1		12.0		139.8		17.9		6.3		194.9		36.7
Allowance for Uncollectible Accounts	33.0		20.0		4.1		5.7		30.4		8.5		3.6		4.5		20.6		17.3		2.9		33.0		25.7		4.1
Tax Effect - Tax Regulatory Liabilities	4.9		1.1		2.6		2.2		3.1		1.5		2.3		2.4		337.2		281.2		116.8		4.9		3.3		2.6
Federal Net Operating Loss Carryforwards	—		—		—		—		—		—		2.4		0.4
Other	59.4		2.2		56.4		4.4		55.5		3.4		61.1		5.0		70.7		4.9		49.6		59.4		6.6		56.4
Total Deferred Tax Assets	433.9		269.2		146.3		31.9		416.8		214.7		148.6		28.4		663.3		477.5		225.2		433.9		301.1		146.3
Less: Valuation Allowance	4.5		—		—		—		3.1		—		—		—		6.3		—		—		4.5		—		—
Net Deferred Tax Assets	$	429.4	$	269.2	$	146.3	$	31.9	$	413.7	$	214.7	$	148.6	$	28.4	$	657.0	$	477.5	$	225.2	$	429.4	$	301.1	$	146.3
Deferred Tax Liabilities:
Accelerated Depreciation and Other Plant-Related Differences	$	1,700.3	$	1,463.5	$	726.3	$	438.4	$	1,545.6	$	1,387.1	$	655.3	$	416.1	$	1,224.9	$	1,229.2	$	502.5	$	1,700.3	$	1,901.9	$	726.3
Property Tax Accruals	29.7		25.6		8.0		11.2		27.3		22.8		7.3		10.6		20.7		24.2		5.5		29.7		36.8		8.0
Regulatory Amounts:
Regulatory Deferrals - Assets	473.4		322.3		142.1		59.4		456.8		339.7		137.9		60.5		310.6		267.1		103.6		473.4		381.7		142.1
Tax Effect - Tax Regulatory Assets	170.4		36.1		12.2		8.7		168.7		36.0		15.4		9.0		173.1		9.8		11.4		170.4		44.8		12.2
Goodwill Regulatory Asset - 1999 Merger	—		160.3		—		—		—		167.4		—		—		—		85.7		—		—		160.3		—
Derivative Assets	27.0		—		—		—		17.7		—		—		—		17.4		—		—		27.0		—		—
Other	16.3		97.7		43.1		5.0		18.5		22.0		38.6		2.7		13.7		137.3		45.7		16.3		102.7		43.1
Total Deferred Tax Liabilities	$	2,417.1	$	2,105.5	$	931.7	$	522.7	$	2,234.6	$	1,975.0	$	854.5	$	498.9	$	1,760.4	$	1,753.3	$	668.7	$	2,417.1	$	2,628.2	$	931.7

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

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

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

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


	As of December 31, 2016											As of December 31, 2017
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Expiration Range	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range
Federal Tax Credit	$	8.6	$	—	$	—	$	—	$	—	—
Federal Net Operating Loss												$	197.3	$	—	$	—	$	—	2027-2037
Federal Charitable Contribution	27.8		—		—		—		—		2016 - 2019	18.7		—		—		—		2017-2022
State Net Operating Loss												82.8		—		—		—		2028-2037
State Tax Credit	111.1		80.5		—		—		—		2016 - 2021	139.0		94.5		—		—		2017-2022
State Charitable Contribution	36.5		—		—		—		—		2016 - 2020	31.4		—		—		—		2017-2022


	As of December 31, 2015											As of December 31, 2016
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Expiration Range	Eversource	CL&P	NSTAR Electric	PSNH	Expiration Range
Federal Net Operating Loss	$	15.5	$	—	$	—	$	7.0	$	1.0	2032
Federal Tax Credit	26.1		0.1		0.2		15.0		—		2031 - 2035	8.6	—	—	—	—
Federal Charitable Contribution	14.9		—		—		—		—		2016 - 2018	27.8	—	—	—	2016 - 2019
State Tax Credit	101.2		73.8		—		—		—		2015 - 2020	111.1	80.5	—	—	2016 - 2021
State Charitable Contribution	3.0		—		—		—		—		2015 - 2019	36.5	—	—	—	2016 - 2020

In 2017,the company increased its valuation allowance reserve for state credits by $9.9 million ($1.8 million for CL&P), net of tax, to reflect and update for expired tax credits. In 2016, the Company increased its valuation allowance reserve for state credits by $1.3 million ($1.3 million for CL&P), net of tax, to reflect an update for expired tax credits.In 2015, the Company decreased its valuation allowance reserve for state credits and state loss carryforwards by $1.3 million ($0.9 million for CL&P), net of tax, to reflect an update for expired state tax credits and loss carryforwards.

For ~~2016~~2017 and ~~2015,~~2016, state credit and state loss carryforwards have been partially reserved by a valuation allowance of ~~$4.5~~$14.4 million and ~~$3.1~~$4.5 million (net of tax), respectively.

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


(Millions of Dollars)	Eversource			CL&P			Eversource			CL&P
Balance as of January 1, 2014	$	38.2		$	11.4
Gross Increases - Current Year	9.3			2.7
Gross Increases - Prior Year	0.3			0.2
Lapse of Statute of Limitations	(1.6		)	—
Balance as of December 31, 2014	46.2			14.3
Balance as of January 1, 2015							$	46.2		$	14.3
Gross Increases - Current Year	9.9			2.6			9.9			2.6
Gross Increases - Prior Year	0.1			—			0.1			—
Lapse of Statute of Limitations	(8.2		)	(3.4		)	(8.2		)	(3.4		)
Balance as of December 31, 2015	48.0			13.5			48.0			13.5
Gross Increases - Current Year	9.9			3.9			9.9			3.9
Gross Increases - Prior Year	0.2			0.2			0.2			0.2
Lapse of Statute of Limitations	(9.7		)	(2.3		)	(9.7		)	(2.3		)
Balance as of December 31, 2016	$	48.4		$	15.3		48.4			15.3
Gross Increases - Current Year							11.4			4.7
Gross Decreases - Prior Year							(0.9		)	(0.5		)
Lapse of Statute of Limitations							(7.2		)	(1.4		)
Balance as of December 31, 2017							$	51.7		$	18.1

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


	Other Interest Expense/(Income)							Accrued Interest Expense				Other Interest Expense/(Income)							Accrued Interest Expense
	For the Years Ended December 31,							As of December 31,				For the Years Ended December 31,							As of December 31,
(Millions of Dollars)	2016			2015		2014		2016		2015		2017		2016			2015		2017		2016
Eversource	$	(0.2	)	$	0.1	$	0.4	$	1.8	$	2.0	$	—	$	(0.2	)	$	0.1	$	1.8	$	1.8

Tax Positions: During ~~2016~~2017 and ~~2015,~~2016, Eversource did not resolve any of its uncertain tax positions.

Open Tax Years: The following table summarizes Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO's~~PSNH's tax years that remain subject to examination by major tax jurisdictions as of December 31, ~~2016:~~2017:



Description	Tax Years
Federal	~~2016~~2017
Connecticut	~~2013~~2014 - ~~2016~~2017
Massachusetts	~~2013~~2014 - ~~2016~~2017
New Hampshire	~~2014~~2015 - ~~2016~~2017

Eversource estimates that during the next twelve months, differences of a non-timing nature could be resolved, resulting in a zero to ~~$1.6~~$2.2 million decrease in unrecognized tax benefits by Eversource. These estimated changes are not expected to have a material impact on the earnings of Eversource. Other companies' impacts are not expected to be material.

~~2015 Federal Legislation:~~On December 18, 2015, the "Protecting Americans from Tax Hikes" Act became law, which extended the accelerated deduction of depreciation to businesses from 2015 through 2019. This extended stimulus provided Eversource with cash flow benefits in 2016 of approximately $275 million (including approximately $105 million for CL&P, $72 million for NSTAR Electric, $46 million for PSNH, and $25 million for WMECO) due to a refund of taxes paid in 2015 and lower tax payments in 2016 of approximately $300 million.

~~2015 Connecticut Legislation~~: In 2015, the state of Connecticut enacted several changes to its corporate tax laws. Among the changes, commencing as of January 1, 2015, is the reduction in the amount of tax credits that corporations can utilize against its tax liability in a year and a continuation of the corporate income tax surcharge through 2018, which effectively increases the state corporate tax rate to 9 percent for the years 2016 and 2017 and 8.25 percent for 2018. Also, effective January 1, 2016, all Connecticut companies have a mandatory unitary tax filing requirement.

11. COMMITMENTS AND CONTINGENCIES

A. Environmental Matters

General: Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~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 ~~PSNH~~ and ~~WMECO~~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 ~~PSNH's~~ and ~~WMECO's~~PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to related environmental matters. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.

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


(Millions of Dollars)	Eversource			CL&P			NSTAR Electric			PSNH			WMECO			Eversource			CL&P			NSTAR Electric			PSNH
Balance as of January 1, 2015	$	43.3		$	3.8		$	1.1		$	5.2		$	0.5
Additions	13.5			1.3			2.0			2.3			0.2
Payments/Reductions	(5.7		)	(0.5		)	(0.7		)	(3.0		)	(0.1		)
Balance as of December 31, 2015	51.1			4.6			2.4			4.5			0.6
Balance as of January 1, 2016																$	51.1		$	4.6		$	3.0		$	4.5
Additions	20.6			0.6			1.7			1.2			0.1			20.6			0.6			1.8			1.2
Payments/Reductions	(5.9		)	(0.3		)	(0.9		)	(0.4		)	(0.1		)	(5.9		)	(0.3		)	(1.0		)	(0.4		)
Balance as of December 31, 2016	$	65.8		$	4.9		$	3.2		$	5.3		$	0.6		65.8			4.9			3.8			5.3
Additions																6.2			0.5			1.8			1.0
Payments/Reductions																(17.1		)	(0.7		)	(2.9		)	(0.6		)
Balance as of December 31, 2017																$	54.9		$	4.7		$	2.7		$	5.7

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


	As of December 31, 2016			As of December 31, 2015			As of December 31, 2017			As of December 31, 2016
	Number of Sites	Reserve (in millions)		Number of Sites	Reserve (in millions)		Number of Sites	Reserve (in millions)		Number of Sites	Reserve (in millions)
Eversource	61	$	65.8	64	$	51.1	59	$	54.9	61	$	65.8
CL&P	14	4.9		14	4.6		14	4.7		14	4.9
NSTAR Electric	13	3.2		15	2.4		15	2.7		17	3.8
PSNH	11	5.3		12	4.5		10	5.7		11	5.3
WMECO	4	0.6		4	0.6

Included in the Eversource number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were ~~$59.0~~$49.0 million and ~~$45.5~~$59.0 million as of December 31, ~~2016~~2017 and ~~2015,~~2016, respectively, and related primarily to the natural gas business segment. The ~~increase~~reduction in the reserve balance isat the MGP sites was primarily due to ~~the completion of~~a change in cost estimates at one site ~~assessments and revised estimates for certain MGP sites.~~where actual contamination was less than originally estimated.

As of December 31, ~~2016,~~2017, for 8 environmental sites (3 for CL&P, 1 for ~~WMECO)~~NSTAR Electric) that are included in the Company's reserve for environmental costs, the information known and the nature of the remediation options allow for the Company to estimate the range of losses for environmental costs. As of December 31, ~~2016, $35.6~~2017, $25.4 million (including ~~$1.7~~$1.8 million for CL&P and $0.3 million for ~~WMECO)~~NSTAR Electric) had been accrued as a liability for these sites, which represents the low end of the range of the liabilities for environmental costs. Management believes that additional losses of up to approximately ~~$16~~$20 million ~~(approximately $1~~($1 million ~~for~~at CL&P) may be incurred in executing current remediation plans for these sites.

As of December 31, ~~2016,~~2017, for 10 environmental sites (3 for CL~~&P )~~&P) that are included in the Company's reserve for environmental costs, management cannot reasonably estimate the exposure to loss in excess of the reserve, or range of loss, as these sites are under investigation and/or there is significant uncertainty as to what remedial actions, if any, the Company may be required to undertake. As of December 31, ~~2016, $13.4~~2017, $12.3 million (including ~~$2.1~~$1.8 million for CL&P) had been accrued as a liability for these sites. As of December 31, ~~2016,~~2017, for the remaining 4341 environmental sites (including 8 for CL&P, 1314 for NSTAR Electric 11and 10 for ~~PSNH, and 3 for WMECO)~~PSNH) that are included in the Company's reserve for environmental costs, the ~~$16.8~~$17.2 million accrual (including $1.1 million for CL&P, ~~$3.2~~$2.4 million for NSTAR Electric ~~$5.3~~and $5.7 million for ~~PSNH, and $0.3 million for WMECO)~~PSNH) represents management's best estimate of the probable liability and no additional loss is anticipated at this time.

CERCLA: Of the total environmental sites, nine sites (four for NSTAR Electric and three for PSNH) are superfund sites under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and its amendments or state equivalents for which the Company has been notified that it is a potentially responsible party but for which the site assessment and remediation are not being managed by the Company. As of December 31, ~~2016,~~2017, a liability of ~~$0.7~~$0.9 million accrued on these sites represents management's best estimate of its potential remediation costs with respect to these superfund sites.

Environmental Rate Recovery: PSNH, NSTAR Gas and Yankee Gas have rate recovery mechanisms for MGP related environmental costs, therefore, changes in their respective environmental reserves do not impact Net Income. CL&P recovers a certain level of environmental costs currently in rates. CL&P and NSTAR Electric ~~and WMECO~~ do not have a separate environmental cost recovery regulatory mechanism.

B. Long-Term Contractual Arrangements

Estimated Future Annual Costs: The estimated future annual costs of significant long-term contractual arrangements as of December 31, ~~2016~~2017 are as follows:


Eversource
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	115.8	$	81.6	$	69.4	$	74.2	$	58.4	$	189.8	589.2		$	81.7	$	69.3	$	74.6	$	68.8	$	63.7	$	144.3	$	502.4
Renewable Energy	275.4		242.6		240.9		238.8		218.9		1,864.1		3,080.7		242.9		242.5		241.7		232.2		224.5		1,665.7		2,849.5
Peaker CfDs	42.3		21.5		21.7		31.1		27.6		54.2		198.4		26.1		24.2		34.0		32.3		23.4		53.3		193.3
Natural Gas Procurement	197.0		185.5		142.3		115.0		104.9		190.2		934.9		225.5		219.2		169.3		148.7		131.4		989.6		1,883.7
Coal, Wood and Other	15.5		3.9		1.9		1.9		1.9		11.3		36.4
Transmission Support Commitments	21.8		22.0		22.2		22.2		22.2		22.2		132.6		22.8		23.0		23.2		15.2		16.5		16.5		117.2
Total	$	667.8	$	557.1	$	498.4	$	483.2	$	433.9	$	2,331.8	$	4,972.2	$	599.0	$	578.2	$	542.8	$	497.2	$	459.5	$	2,869.4	$	5,546.1


CL&P
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	93.4	$	58.7	$	56.6	$	68.8	$	53.0	$	162.3	$	492.8	$	58.7	$	56.7	$	69.5	$	63.7	$	59.1	$	121.6	$	429.3
Renewable Energy	77.9		80.4		80.3		80.3		80.6		684.4		1,083.9		84.1		85.4		85.5		85.8		86.6		655.5		1,082.9
Peaker CfDs	42.3		21.5		21.7		31.1		27.6		54.2		198.4		26.1		24.2		34.0		32.3		23.4		53.3		193.3
Transmission Support Commitments	8.6		8.7		8.8		8.8		8.8		8.8		52.5		9.0		9.1		9.2		6.0		6.5		6.5		46.3
Total	$	222.2	$	169.3	$	167.4	$	189.0	$	170.0	$	909.7	$	1,827.6	$	177.9	$	175.4	$	198.2	$	187.8	$	175.6	$	836.9	$	1,751.8


NSTAR Electric
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost	$	4.8	$	5.5	$	5.5	$	3.1	$	3.1	$	25.0	$	47.0	$	5.5	$	5.5	$	3.1	$	3.1	$	3.1	$	22.0	$	42.3
Renewable Energy	116.8		80.4		78.5		76.6		72.1		416.7		841.1		96.1		94.3		92.6		88.2		88.4		489.4		949.0
Transmission Support Commitments	6.8		6.8		6.9		6.9		6.9		6.9		41.2		9.0		9.0		9.1		6.0		6.5		6.5		46.1
Total	$	128.4	$	92.7	$	90.9	$	86.6	$	82.1	$	448.6	$	929.3	$	110.6	$	108.8	$	104.8	$	97.3	$	98.0	$	517.9	$	1,037.4

PSNH
(Millions of Dollars) 2017 2018 2019 2020 2021 Thereafter Total
Supply and Stranded Cost $ 17.6
$ 17.4
$ 7.3
$ 2.3
$ 2.3
$ 2.5
$ 49.4
Renewable Energy 65.2
66.1
66.3
65.9
50.1
601.9
915.5
Coal, Wood and Other 15.5
3.9
1.9
1.9
1.9
11.3
36.4
Transmission Support Commitments 4.6
4.7
4.7
4.7
4.7
4.7
28.1
Total $ 102.9
$ 92.1
$ 80.2
$ 74.8
$ 59.0
$ 620.4
$ 1,029.4


WMECO
PSNH
(Millions of Dollars)	2017		2018		2019		2020		2021		Thereafter		Total		2018		2019		2020		2021		2022		Thereafter		Total
Supply and Stranded Cost															$	17.5	$	7.1	$	2.0	$	2.0	$	1.5	$	0.7	$	30.8
Renewable Energy	$	15.5	$	15.7	$	15.8	$	16.0	$	16.1	$	161.1	$	240.2	62.7		62.8		63.6		58.2		49.5		520.8		817.6
Transmission Support Commitments	1.8		1.8		1.8		1.8		1.8		1.8		10.8		4.8		4.9		4.9		3.2		3.5		3.5		24.8
Total	$	17.3	$	17.5	$	17.6	$	17.8	$	17.9	$	162.9	$	251.0	$	85.0	$	74.8	$	70.5	$	63.4	$	54.5	$	525.0	$	873.2

Supply and Stranded Cost: CL&P, NSTAR Electric and PSNH have various IPP contracts or purchase obligations for electricity, including payment obligations resulting from the buydown of electricity purchase contracts. Such contracts extend through 2024 for CL&P, 2031 for NSTAR Electric and 2023 for PSNH.

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

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

Renewable Energy: Renewable energy contracts include non-cancellable commitments under contracts of CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO~~PSNH for the purchase of energy and capacity from renewable energy facilities. Such contracts extend through ~~2037~~2038 for CL&P, 2031 for NSTAR Electric and 2033 for ~~PSNH and 2031 for WMECO.~~PSNH.

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

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

Natural Gas Procurement: In the normal course of business, Eversource's natural gas distribution businesses have long-term contracts for the purchase, transportation and storage of natural gas as part of its portfolio of supplies. These contracts extend through ~~2031.~~2032.

Coal, Wood and Other: PSNH has entered into various arrangements for the purchase of coal, wood and the transportation services for fuel supply for its electric generating assets. ~~Also included in~~On January 10, 2018, Eversource and PSNH completed the sale of PSNH's thermal generation assets, at which time, remaining future contractual obligations ~~table above is a contract~~were transferred to the buyer. See Note 12, "Assets Held for ~~capacity on the Portland Natural Gas Transmission System (PNGTS) pipeline that extends through 2018. The costs of this contract of $2.0 million are not recoverable from customers.~~Sale," for further information.

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

The total costs incurred under these agreements were as follows:


Eversource	For the Years Ended December 31,						For the Years Ended December 31,
(Millions of Dollars)	2016		2015		2014		2017		2016		2015
Supply and Stranded Cost	$	152.5	$	147.6	$	99.2	$	103.9	$	152.5	$	147.6
Renewable Energy	210.9		144.3		114.4		235.5		210.9		144.3
Peaker CfDs	47.7		42.7		18.1		38.7		47.7		42.7
Natural Gas Procurement	323.9		428.6		482.5		377.0		323.9		428.6
Coal, Wood and Other	55.7		95.9		120.5		47.7		55.7		95.9
Transmission Support Commitments	15.9		25.3		25.0		19.8		15.9		25.3


	For the Years Ended December 31,																									For the Years Ended December 31,
	2016								2015									2014								2017						2016						2015
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		WMECO			CL&P		NSTAR Electric		PSNH		WMECO		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Supply and Stranded Cost	$	132.7	$	0.7	$	19.1	$	—	$	120.3	$	6.5	$	20.8	$	—		$	63.0	$	7.0	$	26.0	$	3.2	$	81.0	$	4.0	$	18.9	$	132.7	$	0.7	$	19.1	$	120.3	$	6.5	$	20.8
Renewable Energy	42.1		93.6		67.7		7.5		20.0		86.7		37.2		0.4			0.7		87.4		26.3		—		51.0		123.7		60.8		42.1		101.1		67.7		20.0		87.1		37.2
Peaker CfDs	47.7		—		—		—		42.7		—		—		—			18.1		—		—		—		38.7		—		—		47.7		—		—		42.7		—		—
Coal, Wood and Other	—		—		55.7		—		—		—		95.9		—		��	—		—		120.5		—		—		—		47.7		—		—		55.7		—		—		95.9
Transmission Support Commitments	6.3		4.9		3.4		1.3		10.0		7.8		5.4		2.1			9.9		7.7		5.3		2.1		7.8		7.8		4.2		6.3		6.2		3.4		10.0		9.9		5.4

C. Spent Nuclear Fuel Obligations - Yankee Companies

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

Spent Nuclear Fuel Litigation:

The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to provide for a permanent facility to store spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high level waste disposal contracts between the Yankee Companies and the DOE. The court had previously awarded the Yankee Companies damages for Phase I, II and ~~Phase II~~III of litigation resulting from the DOE's failure to meet its contractual obligations. ~~Phase I~~These Phases covered damages incurred in the years 1998 through ~~2002~~2012, and ~~Phase II covered~~the awarded damages ~~incurred in~~have been received by the ~~years 2001 through 2008 for CYAPC and YAEC and from 2002 through 2008 for MYAPC.~~Yankee Companies with certain amounts of the damages refunded to their customers.

DOE Phase III Damages - In August 2013, the Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred in the years 2009 through 2012 ("DOE Phase III"). ~~The DOE Phase III trial concluded on July 1, 2015, followed by a post-trial briefing that concluded on October 14, 2015.~~ On March 25, 2016, the court issued its decision and awarded CYAPC, YAEC and MYAPC damages of $32.6 million, $19.6 million and $24.6 million, respectively. In total, the Yankee Companies were awarded $76.8 million of the $77.9 million in damages sought in DOE Phase III. The decision became final on July 18, 2016, and the Yankee Companies received the awards from the DOE on October 14, 2016. The Yankee Companies received FERC approval of their proposed distribution of certain amounts of the awarded damages proceeds to member companies, including CL&P, NSTAR Electric ~~PSNH,~~ and ~~WMECO,~~PSNH, which CYAPC and MYAPC made in December 2016. MYAPC also refunded $56.5 million from its spent nuclear fuel trust, a portion of which was also refunded to the Eversource utility subsidiaries. In total, Eversource received $26.1 million, of which CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH received $13.6 million, ~~$5.0 million, $3.9~~$8.6 million and ~~$3.6~~$3.9 million, respectively. These amounts ~~will be~~have been refunded to the customers of the respective Eversource utility subsidiaries.

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

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

D. Guarantees and Indemnifications

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

Eversource parent issued a declining balance guaranty on behalf of Eversource Gas Transmission LLC, a wholly-owned subsidiary, to guarantee the payment of the subsidiary's capital contributions for its investment in the Access Northeast project. The guaranty will not exceed $206 million and decreases as capital contributions are made. The guaranty will expire upon the earlier of the full performance of the guaranteed obligations or December 31, 2021.

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

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

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

The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries to external parties, as of December 31, ~~2016:~~2017:


Company	Description	Maximum Exposure (in millions)		Expiration Dates	Description	Maximum Exposure (in millions)		Expiration Dates
On behalf of subsidiaries:
Eversource Gas Transmission LLC	Access Northeast Project Capital Contributions Guaranty	$	185.4	2021	Access Northeast Project Capital Contributions Guaranty ⁽¹⁾	$	185.1	2021
Various	Surety Bonds⁽¹⁾	$	38.2	2017 - 2018	Surety Bonds⁽²⁾	40.4		2018
Eversource Service and Rocky River Realty Company	Lease Payments for Vehicles and Real Estate	$	9.2	2019 - 2024	Lease Payments for Vehicles and Real Estate	7.8		2019 - 2024

⁽¹⁾

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

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

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

~~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.~~

E. FERC ROE Complaints

Four separate complaints have been filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively the "Complainants"). In each of the first three complaints, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since ~~2006~~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 stipulated in~~periods. In the ~~separate complaints.~~ fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

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

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

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



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

⁽¹⁾ The ROE billed during the period October 1, 2011 through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent ~~base ROE~~and an incentive cap at 11.74 percent for the first complaint period and ~~prospectively~~also effective from the date of the FERC order on October 16, ~~2014, and that a utility's total or maximum ROE for any incentive project shall not exceed the top of the new zone of reasonableness, which~~2014. This FERC order was ~~set at 11.74 percent. In late 2014, the NETOs made a compliance filing, and~~vacated on April 14, 2017.

⁽²⁾ CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH have refunded all amounts associated with the first complaint ~~period. The NETOs~~period, totaling $38.9 million (pre-tax and ~~Complainants have appealed the decision in the first complaint to the D.C. Circuit Court~~excluding interest) at Eversource (consisting of ~~Appeals. A court decision is expected in 2017.~~

~~In 2015, the Company recognized a pre-tax charge to earnings (excluding interest) of $20.0~~$22.4 million ~~of which $12.5 million was recorded~~ at CL&P, ~~$2.4~~$13.7 million at NSTAR Electric ~~$1 million at PSNH,~~ and ~~$4.1 million at WMECO. In 2014, the net aggregate pre-tax charge to earnings (excluding interest) totaled $37.0 million, of which $20.7 million was recorded at CL&P, $7.9 million at NSTAR Electric,~~ $2.8 million at ~~PSNH and $5.6 million at WMECO. The pre-tax charges were recorded as a regulatory liability and as a reduction to Operating Revenues.~~

For the second and third complaints, the state parties, municipal utilities and FERC trial staff each believe that the base ROE should be reduced to an amount lower than 11.14 percent. FERC's determination to set these cases for hearing was appealed to the D.C. Circuit Court of Appeals, and is being held in abeyance pending a final FERC order. On March 22, 2016, the FERC ALJ issued an initial decision on the second and third complaints. For the second complaint period, the FERC ALJ recommended a zone of reasonableness of 7.12 percent to 10.42 percent and a base ROE of 9.59 percent. For the third complaint period, the FERC ALJ recommended a zone of reasonableness of 7.04 percent to 12.19 percent and a base ROE of 10.90 percent. The FERC ALJ also found that the maximum ROE for transmission incentive projects should be the top of the zone of reasonableness. The parties filed briefs on April 21, 2016 and May 11, 2016, in which they requested changes to the FERC ALJ's recommendations. The final FERC order will determinePSNH), reflecting both the base ROE and incentive cap prescribed by the ~~maximum~~FERC order.

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

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

At this time, the Company cannot reasonably estimate a range of gain or loss for the ~~two~~ complaint ~~periods.~~

~~The Company believes that~~proceedings. No events in 2017 provided a reasonable basis for a change to the ~~range~~reserve balance of ~~potential loss~~$39.1 million (pre-tax, excluding interest) for the second complaint period, (the 15-month period beginning December 27, 2012) is from a base ROE of 10.57 percent to a base ROE of 9.59 percent. As the FERC ALJ initial decision on the third complaint recommended a base ROE of 10.90 percent,and the Company ~~concluded there is currently no range of potential loss~~has not changed its reserve or recognized ROEs for that complaint period (the 15-month period beginning July 31, 2014). Given the differences between the recommended base ROEs in the FERC ALJ's initial decision on the second and third complaints, as well as other factors, the Company is unable to predict the outcomeany of the final FERC order on these two complaints. The Company does not believe any base ROE outcome within the 10.57 percent to 9.59 percent range is more likely than the base ROEs used to record the current revenues and reserves, and therefore the Company believes that the current reserves for the second complaint ~~period are appropriate at this time.~~periods.

The impact of a 10 basis point change to a base ROE of 10.57 percent would affect Eversource's after-tax earnings by approximately $3 million for each of the historic 15-month second and third complaint periods. If the Company adjusted its reserves based on the recommendations in the FERC ALJ initial decision (for both the base ROE and maximum ROE for transmission incentive projects), then it would result in an after-tax loss of approximately $34 million for the second complaint and an after-tax gain of approximately $8 million for the third complaint.

For the fourth complaint, filed April 29, 2016 and covering a 15-month period through July 30, 2017, certain municipal utilities claimed the current base ROE of 10.57 percent and the incentive cap of 11.74 percent are unjust and unreasonable. The NETOs answered on June 3, 2016 and requested that FERC dismiss the complaint. On September 20, 2016, the FERC issued an order establishing hearing and settlement judge procedures. The case has been set for trial proceedings concurrently with settlement proceedings. On February 1, 2017, the Complainants' filed their direct testimony. The NETO's answering testimony is due March 23, 2017. Trial is scheduled for August 2017, and a FERC ALJ initial decision could be received late in 2017. A final FERC order will determine both the base ROE and the maximum ROE for transmission incentive projects for the fourth complaint period and prospectively from the date the final FERC order is issued. Management cannot at this time predict the ultimate ~~outcome~~effect of ~~this proceeding~~the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric ~~PSNH and WMECO.~~or PSNH.

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

F. Eversource and NSTAR Electric Boston Harbor Civil Action

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

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

In 2017, as a result of the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the ~~claims and is defending~~Massachusetts Water Resources Authority for the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cable to be expensed as incurred. Of this amount, NSTAR Electric ~~and HEEC vigorously. Concurrently, NSTAR Electric and HEEC are seeking~~expensed $11.1 million (pre-tax) of costs incurred on the new cable in 2017. Construction of the new cable is expected to work collaboratively with all parties for a mutually beneficial resolution. At this time, management is unable to predict the outcome of this action or the impact on Eversource's and NSTAR Electric's financial position, results of operations, or cash flows.be completed in 2019.

G. Litigation and Legal Proceedings

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

12. ~~PSNH GENERATION ASSET~~ASSETS HELD FOR SALE

OnIn June ~~10,~~ 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, ~~(the "Agreement") with the New Hampshire Office of Energy and Planning, certain members of the NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. Under~~under the terms of ~~the Agreement,~~which PSNH agreed to divest its generation assets, subject to NHPUC approval. The ~~Agreement provided~~NHPUC approval for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. As partthis agreement, as well as NHPUC approval of the Agreement, PSNH agreed to forego recovery of $25 million of the equity return related to the Clean Air Project. In addition, PSNH will not seek a general distribution rate increase effective before July 1, 2017 and will contribute $5 million to create a clean energy fund, which will not be recoverable from its customers. In 2015, PSNH recorded the $5 million contribution as a long-term liability and an increase to Operations and Maintenance expense on the statements of income.

On July 1, 2016, the NHPUC approved the Agreement in an order that, among other things, instructs PSNH to begin the process to divest its generation assets. The NHPUC selected an auction adviser to assist with thefinal divestiture ~~and a final~~ plan and auction process, ~~was approved by~~were received in the ~~NHPUC in November~~second half of 2016. In ~~December 2016, certain intervenors asked~~October 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in the Agreements. The NHPUC ~~to reconsider certain aspects of its divestiture plan;~~approved the ~~NHPUC rejected that request on December 23, 2016.~~ Agreements in late November 2017, at which time the Company classified these assets as held for sale.

On January 10, ~~2017, these intervenors appealed~~2018, PSNH completed the ~~NHPUC's decision~~sale of its thermal generation assets, pursuant to the ~~New Hampshire Supreme Court, alleging procedural deficiencies,~~Agreement dated October 11, 2017. In accordance with the Purchase and ~~complaining that~~Sale Agreement, the ~~auction schedule~~original purchase price of $175 million was adjusted to reflect working capital adjustments, closing date adjustments and ~~process were unreasonable. PSNH~~proration of taxes and ~~the New Hampshire Attorney General's office acting on behalf~~fees prior to closing, totaling $40.9 million, resulting in net proceeds of ~~the NHPUC requested the court to reject this appeal. On February 10,~~$134.1 million. As of December 31, 2017, the ~~New Hampshire Supreme Court issued an order declining to accept the appeal.~~

~~Management continues to believe the assets will be sold by the end of 2017.~~

~~The sales price of the~~thermal generation assets ~~could be~~classified as assets held for sale are stated at fair value less ~~than~~costs to sell. Deferred costs of $516.1 million were included in Regulatory Assets on the Eversource and PSNH Balance Sheets, and represent the difference between the carrying value ~~but~~and the ~~Company believes that~~fair value less costs to sell of the thermal generation assets as of December 31, 2017. The hydroelectric generation assets are targeted to be sold in the first quarter of 2018 at an amount above net carrying value, and are therefore stated at carrying value. As of December 31, 2017, the difference between the carrying value of the hydroelectric generation assets and the expected proceeds from the sale was approximately $25 million, which will be recognized as a reduction to the stranded costs upon completion of the sale.

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

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

As of December 31, ~~2016,~~2017, PSNH's generation assets held for sale, which are included in current assets on the Eversource and PSNH balance sheets, and are part of the Electric Distribution reportable segment, were as ~~follows:~~follows (liabilities held for sale were $1.2 million as of December 31, 2017):


(Millions of Dollars)
Gross Plant	$	1,192.1
Thermal Gross Plant				$	1,091.4
Hydroelectric Gross Plant				83.0
Accumulated Depreciation	(556.0		)	(575.4		)
Net Plant	636.1			599.0
Fuel	99.9
Fuel and Inventory				87.7
Materials and Supplies	42.7			27.3
Emission Allowances	19.9			19.1
Total Generation Assets	$	798.6
Other Assets				2.6
Deferred Costs from Generation Asset Sale				(516.1		)
Total Generation Assets Held for Sale				$	219.6

As of December 31, ~~2016, current and long-term liabilities associated with PSNH's~~2017, the difference between the carrying value of the generation assets ~~included Accounts Payable of $40.5 million, Other Current Liabilities of $16.1 million, AROs of $20 million,~~ and ~~Accrued Pension, SERP~~the amounts recognized as assets held for sale represented the deferred costs on the thermal generation asset sale and ~~PBOP of $24.3 million.~~were calculated as follows:



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

Deferred Costs from Generation Asset Sale	$	516.1

13. LEASES

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

Operating lease rental payments charged to expense are as follows:


(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH
2017											$	10.5	$	11.7	$	11.3	$	3.3
2016	$	12.1	$	12.5	$	9.3	$	2.9	$	2.1	12.1		12.5		11.4		2.9
2015	12.1		12.5		9.6		2.8		2.2		12.1		12.5		11.8		2.8
2014	14.3		6.0		7.8		1.5		1.2

Future minimum rental payments, excluding executory costs, such as property taxes, state use taxes, insurance, and maintenance, under long-term noncancelable leases, as of December 31, ~~2016~~2017 are as follows:


Operating Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		WMECO		Eversource		CL&P		NSTAR Electric		PSNH
2017	$	14.1	$	2.0	$	9.0	$	0.9	$	0.5
2018	10.6		1.3		7.0		0.6		0.3		$	13.2	$	1.8	$	7.9	$	1.0
2019	8.7		1.0		5.8		0.5		0.3		11.4		1.5		6.9		1.0
2020	7.0		0.7		4.8		0.4		0.2		10.0		1.3		6.1		0.9
2021	6.0		0.6		4.2		0.3		0.2		8.9		1.1		5.5		0.8
2022											7.4		1.0		4.5		0.6
Thereafter	10.4		1.4		6.7		0.8		0.4		19.7		1.0		15.4		2.0
Future minimum lease payments	$	56.8	$	7.0	$	37.5	$	3.5	$	1.9	$	70.6	$	7.7	$	46.3	$	6.3


Capital Leases (Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
2017	$	2.3	$	1.9	$	0.2	$	0.2
2018	2.3		2.0		0.2		0.1		$	2.9	$	2.0	$	0.5	$	0.1
2019	2.2		2.0		0.2		—		3.3		2.0		0.6		—
2020	2.2		2.0		0.2		—		3.3		2.0		0.5		—
2021	1.7		1.4		0.3		—		2.8		1.4		0.6		—
2022									1.3		—		0.6		—
Thereafter	1.1		—		1.1		—		2.5		—		2.5		—
Future minimum lease payments	11.8		9.3		2.2		0.3		16.1		7.4		5.3		0.1
Less amount representing interest	2.9		2.5		0.4		—		3.1		1.7		1.2		—
Present value of future minimum lease payments	$	8.9	$	6.8	$	1.8	$	0.3	$	13.0	$	5.7	$	4.1	$	0.1

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

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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


	As of December 31,								As of December 31,
	2016				2015				2017				2016
Eversource (Millions of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred Stock Not Subject to Mandatory Redemption	$	155.6	$	158.3	$	155.6	$	157.9	$	155.6	$	160.8	$	155.6	$	158.3
Long-Term Debt	9,603.2		9,980.5		9,034.5		9,425.9		12,325.5		12,877.1		9,603.2		9,980.5


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

As of December 31, 2016:
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	114.7	$	43.0	$	43.6	$	—	$	—	$	—	$	—	$	116.2	$	114.7	$	43.0	$	43.6	$	—	$	—
Long-Term Debt	2,766.0		3,049.6		2,078.1		2,201.6		1,072.0		1,109.7		566.5		589.0		2,766.0		3,049.6		2,644.6		2,790.6		1,072.0		1,109.7

As of December 31, 2015:
Preferred Stock Not Subject to Mandatory Redemption	$	116.2	$	114.9	$	43.0	$	43.0	$	—	$	—	$	—	$	—
Long-Term Debt	2,763.7		3,031.6		2,029.8		2,182.4		1,071.0		1,121.2		517.3		551.8

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

15. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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


	For the Year Ended December 31, 2016												For the Year Ended December 31, 2015												For the Year Ended December 31, 2017												For the Year Ended December 31, 2016
Eversource (Millions of Dollars)	Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total			Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total			Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total			Qualified Cash Flow Hedging Instruments			Unrealized Gains/(Losses) on Marketable Securities			Defined Benefit Plans			Total
Balance as of January 1st	$	(10.3	)	$	(1.9	)	$	(54.6	)	$	(66.8	)	$	(12.4	)	$	0.7		$	(62.3	)	$	(74.0	)	$	(8.2	)	$	0.4		$	(57.5	)	$	(65.3	)	$	(10.3	)	$	(1.9	)	$	(54.6	)	$	(66.8	)

OCI Before Reclassifications	—			2.3			(6.8		)	(4.5		)	—			(2.6		)	3.5			0.9			—			(0.4		)	(7.2		)	(7.6		)	—			2.3			(6.8		)	(4.5		)
Amounts Reclassified from AOCL	2.1			—			3.9			6.0			2.1			—			4.2			6.3			2.0			—			4.5			6.5			2.1			—			3.9			6.0
Net OCI	2.1			2.3			(2.9		)	1.5			2.1			(2.6		)	7.7			7.2			2.0			(0.4		)	(2.7		)	(1.1		)	2.1			2.3			(2.9		)	1.5
Balance as of December 31st	$	(8.2	)	$	0.4		$	(57.5	)	$	(65.3	)	$	(10.3	)	$	(1.9	)	$	(54.6	)	$	(66.8	)	$	(6.2	)	$	—		$	(60.2	)	$	(66.4	)	$	(8.2	)	$	0.4		$	(57.5	)	$	(65.3	)

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

Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses and prior service costs that arose during the year and were recognized in AOCL. The related tax effects recognized in AOCL were net deferred tax assets of $4.1 million and $4.0 million in 2017 and ~~$22.3 million in~~ 2016, ~~and 2014,~~ respectively, and were net deferred tax liabilities of $2.0 million in 2015. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCL into Operations and Maintenance expense over the average future employee service period, and are reflected in amounts reclassified from AOCL.

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


	Amounts Reclassified from AOCL										Amounts Reclassified from AOCL
Eversource (Millions of Dollars)	For the Years Ended December 31,									Statements of Income Line Item Impacted	For the Years Ended December 31,									Statements of Income Line Item Impacted
Eversource (Millions of Dollars)	2016			2015			2014			Statements of Income Line Item Impacted	2017			2016			2015			Statements of Income Line Item Impacted
Qualified Cash Flow Hedging Instruments	$	(3.5	)	$	(3.5	)	$	(3.4	)	Interest Expense	$	(3.3	)	$	(3.5	)	$	(3.5	)	Interest Expense
Tax Effect	1.4			1.4			1.4			Income Tax Expense	1.3			1.4			1.4			Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax	$	(2.1	)	$	(2.1	)	$	(2.0	)		$	(2.0	)	$	(2.1	)	$	(2.1	)
Defined Benefit Plan Costs:
Amortization of Actuarial Losses	$	(5.6	)	$	(6.6	)	$	(6.2	)	Operations and Maintenance Expense ⁽¹⁾	$	(6.2	)	$	(5.6	)	$	(6.6	)	Operations and Maintenance Expense ⁽¹⁾
Amortization of Prior Service Cost	(0.8		)	(0.2		)	(0.2		)	Operations and Maintenance Expense ⁽¹⁾	(1.1		)	(0.8		)	(0.2		)	Operations and Maintenance Expense ⁽¹⁾
Total Defined Benefit Plan Costs	(6.4		)	(6.8		)	(6.4		)		(7.3		)	(6.4		)	(6.8		)
Tax Effect	2.5			2.6			2.5			Income Tax Expense	2.8			2.5			2.6			Income Tax Expense
Defined Benefit Plan Costs, Net of Tax	$	(3.9	)	$	(4.2	)	$	(3.9	)		$	(4.5	)	$	(3.9	)	$	(4.2	)
Total Amounts Reclassified from AOCL, Net of Tax	$	(6.0	)	$	(6.3	)	$	(5.9	)		$	(6.5	)	$	(6.0	)	$	(6.3	)


⁽¹⁾	These amounts are included in the computation of net periodic Pension, SERP and PBOP costs. See Note 9A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pensions," for further information.

As of December 31, ~~2016,~~2017, it is estimated that a pre-tax amount of ~~$3.4~~$2.8 million (including ~~$0.6~~$0.1 million for CL&P, ~~$2 million for PSNH and~~ $0.7 million for ~~WMECO)~~NSTAR Electric and $1.9 million for PSNH) will be reclassified from AOCL as a decrease to Net Income over the next 12 months as a result of the amortization of the interest rate swap agreements which have been settled. In addition, it is estimated that a pre-tax amount of $6.6 million will be reclassified from AOCL as a decrease to Net Income over the next 12 months as a result of the amortization of Pension, SERP and PBOP costs.

16. DIVIDEND RESTRICTIONS

Eversource parent's ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends and the leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreement. Pursuant to the joint revolving credit agreement of Eversource, CL&P, PSNH, Yankee Gas and NSTAR Gas, and to the NSTAR Electric revolving credit agreement, each company is required to maintain consolidated total indebtedness to total capitalization ratio of no greater than 65 percent at the end of each fiscal quarter. As of December 31, 2017, all companies were in compliance with such covenant. Eversource, CL&P, NSTAR Electric, PSNH, Yankee Gas and NSTAR Gas were in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends as of December 31, 2017.

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

CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~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 ~~PSNH~~ and ~~WMECO,~~PSNH, would not be construed or applied by the FERC to prohibit the payment of dividends from retained earnings for lawful and legitimate business purposes. In addition, certain state statutes may impose additional limitations on such companies and on Yankee Gas and NSTAR Gas. Such state law restrictions do not restrict the payment of dividends from retained earnings or net income. Pursuant to the joint revolving credit agreement of Eversource, CL&P, PSNH, WMECO, Yankee Gas and NSTAR Gas, and to the NSTAR Electric revolving credit agreement, each company is required to maintain consolidated total indebtedness to total capitalization ratio of no greater than 65 percent at the end of each fiscal quarter. As of December 31, 2016, all companies were in compliance with such covenant. The Retained Earnings balances subject to these restrictions were $3.2 billion for Eversource, $1.3 billion for CL&P, $1.6 billion for NSTAR Electric, $549.3 million for PSNH and $218.2 million for WMECO as of December 31, 2016. Eversource, CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas were in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends as of December 31, 2016. PSNH is further required to reserve an additional amount under its FERC hydroelectric license conditions. As of December 31, 2016, $13.8 million of PSNH's Retained Earnings was subject to restriction under its FERC hydroelectric license conditions and PSNH was in compliance with this provision.

17. COMMON SHARES

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


			Shares			Shares
	Par Value		Authorized as of December 31, 2016 and 2015	Issued as of December 31,		Par Value		Authorized as of December 31, 2017 and 2016	Issued as of December 31,
	Par Value		Authorized as of December 31, 2016 and 2015	2016	2015	Par Value		Authorized as of December 31, 2017 and 2016	2017	2016
Eversource	$	5	380,000,000	333,878,402	333,862,615	$	5	380,000,000	333,878,402	333,878,402
CL&P	$	10	24,500,000	6,035,205	6,035,205	$	10	24,500,000	6,035,205	6,035,205
NSTAR Electric	$	1	100,000,000	100	100	$	1	100,000,000	200	200
PSNH	$	1	100,000,000	301	301	$	1	100,000,000	301	301
WMECO	$	25	1,072,471	434,653	434,653

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

As of both December 31, ~~2016~~2017 and ~~2015,~~2016, there were 16,992,594 ~~and 16,671,366~~ Eversource common shares held as treasury ~~shares, respectively.~~shares. As of both December 31, ~~2016~~2017 and ~~2015,~~2016, Eversource common shares outstanding were ~~316,885,808 and 317,191,249, respectively.~~316,885,808.

In 2016, ~~and 2015,~~ the Company ~~repurchased~~converted 321,228 ~~and 532,521~~ Eversource common shares ~~respectively,~~ at a share price of $52.56 ~~and $47.94, respectively. Such shares are included in~~to Treasury Stock on the consolidated balance ~~sheets~~sheet at their weighted average original average cost of $24.26 ~~and $26.02~~ per ~~share, respectively.~~

share.

18. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION

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

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

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


		Redemption Price Per Share		Shares Outstanding as of December 31, 2016 and 2015		As of December 31,									Redemption Price Per Share		Shares Outstanding as of December 31,				As of December 31,
Series	Series			Shares Outstanding as of December 31, 2016 and 2015	2016				2015			Series		2017				2016		2017			2016
CL&P	CL&P	Redemption Price Per Share												CL&P	Redemption Price Per Share
$1.90	Series of 1947	$	52.50	163,912		$	8.2			$	8.2		Series of 1947		$	52.50	163,912		163,912		$	8.2		$	8.2
$2.00	Series of 1947	$	54.00	336,088		16.8				16.8			Series of 1947		$	54.00	336,088		336,088		16.8			16.8
$2.04	Series of 1949	$	52.00	100,000		5.0				5.0			Series of 1949		$	52.00	100,000		100,000		5.0			5.0
$2.20	Series of 1949	$	52.50	200,000		10.0				10.0			Series of 1949		$	52.50	200,000		200,000		10.0			10.0
3.90%	Series of 1949	$	50.50	160,000		8.0				8.0			Series of 1949		$	50.50	160,000		160,000		8.0			8.0
$2.06	Series E of 1954	$	51.00	200,000		10.0				10.0			Series E of 1954		$	51.00	200,000		200,000		10.0			10.0
$2.09	Series F of 1955	$	51.00	100,000		5.0				5.0			Series F of 1955		$	51.00	100,000		100,000		5.0			5.0
4.50%	Series of 1956	$	50.75	104,000		5.2				5.2			Series of 1956		$	50.75	104,000		104,000		5.2			5.2
4.96%	Series of 1958	$	50.50	100,000		5.0				5.0			Series of 1958		$	50.50	100,000		100,000		5.0			5.0
4.50%	Series of 1963	$	50.50	160,000		8.0				8.0			Series of 1963		$	50.50	160,000		160,000		8.0			8.0
5.28%	Series of 1967	$	51.43	200,000		10.0				10.0			Series of 1967		$	51.43	200,000		200,000		10.0			10.0
$3.24	Series G of 1968	$	51.84	300,000		15.0				15.0			Series G of 1968		$	51.84	300,000		300,000		15.0			15.0
6.56%	Series of 1968	$	51.44	200,000		10.0				10.0			Series of 1968		$	51.44	200,000		200,000		10.0			10.0
Total CL&P	Total CL&P			2,324,000		$	116.2			$	116.2		Total CL&P				2,324,000		2,324,000		$	116.2		$	116.2
NSTAR Electric	NSTAR Electric												NSTAR Electric
4.25%	Series of 1956	$	103.625	180,000		$	18.0			$	18.0		Series of 1956		$	103.625	180,000		180,000		$	18.0		$	18.0
4.78%	Series of 1958	$	102.80	250,000		25.0				25.0			Series of 1958		$	102.80	250,000		250,000		25.0			25.0
Total NSTAR Electric	Total NSTAR Electric			430,000		$	43.0			$	43.0		Total NSTAR Electric				430,000		430,000		$	43.0		$	43.0
Fair Value Adjustment due to Merger with NSTAR	Fair Value Adjustment due to Merger with NSTAR					(3.6		)		(3.6		)	Fair Value Adjustment due to Merger with NSTAR								(3.6		)	(3.6		)
Other													Other
6.00%													Series of 1958		$	100.00	23		—		$	—		$	—
Total Eversource - Preferred Stock of Subsidiaries	Total Eversource - Preferred Stock of Subsidiaries					$	155.6			$	155.6		Total Eversource - Preferred Stock of Subsidiaries								$	155.6		$	155.6

19. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

Dividends on the preferred stock of CL&P and NSTAR Electric totaled $7.5 million for each of the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014.~~2015. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of December 31, ~~2016~~2017 and ~~2015.~~2016. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to the parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.

For the years ended December 31, 2017, 2016 ~~2015~~ and ~~2014,~~2015, there was no change in ownership of the common equity of CL&P and NSTAR Electric.

20. EARNINGS PER SHARE

Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into common shares. The dilutive effect of unvested RSU and performance share awards ~~and unexercised stock options~~ is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the ~~year~~years ended December 31, 2017 and 2016, there were no antidilutive share awards excluded from the diluted EPS computation. For the ~~years~~year ended December 31, 2015, ~~and 2014,~~ there were 1,474 ~~and 3,643~~ antidilutive share awards excluded from the computation of diluted ~~EPS, respectively.~~EPS.

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


Eversource (Millions of Dollars, except share information)	For the Years Ended December 31,						For the Years Ended December 31,
Eversource (Millions of Dollars, except share information)	2016		2015		2014		2017		2016		2015
Net Income Attributable to Common Shareholders	$	942.3	$	878.5	$	819.5	$	988.0	$	942.3	$	878.5
Weighted Average Common Shares Outstanding:
Basic	317,650,180		317,336,881		316,136,748		317,411,097		317,650,180		317,336,881
Dilutive Effect	804,059		1,095,806		1,280,666		620,483		804,059		1,095,806
Diluted	318,454,239		318,432,687		317,417,414		318,031,580		318,454,239		318,432,687
Basic EPS	$	2.97	$	2.77	$	2.59	$	3.11	$	2.97	$	2.77
Diluted EPS	$	2.96	$	2.76	$	2.58	$	3.11	$	2.96	$	2.76

21. SEGMENT INFORMATION

Presentation: Eversource is organized ~~between~~among the Electric Distribution, Electric Transmission and Natural Gas Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity and natural gas primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the results of PSNH's generation ~~activities~~facilities and NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of ~~PSNH~~company resources. On December 4, 2017, Eversource acquired Aquarion, which was considered to be a new operating segment, water. Financial statement results, however, were not considered material as a result of a short period of ownership by Eversource, and ~~WMECO.~~ were not reported separately. Therefore, the results of the water operating segment have been included in Other for the year ended December 31, 2017.

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

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

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

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

Eversource's 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. Each of Eversource's subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, has one reportable segment. Eversource's operating segments and reporting units are consistent with its reportable business segments.

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

Eversource's segment information is as follows:


	For the Year Ended December 31, 2016																		For the Year Ended December 31, 2017
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total			Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,594.3		$	857.7		$	1,210.0		$	870.4		$	(893.3	)	$	7,639.1		$	5,542.9		$	947.3		$	1,301.7		$	946.9		$	(986.8	)	$	7,752.0
Depreciation and Amortization	(504.7		)	(65.3		)	(185.8		)	(33.5		)	2.2			(787.1		)	(542.6		)	(72.9		)	(209.4		)	(41.1		)	2.2			(863.8		)
Other Operating Expenses	(4,155.1		)	(628.9		)	(321.8		)	(778.1		)	891.8			(4,992.1		)	(4,046.0		)	(713.5		)	(382.6		)	(814.6		)	986.7			(4,970.0		)
Operating Income	934.5			163.5			702.4			58.8			0.7			1,859.9			954.3			160.9			709.7			91.2			2.1			1,918.2
Interest Expense	(193.1		)	(41.3		)	(110.0		)	(63.5		)	6.9			(401.0		)	(186.3		)	(43.1		)	(115.1		)	(93.1		)	15.8			(421.8		)
Interest Income	10.0			0.1			1.2			7.0			(7.3		)	11.0			7.3			0.1			1.8			15.8			(16.7		)	8.3
Other Income, Net	4.8			0.6			18.3			1,020.1			(1,008.9		)	34.9			15.0			0.9			27.1			1,112.7			(1,086.0		)	69.7
Income Tax (Expense)/Benefit	(288.8		)	(45.2		)	(238.2		)	16.5			0.7			(555.0		)
Income Tax Expense																			(288.3		)	(44.2		)	(228.7		)	(17.6		)	(0.1		)	(578.9		)
Net Income	467.4			77.7			373.7			1,038.9			(1,007.9		)	949.8			502.0			74.6			394.8			1,109.0			(1,084.9		)	995.5
Net Income Attributable to Noncontrolling Interests	(4.6		)	—			(2.9		)	—			—			(7.5		)	(4.6		)	—			(2.9		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	462.8		$	77.7		$	370.8		$	1,038.9		$	(1,007.9	)	$	942.3		$	497.4		$	74.6		$	391.9		$	1,109.0		$	(1,084.9	)	$	988.0
Total Assets (as of)	$	18,367.5		$	3,303.8		$	8,751.5		$	14,493.1		$	(12,862.7	)	$	32,053.2		$	19,250.4		$	3,595.2		$	9,401.2		$	18,403.8		$	(14,430.2	)	$	36,220.4
Cash Flows Used for Investments in Plant	$	812.6		$	255.3		$	801.0		$	108.0		$	—		$	1,976.9		$	1,020.7		$	298.2		$	867.6		$	161.6		$	—		$	2,348.1


	For the Year Ended December 31, 2015																		For the Year Ended December 31, 2016
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total			Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,903.6		$	995.5		$	1,069.1		$	863.6		$	(877.0	)	$	7,954.8		$	5,594.3		$	857.7		$	1,210.0		$	870.4		$	(893.3	)	$	7,639.1
Depreciation and Amortization	(425.2		)	(70.5		)	(165.6		)	(29.0		)	2.1			(688.2		)	(504.7		)	(65.3		)	(185.8		)	(33.5		)	2.2			(787.1		)
Other Operating Expenses	(4,470.2		)	(776.7		)	(314.9		)	(817.9		)	877.3			(5,502.4		)	(4,155.1		)	(628.9		)	(321.8		)	(778.1		)	891.8			(4,992.1		)
Operating Income	1,008.2			148.3			588.6			16.7			2.4			1,764.2			934.5			163.5			702.4			58.8			0.7			1,859.9
Interest Expense	(186.3		)	(36.9		)	(105.8		)	(48.0		)	4.6			(372.4		)	(193.1		)	(41.3		)	(110.0		)	(63.5		)	6.9			(401.0		)
Interest Income	5.7			0.1			1.6			4.4			(5.1		)	6.7			10.0			0.1			1.2			7.0			(7.3		)	11.0
Other Income, Net	7.2			0.8			14.5			977.8			(972.8		)	27.5			4.8			0.6			18.3			1,020.1			(1,008.9		)	34.9
Income Tax (Expense)/Benefit	(322.8		)	(40.1		)	(191.6		)	14.5			—			(540.0		)	(288.8		)	(45.2		)	(238.2		)	16.5			0.7			(555.0		)
Net Income	512.0			72.2			307.3			965.4			(970.9		)	886.0			467.4			77.7			373.7			1,038.9			(1,007.9		)	949.8
Net Income Attributable to Noncontrolling Interests	(4.7		)	—			(2.8		)	—			—			(7.5		)	(4.6		)	—			(2.9		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	507.3		$	72.2		$	304.5		$	965.4		$	(970.9	)	$	878.5		$	462.8		$	77.7		$	370.8		$	1,038.9		$	(1,007.9	)	$	942.3
Total Assets (as of)	$	17,981.3		$	3,104.5		$	8,019.3		$	13,256.7		$	(11,781.5	)	$	30,580.3		$	18,367.5		$	3,303.8		$	8,751.5		$	14,493.1		$	(12,862.7	)	$	32,053.2
Cash Flows Used for Investments in Plant	$	718.9		$	182.2		$	749.1		$	73.9		$	—		$	1,724.1		$	812.6		$	255.3		$	801.0		$	108.0		$	—		$	1,976.9


	For the Year Ended December 31, 2014																		For the Year Ended December 31, 2015
Eversource (Millions of Dollars)	Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total			Electric Distribution			Natural Gas Distribution			Electric Transmission			Other			Eliminations			Total
Operating Revenues	$	5,663.4		$	1,007.3		$	1,018.2		$	790.9		$	(737.9	)	$	7,741.9		$	5,903.6		$	995.5		$	1,069.1		$	863.6		$	(877.0	)	$	7,954.8
Depreciation and Amortization	(384.6		)	(68.1		)	(150.5		)	(42.1		)	19.9			(625.4		)	(425.2		)	(70.5		)	(165.6		)	(29.0		)	2.1			(688.2		)
Other Operating Expenses	(4,366.2		)	(786.7		)	(302.1		)	(748.0		)	719.3			(5,483.7		)	(4,470.2		)	(776.7		)	(314.9		)	(817.9		)	877.3			(5,502.4		)
Operating Income	912.6			152.5			565.6			0.8			1.3			1,632.8			1,008.2			148.3			588.6			16.7			2.4			1,764.2
Interest Expense	(191.6		)	(34.0		)	(104.1		)	(36.6		)	4.2			(362.1		)	(186.3		)	(36.9		)	(105.8		)	(48.0		)	4.6			(372.4		)
Interest Income	5.1			—			0.9			3.6			(3.6		)	6.0			5.7			0.1			1.6			4.4			(5.1		)	6.7
Other Income, Net	10.7			0.2			10.3			916.0			(918.6		)	18.6			7.2			0.8			14.5			977.8			(972.8		)	27.5
Income Tax (Expense)/Benefit	(269.7		)	(46.4		)	(174.5		)	22.3			—			(468.3		)	(322.8		)	(40.1		)	(191.6		)	14.5			—			(540.0		)
Net Income	467.1			72.3			298.2			906.1			(916.7		)	827.0			512.0			72.2			307.3			965.4			(970.9		)	886.0
Net Income Attributable to Noncontrolling Interests	(4.7		)	—			(2.8		)	—			—			(7.5		)	(4.7		)	—			(2.8		)	—			—			(7.5		)
Net Income Attributable to Common Shareholders	$	462.4		$	72.3		$	295.4		$	906.1		$	(916.7	)	$	819.5		$	507.3		$	72.2		$	304.5		$	965.4		$	(970.9	)	$	878.5
Cash Flows Used for Investments in Plant	$	645.2		$	176.7		$	731.6		$	50.2		$	—		$	1,603.7		$	718.9		$	182.2		$	749.1		$	73.9		$	—		$	1,724.1

22. ACQUISITION OF AQUARION AND GOODWILL

A. Acquisition of Aquarion

On December 4, 2017, Eversource ~~recorded~~acquired Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately ~~$3.2 billion~~$880 million in cash purchase price and $795 million of ~~goodwill~~assumed Aquarion debt. Aquarion is a holding company primarily engaged, through its three separate regulated water utility subsidiaries, in ~~connection with~~ the ~~2012 merger with NSTAR~~water collection, treatment and ~~$0.3 billion of goodwill related~~distribution business, and operates in Connecticut, Massachusetts and New Hampshire. These regulated utilities collect, treat and distribute water to residential, commercial and industrial customers, to other utilities for resale, and for private and municipal fire protection. With the acquisition of Aquarion, Eversource is now the ~~parent~~only U.S.-based electric utility to also own a water utility. The transaction was approved by PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission. Aquarion and its subsidiaries became wholly-owned subsidiaries of ~~Yankee Gas in 2000.~~Eversource, and Eversource's consolidated financial information includes Aquarion and its subsidiaries' activity from December 4, 2017 through December 31, 2017.

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

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

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

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



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

Pro Forma Financial Information: The following unaudited pro forma financial information reflects the pro forma combined results of operations of Eversource and Aquarion and reflects the amortization of purchase price adjustments assuming the acquisition had taken place on January 1, 2016. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Eversource.



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

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

B. Goodwill

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

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

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

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

Eversource completed its annual goodwill impairment test for each of its reporting units as of October 1, 2016 and determined that no impairment existed. There were no events subsequent to October 1, 2016 that indicated impairment of goodwill.

~~There were no changes to the goodwill balance or the allocation of goodwill as of December 31, 2016 or 2015.~~ The following table presents goodwill by reportable segment:


	As of December 31, 2016 and 2015
(Billions of Dollars)	Electric Distribution		Electric Transmission		Natural Gas Distribution		Total		Electric Distribution		Electric Transmission		Natural Gas Distribution		Parent and Other		Total
Goodwill	$	2.5	$	0.6	$	0.4	$	3.5
Balance as of January 1, 2017									$	2.5	$	0.6	$	0.4	$	—	$	3.5
Acquisition of Aquarion									—		—		—		0.9		0.9
Balance as of December 31, 2017									$	2.5	$	0.6	$	0.4	$	0.9	$	4.4

23. VARIABLE INTEREST ENTITIES

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

24. QUARTERLY FINANCIAL DATA (UNAUDITED)


	Quarter Ended																Quarter Ended
Eversource (Millions of Dollars, except per share information)	2016								2015								2017								2016
	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,
Operating Revenues	$	2,055.6	$	1,767.2	$	2,039.7	$	1,776.6	$	2,513.4	$	1,817.1	$	1,933.1	$	1,691.2	$	2,105.1	$	1,762.8	$	1,988.5	$	1,895.6	$	2,055.6	$	1,767.2	$	2,039.7	$	1,776.6
Operating Income	488.5		423.4		509.9		438.1		497.5		412.0		469.2		385.5		509.0		455.7		502.6		450.9		488.5		423.4		509.9		438.1
Net Income	246.0		205.5		267.2		231.1		255.1		209.4		237.8		183.7		261.3		232.6		262.2		239.4		246.0		205.5		267.2		231.1
Net Income Attributable to Common Shareholders	244.2		203.6		265.3		229.2		253.3		207.5		235.9		181.8		259.5		230.7		260.4		237.4		244.2		203.6		265.3		229.2
Basic EPS⁽¹⁾	$	0.77	$	0.64	$	0.83	$	0.72	$	0.80	$	0.65	$	0.74	$	0.57	$	0.82	$	0.73	$	0.82	$	0.75	$	0.77	$	0.64	$	0.83	$	0.72
Diluted EPS ⁽¹⁾	$	0.77	$	0.64	$	0.83	$	0.72	$	0.80	$	0.65	$	0.74	$	0.57	$	0.82	$	0.73	$	0.82	$	0.75	$	0.77	$	0.64	$	0.83	$	0.72


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


	Quarter Ended																Quarter Ended
	2016								2015								2017								2016
(Millions of Dollars)	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,
CL&P
Operating Revenues	$	735.3	$	679.8	$	760.0	$	630.9	$	804.9	$	666.6	$	704.3	$	626.9	$	732.3	$	666.6	$	774.8	$	713.7	$	735.3	$	679.8	$	760.0	$	630.9
Operating Income	171.5		162.1		176.1		163.5		141.8		154.0		161.1		154.2		176.0		176.0		177.5		155.6		171.5		162.1		176.1		163.5
Net Income	87.0		82.9		86.6		77.8		69.2		78.8		80.2		71.2		90.2		91.3		96.1		99.1		87.0		82.9		86.6		77.8
NSTAR Electric
Operating Revenues	$	614.2	$	591.3	$	780.5	$	571.9	$	766.8	$	617.2	$	750.7	$	546.6	$	733.8	$	704.7	$	851.9	$	690.2	$	742.2	$	707.6	$	904.4	$	687.4
Operating Income	109.8		130.5		208.7		104.8		159.5		151.4		214.2		117.7		161.6		182.7		234.4		128.9		142.9		159.7		240.8		130.8
Net Income	54.5		68.2		117.2		52.8		83.6		82.0		118.6		60.3		83.4		95.0		125.8		70.5		71.3		81.4		133.2		64.9
PSNH
Operating Revenues	$	242.3	$	218.5	$	266.9	$	231.8	$	284.8	$	241.9	$	234.4	$	211.1	$	253.2	$	230.4	$	250.0	$	248.0	$	242.3	$	218.5	$	266.9	$	231.8
Operating Income	70.7		63.1		74.7		54.6		63.2		54.1		63.6		49.3		68.3		64.9		67.4		71.2		70.7		63.1		74.7		54.6
Net Income	36.1		31.3		38.5		26.1		32.0		27.9		32.5		22.0		34.3		31.6		33.7		36.4		36.1		31.3		38.5		26.1
WMECO
Operating Revenues	$	128.1	$	116.4	$	124.0	$	115.7	$	152.9	$	125.2	$	125.1	$	114.9
Operating Income	33.1		29.2		32.1		26.0		28.6		28.9		30.0		28.0
Net Income	16.8		13.3		16.0		12.0		13.2		14.2		15.0		14.1

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

No events that would be described in response to this item have occurred with respect to Eversource, CL&P, NSTAR Electric ~~PSNH~~ or ~~WMECO.~~PSNH.

Item 9A. Controls and Procedures

Management, on behalf of Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, is responsible for the preparation, integrity, and fair presentation of the accompanying ~~Consolidated~~ Financial Statements and other sections of this combined Annual Report on Form 10-K. Eversource's internal controls over financial reporting were audited by Deloitte & Touche LLP.

Management, on behalf of Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, is responsible for establishing and maintaining adequate internal controls over financial reporting. The 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 GAAP. 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, an evaluation of the effectiveness of internal controls over financial reporting was conducted 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 at Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH were effective as of December 31, ~~2016.~~2017.

Management, on behalf of Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO,~~PSNH, evaluated the design and operation of the disclosure controls and procedures as of December 31, ~~2016~~2017 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC. This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Annual Report on Form 10-K. There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

On December 4, 2017, Eversource completed the acquisition of Eversource Aquarion Holdings, Inc. (formerly Macquarie Utilities Inc.). Eversource Aquarion Holdings Inc. is the parent company that holds the operating companies of the Aquarion water business (collectively, "Aquarion"). As of December 31, 2017, Eversource management has excluded Aquarion from its evaluation of disclosure controls and procedures and management's report on internal controls over financial reporting.

There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH during the quarter ended December 31, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Item 9B. Other Information

No information is required to be disclosed under this item as of December 31, ~~2016,~~2017, as this information has been previously disclosed in applicable reports on Form 8-K during the fourth quarter of ~~2016.~~2017.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information in Item 10 is provided as of February ~~22, 2017,~~23, 2018, except where otherwise indicated.

Certain information required by this Item 10 is omitted for NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly Owned Subsidiaries.

Eversource Energy

In addition to the information provided below concerning the executive officers of Eversource Energy, incorporated herein by reference is the information to be contained in the sections captioned ~~"Election~~“Election of Trustees,~~" "Governance~~” “Governance of Eversource ~~Energy"~~Energy” and the related subsections, ~~"Selection~~“Selection of Trustees,"” and ~~"Section~~“Section 16(a) Beneficial Ownership Reporting ~~Compliance"~~Compliance” of Eversource ~~Energy's~~Energy’s definitive proxy statement for solicitation of proxies, expected to be filed with the SEC on or about March ~~24, 2017.~~23, 2018.

Eversource Energy and CL&P

Each member of CL~~&P's~~&P’s Board of Directors is an employee of Eversource Energy Service Company. Directors are elected annually to serve for one year until their successors are elected and qualified.

Set forth below is certain information concerning CL~~&P's~~&P’s Directors and Eversource ~~Energy's~~Energy’s and CL~~&P's~~&P’s executive officers:



Name	Age	Title
James J. Judge	6162	Chairman of the Board, President and Chief Executive Officer and a Trustee of Eversource Energy; Chairman, President and Chief Executive Officer and a Director of Eversource ~~Service;~~Service and ~~Chairman and~~Chairman; a Director of the ~~Regulated~~electric and natural gas regulated companies, including CL&P
Philip J. Lembo	6162	Executive Vice President and Chief Financial Officer ~~and Treasurer~~ of Eversource Energy; Executive Vice President and Chief Financial ~~Officer and Treasurer and~~Officer; a Director of Eversource Service and the ~~Regulated~~electric and natural gas regulated companies, including CL&P
Gregory B. Butler	5960	Executive Vice President and General Counsel of Eversource Energy; Executive Vice President and General Counsel and a Director of Eversource Service and the ~~Regulated~~electric and natural gas regulated companies, including CL&P
Christine M. Carmody ¹	5455	Executive Vice President-Human Resources and Information Technology of Eversource Energy and Eversource Service; a Director of Eversource Service
Joseph R. Nolan, Jr. ¹	5354	Executive Vice President-Customer and Corporate Relations of Eversource Energy and Eversource Service; a Director of Eversource Service
Leon J. Olivier	6970	Executive Vice President-Enterprise Energy Strategy and Business Development of Eversource Energy and Eversource Service; a Director of Eversource Service
Werner J. Schweiger	5758	Executive Vice President and Chief Operating Officer of Eversource Energy; Executive Vice President and Chief Operating Officer and a Director of Eversource Service; ~~and~~ Chief Executive Officer and a Director of the ~~Regulated~~electric and natural gas regulated companies, including CL&P
Jay S. Buth	4748	Vice President, Controller and Chief Accounting Officer of Eversource Energy, Eversource Service and the ~~Regulated~~electric and natural gas regulated companies, including CL&P

¹Deemed an executive officer of CL&P pursuant to Rule 3b-7 under the Securities Exchange Act of 1934.

James J. Judge. Mr. Judge has served as Chairman of the Board, President and Chief Executive Officer ~~and~~of Eversource Energy since May 3, 2017; as a Trustee of Eversource Energy and as Chairman of CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH since May 4, 2016; and as Chairman, President and Chief Executive Officer of Eversource Service and Chairman of NSTAR Gas and Yankee Gas since May 9, ~~2016; and~~2016. Mr. Judge has served as a Director of CL&P, PSNH, ~~WMECO,~~ Yankee Gas and Eversource Service since April 10, ~~2012,~~2012; and of NSTAR Electric and NSTAR Gas since September 27, 1999. Previously, Mr. Judge ~~previously~~ served as President and Chief Executive Officer of Eversource Energy from May 4, 2016 until May 3, 2017; as Chairman of WMECO from May 4, 2016 until December 31, 2017; as a Director of WMECO from April 10, 2012 until December 31, 2017; and as Executive Vice President and Chief Financial Officer of Eversource Energy, CL&P, NSTAR Electric, PSNH and WMECO from April 10, 2012 until May 4, ~~2016, and~~2016; of NSTAR Gas, Yankee Gas and Eversource Service from April 10, 2012 until May 9, 2016. ~~He was Senior Vice President and Chief Financial Officer of NSTAR, NSTAR Electric and NSTAR Gas from 1999 until April 10, 2012.~~ Mr. Judge has served as Chairman of the Board of Eversource Energy Foundation, Inc. since May 9, ~~2016~~2016; and as a Director since April 10, 2012. He ~~was~~previously served as Treasurer of the Eversource Energy Foundation, Inc. from ~~April~~May 10, 2012 tountil May 9, 2016. He has served as a Trustee of the NSTAR Foundation since December 12, 1995.

from August 8, 2016 until May 3, 2017; of CL&P, NSTAR Electric, PSNH, WMECO, NSTAR Gas, Yankee Gas and Eversource Service from August 8, 2016 until March 31, 2017; as Senior Vice President, Chief Financial Officer and Treasurer of Eversource Energy, CL&P, NSTAR Electric, PSNH and WMECO from May 4, 2016 until August 8, ~~2016,~~2016; and of NSTAR Gas, Yankee Gas and Eversource Service from May 9, 2016 until August 8, ~~2016. He was~~2016; as Vice President and Treasurer of Eversource Energy, CL&P, PSNH and WMECO from April 10, 2012 until May 4, ~~2016,~~2016; and of Yankee Gas and Eversource Service from April 10, 2012 until May 9, 2016. Mr. Lembo ~~was~~served as Vice President and Treasurer of NSTAR Electric ~~from March 29, 2006~~

~~until May 4, 2016, of~~and NSTAR Gas from March 29, 2006 until May ~~9, 2016, and of NSTAR from March 29, 2006 until April 10, 2012.~~4, 2016. Mr. Lembo has served as a Director ~~and as Treasurer~~ of Eversource Energy Foundation, Inc. since May 9, 2016. He previously served as Treasurer of Eversource Energy Foundation, Inc. from May 9, 2016 until March 31, 2017. He has served as a Trustee of the NSTAR Foundation since May 9, 2016.

Joseph R. Nolan, Jr. Mr. Nolan has served as Executive Vice President-Customer and Corporate Relations of Eversource Energy and Eversource Service since August 8, ~~2016, and~~2016. Mr. Nolan has served as a Director of Eversource Service since November 27, 2012. Previously Mr. Nolan ~~previously~~ served as Senior Vice President-Corporate Relations of Eversource Energy from May 4, 2016 until August 8, ~~2016,~~2016; of Eversource Service from April 10, 2012 ~~until~~to August 8, ~~2016,~~2016; of NSTAR Electric and NSTAR Gas from April 10, 2012 until September 29, ~~2014,~~2014; and of CL&P, PSNH, WMECO and Yankee Gas from November 27, 2012 until September 29, 2014. Mr. Nolan ~~was~~previously served as a Director of CL&P, PSNH, WMECO and Yankee Gas from April 10, 2012 until September 29, ~~2014,~~2014; and of NSTAR Electric and NSTAR Gas from November 27, 2012 until September 29, 2014. ~~He was Senior Vice President-Customer & Corporate Relations of NSTAR, NSTAR Electric and NSTAR Gas from 2006 until April 10, 2012.~~ Mr. Nolan has served as a Director of Eversource Energy Foundation, Inc. since April 10, 2012, and as Executive Director of Eversource Energy Foundation, Inc. since October 15, 2013. He has served as a Trustee of the NSTAR Foundation since October 1, 2000.

There are no family relationships between any director or executive officer and any other trustee, director or executive officer of Eversource Energy or CL&P and none of the above executive officers or directors serves as an executive officer or director pursuant to any agreement or understanding with any other person. Our executive officers hold the offices set forth opposite their names until the next annual meeting of the Board of Trustees, in the case of Eversource Energy, and the Board of Directors, in the case of CL&P, and until their successors have been elected and qualified.

CL&P obtains audit services from the independent registered public accounting firm engaged by the Audit Committee of Eversource ~~Energy's~~Energy’s Board of Trustees. CL&P does not have its own audit committee or, accordingly, an audit committee financial expert. CL&P relies on Eversource ~~Energy's~~Energy’s audit committee and the audit committee financial expert.

CODE OF ETHICS AND CODE OF BUSINESS CONDUCT

Each of Eversource Energy, CL&P, NSTAR Electric, ~~PSNH~~ and ~~WMECO~~PSNH has adopted a Code of Ethics for Senior Financial Officers (Chief Executive Officer, Chief Financial Officer and Controller) and the Code of Business Conduct, which are applicable to all Trustees, directors, officers, employees, contractors and agents of Eversource Energy, CL&P, NSTAR Electric ~~PSNH~~ and ~~WMECO.~~PSNH. The Code of Ethics and the Code of Business Conduct have both been posted on the Eversource Energy web site and are available at www.eversource.com/Content/general/about/investors/corporate-governance on the Internet. Any amendments to or waivers from the Code of Ethics and Code of Business Conduct for executive officers, directors or Trustees will be posted on the website. Any such amendment or waiver would require the prior consent of the Board of Trustees or an applicable committee thereof.

Printed copies of the Code of Ethics and the Code of Business Conduct are also available to any shareholder without charge upon written request mailed to:

Richard J. Morrison

Secretary

Eversource Energy

800 Boylston Street, 17^th Floor

Boston, Massachusetts 02199-7050

Item 11. Executive Compensation

Eversource Energy

The information required by this Item 11 for Eversource Energy is incorporated herein by reference to certain information contained in Eversource Energy's definitive proxy statement for solicitation of proxies, which is expected to be filed with the SEC on or about March ~~24, 2017,~~23, 2018, under the sections captioned "Compensation Discussion and Analysis," plus related subsections, and "Compensation Committee Report," plus related subsections following such Report.

NSTAR ELECTRIC ~~PSNH~~ and ~~WMECO~~PSNH

Certain information required by this Item 11 has been omitted for NSTAR Electric ~~PSNH~~ and ~~WMECO~~PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly-Owned Subsidiaries.

CL&P

The information in this Item 11 relates solely to CL&P.

COMPENSATION DISCUSSION AND ANALYSIS

CL&P is a wholly-owned subsidiary of Eversource Energy. Its board of directors consists entirely of executive officers of Eversource Energy system companies. CL&P does not have a compensation committee, and the Compensation Committee of Eversource Energy's Board of Trustees determines compensation for the executive officers of CL&P, including their salaries, annual incentive awards and long-term incentive awards. All of CL&P's "Named Executive Officers," as defined below, also serve ~~or served~~ as officers of Eversource Energy and one or more other subsidiaries of Eversource Energy. Compensation set by the Compensation Committee of Eversource Energy (the "Committee") and set forth herein is for services rendered to Eversource Energy and its subsidiaries by such officers in all capacities.

This Compensation Discussion and Analysis ("CD&A") provides information about the principles behind Eversource Energy's compensation objectives, plans, policies and actions for the Named Executive Officers. The discussion describes the specific components of Eversource Energy's compensation program, how Eversource Energy measures performance, and how the compensation principles were applied to compensation awards and decisions that were made by the Compensation Committee for the Named Executive Officers, as presented in the tables and narratives that follow. While this discussion focuses primarily on ~~2016~~2017 information, it also addresses decisions that were made in ~~other~~prior periods to the extent that these decisions are relevant to the full understanding of the compensation program and the specific awards that were made for performance ~~in 2016.~~through 2017. The CD&A also contains a summary of ~~2016~~2017 performance, an assessment of the performance and the compensation awards made by the Compensation Committee, and other information relating to ~~the Eversource Energy~~Eversource's compensation program, including:



•	Pay for Performance Philosophy	•	Description of the Long-Term Incentive Program, Grants and Performance Plan Results
•	Executive Compensation Governance
•	The Named Executive Officers	•	Disclosure of the:
•	Overview of the Compensation Program		•	Clawback and No Hedging and No Pledging Policies
•	Market Analysis		•	Share Ownership Guidelines
•	Elements of ~~2016~~2017 Compensation		•	Other Benefits
•	~~2016~~2017 Annual Incentive Program	•	Contractual Agreements
•	~~2016~~2017 Assessment of Financial and Operational Performance	•	Tax and Accounting Considerations
•	Performance Goal Assessment Matrix	•	Equity Grant Practices

Summary of ~~2016~~2017 Performance

In ~~2016,~~2017, Eversource Energy achieved very positive overall financial ~~results~~ and ~~solid~~ operational performance results. The following is a summary of some of the most important accomplishments in ~~2016:~~2017:

2017 Financial Accomplishments

Eversource's ~~2016~~earnings grew by 5.1 percent in 2017, exceeding the established goal. 2017 earnings were ~~$2.96~~$3.11 per ~~share, a 5.3 percent increase over 2015 results.~~share.

Eversource's total shareholder return in ~~2016~~2017 was ~~11.6~~18 percent, comparing favorably to the industry return of 11.7 percent, and over the longer term, ~~its~~Eversource's stock performance ~~continues~~continued to outperform the industry. This marks the ~~seventh~~eighth time in ~~eight~~nine years that Eversource ~~has~~ achieved a double-digit total shareholder return. Only ~~four~~two other companies within the Edison Electric Institute ("EEI") index of 4443 utility companies have ~~achieved this level of return.~~accomplished this.

Eversource increased its ~~2016~~2017 dividend to ~~$1.78~~$1.90 per share, a ~~6.6~~6.7 percent increase over ~~2015,~~2016, continuing to significantly outperform the dividend growth rate of the EEI Index companies.

~~Eversource maintained its~~ Standard & Poor's ("S~~&P Credit Rating of "A" and its outlook was~~&P") raised ~~by S&P and Fitch~~Eversource's credit rating from ~~Stable~~A to ~~Positive; the S&P A Credit Rating~~A+. It remains the highest holding company S&P credit rating in the ~~industry.~~industry, by two credit notches.

Eversource continued to successfully achieve operations and maintenance expense reductions in ~~2016,~~2017, and ~~its~~ total utility operations and maintenance expenses were $8$14 million under ~~target.~~budget.

Eversource became the only electric utility in the country to add a water utility as an additional line of business through the purchase of Aquarion Water Company. Participating in a highly competitive auction process, Eversource negotiated a purchase agreement, received regulatory approvals in three states within five months, and closed the transaction in early December 2017, creating a new, complementary, growth-oriented business line.

Set forth below is information relating to key financial metrics over the past three to five years.

Earnings Growth. Eversource's ~~2014~~2015 - ~~2016~~2017 recurring earnings per share have grown ~~5.7~~5.5 percent on average, consistent with long-term earnings guidance and above the utility industry average. Recurring earnings per share, presented below for 2015 exclude merger-related costs. A reconciliation between reported 2015 earnings per share and the recurring earnings per share presented below appears under the caption entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" in this Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016. Recurring earnings per share presented below for 2014 and 2015 exclude integration costs.~~2017.

Dividend Growth.As a result of ~~Eversource's~~continuing strong earnings growth, Eversource's Board of Trustees increased the annual dividend rate by ~~6.6~~6.7 percent for ~~2016~~2017 to ~~$1.78~~$1.90 per share, ~~exceeding~~which exceeds the EEI Index companies' median dividend growth rate of ~~3.8~~4.8 percent. The dividend growth rate for the period ~~2014~~2015 - ~~2016~~2017 has averaged ~~6.5~~6.6 percent, ~~greater than Eversource's earnings per share growth and~~ well ahead of the utility industry average.

Total Shareholder Return. Eversource's Total Shareholder Return in ~~2016~~2017 was ~~11.6~~18 percent, ~~in line with~~compared to the 11.7 percent growth of the EEI Index companies and 21.8 percent for the S&P 500. Eversource also outperformed the EEI Index companies over ~~the five-year period.~~2013 - 2017. An investment of $1,000 in Eversource common shares at the beginning of the five-year period beginning January 1, ~~2012~~2013 was worth ~~$1,679~~$1,904 on December 31, ~~2016.~~2017. The following charts represent the comparative one- and five-year total shareholder returns for the periods ending December 31, ~~2016,~~2017, respectively:

2017 Operational Accomplishments

Eversource's overall electric system reliability performance in ~~2016~~2017 was ~~towards~~its best ever; on average, customer power interruptions were 17.6 months apart, and average restoration time was 73.2 minutes. Eversource's performance ranks in the ~~top~~first quartile of the industry second quartile, though behind targeted performance due to the significantly higher number of storm events. Eversource experienced nearly double the number of storm events as compared with prior years.industry.

~~NSTAR Electric, NSTAR Gas~~Eversource's Massachusetts electric and ~~WMECO~~gas distribution companies each met or exceeded Service Quality Index performance targets established by regulators in Massachusetts, which is the only state in Eversource's service territory that has such performance targets.

Eversource exceeded its established targets in safety performance and response to gas service calls. Eversource's safety performance, which is measured by ~~days away~~Days Away or ~~restricted time,~~Restricted Time ("DART"), was its best ever, and in the first quartile of the industry.

Eversource added more than 10,000 new gas customers for the fifth consecutive year, exceeded its gas emergency response rate ~~target.~~target, and received its highest satisfaction rating (93 percent) for new customer connections.

Eversource exceeded the target of having 3537 percent of new hires and promotions within ~~Eversource's~~the supervisor and above management group be women or ~~people~~persons of color.

Eversource achieved very constructive regulatory outcomes, including the sale of its New Hampshire fossil generation assets, receiving a constructive rate order for its Massachusetts electric companies, and successfully resolving a complex and significant dispute regarding an underwater electric cable with federal agencies and the Massachusetts Water Resources Authority.

Eversource continues to operate its electric and gas systems well. This is the result of the continuing implementation of best practices, focusing on investments in reliability improvements to reduce the number and length of outages, and performing work safely each and every day.

Set forth below is information relating to key operational metrics over the past four years.

Reliability. ~~While Eversource was affected in 2016 by an unusually high number of storms in its service territory,~~ Electric System Reliability, which is measured by months between interruptions and average time to restore power, was ~~better than~~in the first quartile of the industry, ~~average.~~with its best results ever for the lowest number and frequency of interruptions.

Safety. Safety performance, measured by ~~days away or restricted time~~DART per 100 workers, ~~continued to improve~~improved significantly; performance was in the first quartile and the best ever performance for ~~the fourth straight year.~~Eversource.

Achievement of the ~~2016~~2017 performance goals, additional accomplishments and the Compensation Committee's assessment of the performance of Eversource and its executives are more fully described in the section titled "2016 Annual Incentive Program." Specific decisions regarding executive compensation based upon the Committee's assessment of the performance of Eversource and its executives and market data are also described below.

Pay for Performance

The Committee links the Named Executive Officers' compensation to performance that will ultimately benefit Eversource's customers and shareholders. Eversource's compensation program is intended to attract and retain the best executive talent in the industry, motivate its executives to meet or exceed specific stretch financial and operational goals ~~set~~ each year, and compensate its executives in a manner that aligns compensation directly with performance. Eversource strives to provide executives with base salary, performance-based annual incentive compensation, and performance-based long-term incentive compensation opportunities that are competitive with market practices and that reward excellent performance.

Executive Compensation Governance

Eversource's Compensation Committee annually assesses the independence of its compensation consultant, Pay Governance LLC ("Pay Governance"), which is retained directly by the Committee, performs no other consulting or other services for Eversource, and has no relationship with Eversource that could result in a conflict of interest. The Committee has concluded that Pay Governance is independent and that no conflict of interest exists between Pay Governance and Eversource.



What Eversource DOES:		What Eversource DOESN'T do:
ü	Pay for Performance	û	No tax gross-ups in any new or materially amended executive compensation agreements
ü	Share ownership and holding guidelines	û	No hedging, pledging or similar transactions by Eversource executives and Trustees
ü	Clawback policy of incentive compensation for willful non-compliance by any employee	û	No repricing of options
ü	Double-trigger change in control vesting provisions	û	No liberal share recycling in the Incentive Plan
ü	Independent compensation consultant
ü	Annual Say-on-Pay Vote

~~The Eversource~~Eversource's executive and Trustee share ownership and holding guidelines noted in this CD&A emphasize the importance of ~~share ownership.~~aligning management and governance with shareholders. Under the share ownership guidelines, which ~~include a~~require Eversource's Chief Executive Officer to hold shares equal to six times base salary, ~~requirement for its Chief Executive Officer,~~ Eversource requires its executives to hold 100 percent of the shares awarded under the ~~Eversource~~ stock

compensation program until the share ownership guidelines have been met. ~~In addition, 100 percent of the Eversource Trustee stock compensation is deferred and not distributed until the Trustee's retirement from the Board.~~

~~The Compensation Committee has implemented~~Eversource's new Incentive Plan includes a clawback ~~policy~~provision that requires ~~Eversource's~~its executives and other ~~eligible employees~~participants to reimburse Eversource for incentive compensation received, not only if earnings were subsequently required to be restated as a result of noncompliance with accounting rules caused by fraud or ~~misconduct.~~misconduct, but also if there had been a material violation of the Code of Business Conduct or material breach of a covenant in an employment agreement. The Plan also imposes limits on awards and on Eversource Trustee compensation, and prohibits repricing of awards and liberal share recycling.

Eversource has discontinued the use of "gross-ups" in all new or materially amended executive compensation agreements.

Eversource has a "no ~~hedging"~~hedging and ~~"no~~no pledging" policy that prohibits ~~all~~ Eversource Trustees and executives from purchasing financial instruments or otherwise entering into any transactions that are designed to have the effect of hedging or offsetting any decrease in the market value of Eversource common shares. This policy also prohibits all pledges, derivative transactions or short sales involving Eversource common shares or the holding of any Eversource common shares in a margin account.

Employment agreements with executives and the Incentive Plan provide for "double-trigger" change ofin control acceleration of ~~awards assumed~~compensation.

The Compensation Committee annually assesses the independence of its compensation consultant, Pay Governance LLC ("Pay Governance"), which is retained directly by the ~~surviving company.~~Committee. Pay Governance performs no other consulting nor provides services for Eversource, and has no relationship with Eversource that could result in a conflict of interest. At its February 7, 2018 meeting, the Committee concluded that Pay Governance is independent and that no conflict of interest exists between Pay Governance and Eversource.

Named Executive Officers

The executive officers of CL&P listed in the Summary Compensation Table and whose compensation is discussed in this Item 11 are referred to as the "Named Executive Officers" or "NEOs" under SEC regulations. For ~~2016,~~2017, CL&P's Named Executive Officers are:

~~Current Executive Officers:~~

James J. Judge, Chairman, President and Chief Executive Officer of Eversource Energy and Chairman of the Board of CL~~&P; former Executive Vice President and Chief Financial Officer of Eversource Energy and CL~~&P

Philip J. Lembo, Executive Vice President and Chief Financial Officer ~~and Treasurer~~ of Eversource Energy and CL&P

Werner J. Schweiger, Executive Vice President and Chief Operating Officer of Eversource Energy and Chief Executive Officer of CL&P

Gregory B. Butler, Executive Vice President and General Counsel of Eversource Energy and CL&P

Joseph R. Nolan, Jr., Executive Vice ~~President-Customer~~President - Customer and Corporate Relations of Eversource Energy and Eversource Service

~~Former Executive Officers:~~

~~Thomas J. May, Chairman of the Board of Eversource Energy; retired President and Chief Executive Officer of Eversource Energy; and retired Chairman of the Board of CL&P~~

~~David R. McHale, retired Executive Vice President and Chief Administrative Officer of Eversource Energy and CL&P~~

Under the SEC regulations, CL&P is required to disclose the compensation of the principal executive officer and principal financial officer, along with the three most highly compensated other current executive officers, and up to two others who would have been Named Executive Officers if they were still employees.

Overview of the Compensation Program

The Role of the Compensation Committee. The Eversource Board of Trustees has delegated to the Compensation Committee overall responsibility for establishing the compensation program for those senior executive officers, who are referred to in this CD&A as "executives" and ~~who~~whom are deemed to be "officers" under the SEC's regulations that determine the persons whose compensation is subject to disclosure. In this role, the Committee sets compensation policy and compensation levels, reviews and approves performance goals and evaluates executive performance. Although this discussion and analysis refers principally to compensation for the Named Executive Officers, the same compensation principles and practices apply to all executives. The compensation of Eversource's Chief Executive Officer is subject to the further review and approval of ~~all~~the independent Eversource Trustees.

Elements of Compensation. Total direct compensation consists of three elements: base salary, annual cash incentive awards and long-term equity-based incentive awards. Indirect compensation is provided through certain retirement, perquisite, severance, and health and welfare benefit programs.

Eversource's Compensation Objectives. The objectives of Eversource's compensation program are to attract and retain superior executive talent, motivate executives to achieve annual and long-term performance goals set each year, and provide total compensation opportunities that are competitive with market practices. With respect to incentive compensation, the Committee believes it is important to balance short-term goals, such as producing earnings, with longer-term goals, such as long-term value creation and maintaining a strong balance sheet. The Committee also places great emphasis on system reliability and ~~superior~~good customer service. Eversource's compensation program utilizes performance-based incentive compensation to reward individual and corporate performance and to align the interests of executives with Eversource's customers and shareholders. The Committee continually increases expectations to motivate executives and employees to achieve continuous improvement in carrying out their responsibilities to customers to deliver energy reliably, safely, with respect for the environment and employees, and at a reasonable cost, while providing an above-average total shareholder return to Eversource ~~shareholders.~~shareholders

Setting Compensation Levels. To ensure that Eversource achieves its goal of providing market-based compensation levels to attract and retain top quality management, the Committee provides executives with target compensation opportunities approximately equal to median compensation levels for executive officers of companies in the utility industry comparable to Eversource in size. To achieve that goal, the Committee and its independent compensation consultant work together to determine the market values of executive direct compensation elements (base salaries, annual incentives and long-term incentives), as well as total compensation, by using competitive market compensation data. The Committee reviews competitive compensation data obtained from utility and general industry surveys and a specific group of peer utility companies. Levels may be lower than median for those executives who are new to their roles, while long-tenured, high performing executives may be compensated above median. The review by Pay Governance performed in late 2017 indicated that Eversource's aggregate executive compensation levels were aligned with median market rates.

Role of the Compensation Consultant. The Committee has retained Pay Governance as its independent compensation consultant. Pay Governance reports directly to the Committee and does not provide any other services to Eversource. With the consent of the Committee, Pay Governance works cooperatively with Eversource's management to develop analyses and proposals for presentation to the Committee. The Committee generally relies on Pay Governance for peer group market data and information as to market practices and trends to assess the competitiveness of the compensation Eversource pays to its executives and to review the Committee's proposed compensation decisions.

Pay Governance Independence.In February ~~2017,~~2018, the Committee assessed the independence of Pay Governance pursuant to SEC and ~~New York Stock Exchange ("NYSE")~~NYSE rules, and concluded that it is independent and that no conflict of interest exists that would prevent Pay Governance from independently advising the Committee. In making this assessment, the Committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities Exchange Act of 1934, including the written representations of Pay Governance that Pay Governance does not provide any other services to Eversource, the level of fees received from Eversource as a percentage of Pay Governance's total revenues, the policies and procedures employed by Pay Governance to prevent conflicts of interest, and whether the individual Pay Governance advisers with whom the Committee consulted own any Eversource common shares or have any business or personal relationships with members of the Committee or ~~Eversource's~~the Eversource executives.

Role of Management. The role of Eversource's management, and specifically the roles of Eversource's Chief Executive Officer and the Executive Vice President of Human Resources and Information Technology, isare to provide current compensation information to the compensation consultant and analyses and recommendations on executive compensation to the Committee based on the market value of the position, individual performance, experience and internal pay equity. ~~The Eversource~~Eversource's Chief Executive Officer also provides recommendations on

the compensation for the other Named Executive Officers. None of the executives makes recommendations that affect his or her individual compensation.

MARKET ANALYSIS

The Compensation Committee seeks to provide executives with target compensation opportunities using a range that is approximately equal to the median compensation levels for executive officers of utility companies comparable to ~~Eversource Energy.~~Eversource. Set forth below is a description of the sources of the compensation data used by the Committee when reviewing ~~2016~~2017 compensation:

Utility and general industry compensation survey data. The Committee reviews compensation information obtained from surveys of diverse groups of utility and general industry companies that represent Eversource's market for executive officer talent. Utility industry data serve as the primary reference point for benchmarking officer compensation and are based on a defined peer set, as discussed below, while general industry data is derived from compensation consultant ~~surveys.~~surveys and serves as a secondary reference point. General industry data are used for staff positions and are size-adjusted to ensure a close correlation between the market data and Eversource's scope of operations. The Committee used this information, which it obtained from Pay Governance, to evaluate and determine base salaries and incentive opportunities.

Peer group data. In support of executive pay decisions during ~~2016,~~2017 and early 2018, the Committee consulted with Pay Governance, which provided the Committee with a competitive assessment analysis of Eversource's executive compensation levels, as compared to the 20 peer group companies listed in the table below. This peer group was chosen because these companies are and continue to be similar to Eversource Energy in terms of size, business model and long-term strategies.



Alliant Energy Corporation	DTE Energy Company	PPL Corporation
Ameren Corporation	Edison International	Public Service Enterprise Group, Inc.
American Electric Power Co., Inc.	Entergy Corporation	SCANA Corp.
CenterPoint Energy, Inc.	FirstEnergy Corp.	Sempra Energy
CMS Energy Corp.	NiSource Inc.	WEC Energy Group, Inc.
Consolidated Edison, Inc.	PG&E Corporation	Xcel Energy Inc.
Dominion Resources, Inc.	Pinnacle West Capital Corporation

The Committee reviews the appropriateness of the peer group periodically and adjusts the target percentages of annual and long-term incentives based on the survey data and recommendations from Eversource's CEO, after discussion with the compensation consultant to ensure that they are approximately equal to competitive median levels.

The Committee also determines perquisites to the extent they serve business purposes, and sets supplemental benefits at levels that provide ~~market-based~~appropriate compensation opportunities to the executives. The Committee periodically reviews the general market for supplemental benefits and perquisites using utility and general industry survey data, including data obtained from companies in the peer group.

Mix of Compensation Elements. Eversource targets the mix of compensation for its Chief Executive Officer and the other Named Executive Officers so that the percentages of each compensation element are approximately equal to the competitive median market mix. The mix is heavily weighted toward incentive compensation, and incentive compensation is heavily weighted toward long-term compensation. Since the most senior positions have the greatest responsibility for implementing the long-term business plans and strategies, a greater proportion of total compensation is based on performance with a long-term focus.

The Committee determines the compensation for each executive based on the relative authority, duties and responsibilities of the executive. Eversource's Chief Executive Officer's responsibilities for the strategic direction and daily operations and management of Eversource are greater than the duties and responsibilities of the other executives. As a result, Eversource's Chief Executive Officer's compensation is higher than the compensation of ~~the~~these other executives. Assisted by the compensation consultant, the Committee regularly reviews market compensation data for executive officer positions similar to those held by Eversource's executives, including its Chief Executive ~~Officer, and this market data continues to indicate that chief executive officers are paid significantly more than other executive officers.~~Officer.

The following table sets forth the contribution to ~~2016~~2017 Total Direct Compensation ("TDC") of each element of compensation at target, reflected as a percentage of TDC, for the Named Executive Officers. The percentages shown in this table are at target and therefore do not correspond to the amounts appearing in the Summary Compensation Table.


	Percentage of TDC at Target							Percentage of TDC at Target
					Long-Term Incentives							Long-Term Incentives
	Base Salary		Annual Incentive ⁽¹⁾		Performance Shares ⁽¹⁾			Base Salary		Annual Incentive ⁽¹⁾		Performance Shares ⁽¹⁾
Named Executive Officer				RSUs ⁽²⁾	Performance Shares ⁽¹⁾	TDC			RSUs ⁽²⁾	Annual Incentive ⁽¹⁾		Performance Shares ⁽¹⁾	TDC
James J. Judge	Base Salary	17	Annual Incentive ⁽¹⁾		19	32	32	Base Salary	100		16		18		33		33	100
Philip J. Lembo	26		20		27	27	100	26		20		27		27		100
Werner J. Schweiger	26		20		27	27	100	26		20		27		27		100
Gregory B. Butler	30		20		25	25	100	30		20		25		25		100
Joseph R. Nolan, Jr.	30		20		25	25	100	30		20		25		25		100
Thomas J. May	15		17		34	34	100
David R. McHale	26		20		27	27	100
NEO average, excluding CEO	28		20		26	26	100	28		20		26		26		100


(1)	The annual incentive compensation element and performance shares under the long-term incentive compensation element are performance-based.


(2)	Restricted Share Units ~~("RSUs")~~(RSUs) vest over three years contingent upon continued employment.

Risk Analysis of Executive Compensation Program. The overall compensation program includes a mix of compensation elements ranging from a fixed base salary that is ~~risk-neutral~~not at risk, to annual and long-term incentive compensation programs intended to motivate officers and eligible employees to achieve individual and corporate performance goals that reflect an appropriate level of risk. The fundamental objective of the compensation program is to foster the continued growth and success of Eversource's business. The design and implementation of the overall compensation program provides the Committee with opportunities throughout the year to assess risks within the compensation program that may have a material effect on the Eversource ~~Energy~~ and its shareholders.

~~In 2016, the~~The Compensation Committee ~~assessed~~assesses the risks associated with the executive compensation program on an on-going basis by reviewing the various elements of incentive compensation. The annual incentive program was designed to ensure an appropriate balance between individual and

corporate goals, which were deemed appropriate and supportive of Eversource's annual business plan. Similarly, the long-term incentive program was designed to ensure that the performance metrics were properly weighted and supportive of Eversource's strategic plan. The Committee reviewed the overall compensation program in the context of the annual operating and strategic plans, which were both previously subject to review by Eversource's Enterprise Risk Management ~~review.~~and Risk Committees.

The annual and long-term incentive programs were designed to include mechanisms to mitigate risk. These mechanisms include realistic goal setting and discretion with respect to actual payments, in addition to:

A mix of annual and long-term performance awards to provide an appropriate balance of short- and long-term risk and reward horizon;

A variety of performance metrics, including financial, operational, customer service, diversity and safety goals and other strategic initiatives for annual performance awards to avoid excessive focus on a single measure of performance;

Metrics in the Eversource's long-term incentive compensation program that use ~~recurring~~ earnings per share and total shareholder return, which are both robust measures of shareholder value and which reduce the risk that employees might be encouraged to pursue other objectives that increase risk or reduce financial performance;

The provisions of Eversource's annual and long-term incentive programs, which cap awards at 200 percent of target;

Clawback ~~provision~~provisions on incentive compensation; and

Stock ownership requirements for all executives, including the Named Executive Officers, and prohibitions on hedging, pledging and other derivative transactions related to Eversource common shares.

Based on these factors, the Compensation Committee and ~~the Eversource~~Eversource's Board of Trustees believe the overall compensation program risks are mitigated to reduce overall compensation risk.

Results of Eversource's ~~2016~~2017 Say-on-Pay Vote. Eversource ~~Energy~~ provides its shareholders with the required opportunity to cast the annual advisory vote on executive compensation (a "Say-on-Pay" proposal). At the Eversource ~~Energy~~ Annual Meeting of Shareholders held on May ~~4, 2016, 87~~3, 2017, 89 percent of the votes cast on the Say-on-Pay proposal were voted to approve the ~~2015~~2016 compensation of the ~~Eversource~~ Named Executive Officers, as described in Eversource's ~~2016~~2017 proxy statement. Eversource's Say-on-Pay results, along with utility and general industry peers, are reviewed with the Committee annually to help assess whether Eversource shareholders continue to deem the executive compensation to be appropriate. The Committee has and will continue to consider the outcome of Eversource's Say-on-Pay votes when making future compensation decisions for the ~~Eversource~~ Named Executive Officers.

ELEMENTS OF ~~2016~~2017 COMPENSATION

Base Salary

Base salary is designed to attract and retain key executives by providing an element of total compensation at levels competitive with those of other executives employed by companies of similar size and complexity in the utility and general industries. In establishing base salary, the Compensation Committee relies on compensation data obtained from independent third-party surveys of companies and from an industry peer group to ensure that the compensation opportunities Eversource offers are capable of attracting and retaining executives with the experience and talent required to achieve its strategic objectives. Adjustments to base salaries are made on an annual basis except in instances of promotions.

When setting or adjusting base salaries, the Committee considers annual executive performance appraisals; market pay movement across industries (determined through market analysis); targeted market pay positioning for each executive; individual experience; strategic importance of a position; recommendations of Eversource's Chief Executive Officer; and internal equity.

Incentive Compensation

Annual incentive and long-term incentive compensation are provided under Eversource's Incentive Plan, which was approved by Eversource shareholders at the 2007 Annual Meeting of Shareholders and the material terms of performance goals of which were re-approved by shareholders at the 2012 Annual Meeting of Shareholders.Plan. The annual incentive program provides cash compensation intended to reward performance under Eversource's annual operating plan. The long-term stock-based incentive program is designed to reward demonstrated performance and leadership, motivate future performance, align the interests of the executives with those of shareholders, and retain the executives during the term of grants. The annual and long-term programs are designed to strike a balance between Eversource's short- and long-term objectives so that the programs work in tandem.

In addition to the specific performance goals, the Committee assesses other factors as well as the executives' roles and individual performance and then makes annual incentive program awards at the levels and amounts disclosed in this Item 11.

~~2016~~2017 ANNUAL INCENTIVE PROGRAM

In February ~~2016,~~2017, the Committee established the terms of the ~~2016~~2017 Annual Incentive Program. As part of the overall program, and after consulting with Pay Governance, the Committee set target award levels for each of the Named Executive Officers that ranged from 65 percent to ~~110~~115 percent of base salary.

At the February ~~2016~~2017 meeting, the Committee determined that for ~~2016~~2017 it would continue to base 70 percent of the annual incentive performance goals on Eversource's overall financial performance and 30 percent of the annual performance goals on Eversource's overall operational performance. The Committee also determined the specific goals that would be used to assess performance, ~~and that the individual goals would continue to be assessed using~~with potential ratings on each goal ranging from 0 percent to 200 ~~percent.~~percent of target. The Committee assigned weightings to each of these specific goals. For the financial component, the following goals were used: earnings per share, ~~goal was~~ weighted at 70 percent, ~~the~~ dividend growth goal, ~~was~~ weighted at 20 percent, and ~~the~~ credit rating, ~~goal was~~ weighted at 10 percent. For the operational component, the Committee ~~determined~~used the following goals: combined service reliability and restoration goals, ~~would be~~ weighted at 60 ~~percent, the~~percent; combined key strategic regional energy projects, success ~~on aggressive~~in regulatory ~~proceedings~~outcomes and improvement of the customer experience goals, ~~would be~~ weighted at 25 ~~percent,~~percent; and ~~the~~ combined safety ratings, gas service response and diversity promotions and hires of leadership employee positions goals, ~~would be~~ weighted at 15 percent.

~~2016~~

2017 Performance Goals

At the December ~~2016~~2017 meeting of the Committee, management provided an initial review of Eversource's ~~2016~~2017 performance, followed in February ~~2017~~2018 by a full assessment of the performance goals, the additional accomplishments noted below under the caption "Additional Factors" and the overall performance of Eversource and ~~each of~~ the executives. In addition to these meetings, the Committee ~~was also~~and the Eversource Board were continuously provided updates during ~~the year~~2017 on corporate performance. At the February ~~2017~~2018 meeting, the Committee determined, based on its assessment of the financial and operational performance goals, to set the level of achievement of combined financial and operational performance goals results at ~~152~~160 percent of target, reflecting the overall strong performance of Eversource and the executive team. In arriving at this determination, the Committee determined that the financial performance goals result was ~~168~~161 percent of target and the operational performance goals result was ~~115~~155 percent of target. The individual financial and operational performance goals results are as set forth below. Eversource's Chief Executive Officer recommended to the Committee payout levels for the executives (other than himself) based on his assessment of each executive's individual performance towards achievement of the performance goals and the additional accomplishments of Eversource, together with each executive's contributions to the overall performance of Eversource. The awards determined by the Committee were also based on the same three-component criteria.

Financial Performance Goals Assessment

Eversource Energy's earnings per share in 2017 increased by 5.1 percent over 2016 ~~were $2.96, exceeding~~and exceeded the established goal of ~~$2.95 and representing a 5.3 percent increase over 2015. Eversource's longer term~~$3.10; 2017 earnings ~~growth of 5.7 percent from 2014 to 2016 is significantly above~~equaled $3.11 per share. Eversource exceeded the ~~long-term industry growth of nearly 4 percent. The~~ earnings goal ~~was exceeded~~ despite several significant challenges, including higher than ~~planned storms~~anticipated storm costs and ~~milder weather~~lower sales in ~~2016,~~2017, which resulted in significantly lower than ~~planned~~expected revenues ~~through the accomplishment~~ of nearly $40 million. In a ~~challenging operations and maintenance cost containment result that was $8 million under target despite an additional $20 million of storm response costs.~~demanding operating environment, Eversource reduced costs to mitigate these challenges. The Committee determined the earnings per share goal to have attained a ~~165~~155 percent performance result.

Eversource Energy increased its dividend to ~~$1.78~~$1.90 per share, a ~~6.6~~6.7 percent increase from the prior year, compared to the utility industry's median dividend growth of ~~3.8~~4.8 percent. The Committee determined this goal to have attained a 160 percent performance.

~~Eversource maintained its "A"~~S&P raised Eversource's credit rating ~~and both S&P and Fitch raised Eversource's Outlook~~in December 2017 to ~~"Positive."~~A+. This rating represents the highest S&P holding company ~~S&P~~ credit rating in the utility industry, and continues to provide the foundation for ~~continued~~ favorable financing ~~opportunities during the year and in the future.~~opportunities. The industry average credit rating at S&P is "BBB+." The Committee determined this goal to have attained a 200 percent performance result.

Operational Performance Goals Assessment

~~While performance results were towards the top of the second quartile as measured against its peers,~~ Eversource's total electric system reliability performance exceeded targeted performance and was ~~behind targeted performance.~~its best ever. Average months between interruptions equaled 1317.6 months, ~~behind~~near the highest end of the performance zone established by the Committee of 15 to ~~17 months.~~18 months and in the first quartile of industry peers. System average restoration duration time equaled ~~97.9~~73.2 minutes, ~~behind~~well within the performance zone established by the Committee of 8576 to ~~69 minutes. Taking into consideration~~63 minutes and also in the ~~significant number~~first quartile of ~~storms experienced in 2016 and Eversource's performance as compared to its peers, the~~industry peers. The Committee determined these goals to have each attained a 175 percent performance result.

Eversource exceeded the safety performance goal of between 0.9 - 1.2 DART per 1,000 employees; DART equaled 0.6 in 2017, the best performance in Eversource's history and also industry first quartile performance. The Committee determined this goal to have attained a 200 percent performance result.

On-time response to gas customer emergency calls was 99.6 percent, which exceeded the goal of 99.1 percent and was also first quartile versus industry peers. The Committee determined this goal to have attained a 125 percent performance result.

In 2017, 37.5 percent of new hires and promotions into leadership roles were women or people of color, slightly ahead of the goal of 37 percent. The Committee determined this goal to have attained a 100 percent performance result.

Eversource successfully ~~put its redesigned customer bill into place,~~ expanded the functionality of its customer website and outage communication systems and strengthened media outreach efforts. The Committee determined this goal to have attained a ~~125~~75 percent performance result.

Eversource ~~continued to decrease financial risk and protect earnings through effective~~achieved several constructive regulatory outcomes in each of the three states in which ~~Eversource~~it provides ~~service, and at the FERC. This~~service. These included the ~~approved divestiture~~sale of ~~Eversource's~~the New Hampshire fossil generation assets, a ~~three-year Energy Efficiency Program~~constructive Massachusetts rate case approval, ~~recovery at FERC of transmission merger-related costs from Eversource's 2012 merger~~and a settlement agreement to for approval with ~~NSTAR, and~~ the ~~successful resolution of spent nuclear fuel costs liability.~~Connecticut Public Utility Authority in connection with a previous filed rate review. The Committee determined this goal to have attained a 200 percent performance result.

While Eversource ~~had mixed results related to~~made substantial progress on its ~~two~~ major ongoing strategic projects ~~Access Northeast ("ANE") and~~in 2017, it encountered a significant setback on its Northern Pass Transmission ~~(NPT). Despite making good progress on ANE, a Massachusetts Supreme Judicial Court decision not allowing electric distribution companies to execute gas capacity contracts has affected the~~ project ~~schedule. Eversource is currently assessing alternative plans for the project. NPT was not selected~~ in ~~the three-state Clean Energy RFP, and siting approval from~~early 2018, when the New Hampshire Site Evaluation Committee ~~was delayed until September 2017. However, NPT~~rejected the project. Eversource continues to work on a path forward. Bay State Wind received approval of a Site Assessment Plan from the ~~New Hampshire Public Utilities Commission~~U.S. government, the first off-shore wind project to ~~operate~~do so. Eversource is awaiting a decision on Bay State Wind's off-shore wind proposal bid to the Massachusetts Clean Energy request for proposal. The Access Northeast gas pipeline project received an adverse court decision in 2017 relating to the ability to secure supply contracts. Eversource is reconfiguring the project in light of this decision. Eversource is the only electric utility in the country to add a water utility as an additional line of business through the purchase of Aquarion Water Company. Participating in a ~~public utility,~~highly competitive auction process, Eversource negotiated a purchase agreement, received regulatory approvals in three states within five months, and ~~NE-ISO approved its Transmission Interconnection Application. In addition to NPT~~completed the acquisition in December, adding a new, complementary and ~~ANE, Eversource advanced a number of new strategic clean energy opportunities.~~growth-oriented business line. The Committee determined this goal to have attained a ~~100~~75 percent performance result.

Eversource exceeded the safety performance goal of between 1.4 - 1.1 Days Away or Restricted Time ("DART") per 1,000 employees; DART equaled 0.95 in 2016. The Committee determined this goal to have attained a 150 percent performance result.

On-time response to gas customer emergency calls by Eversource’s gas utilities was 99.5 percent, which exceeded the goal of 99.1 percent. The Committee determined this goal to have attained a 125 percent performance result.

In 2016, 39 percent of Eversource’s new hires and promotions into leadership roles were women or people of color, exceeding the goal of 35 percent. The Committee determined this goal to have attained a 125 percent performance result.

~~2016 Annual Incentive Program Performance Assessments~~

Financial Performance Goals



Category	~~2016~~2017 Goal	Eversource Performance	Indicative Assessment
Earnings Per Share	$~~2.95~~3.10 per share	~~Exceeded - $2.96~~Exceeded: $3.11 per share, a ~~5.3%~~5.1% increase over ~~2015,~~2016, significantly outperforming industry average growth ~~median~~ of nearly 4%	~~165%~~155%
Dividend Growth	Increase dividend ~~$0.11~~$0.12 to ~~$1.78~~$1.90 per share	~~Achieved -~~Achieved: Increased to ~~$1.78~~$1.90 per share, a ~~$0.11~~$0.12 increase and ~~6.6%~~6.7% growth, significantly exceeding the industry median of ~~3.8%~~4.8%	160%
Credit Rating	Maintain Eversource's top tier ~~S&P~~Standard & Poor's (S&P) "A" credit rating	~~Achieved - Maintained~~Exceeded: S&P rating ~~of "A" (S&P and Fitch~~ raised to ~~"Positive" Outlook)~~"A+", the highest holding company credit rating in the utility industry by two notches	200%
Weightings = Earnings ~~Per Share –~~per share: 70%; Dividend ~~Growth –~~growth: 20%; ~~credit rating –~~Credit rating: 10%

Operational Performance Goals



CL&P Selected Sales Statistics
	2016		2015		2014		2013		2012
Revenues: (Thousands)
Residential	$	1,603,351	$	1,641,165	$	1,474,181	$	1,294,160	$	1,263,845
Commercial	858,965		841,093		879,343		780,585		732,620
Industrial	139,556		129,544		149,220		129,557		126,165
Wholesale	156,411		128,169		146,787		219,367		214,807
Other	47,672		62,704		43,051		18,672		70,012
Total	$	2,805,955	$	2,802,675	$	2,692,582	$	2,442,341	$	2,407,449
Sales Volumes: (GWh)
Residential	9,907		10,094		10,026		10,314		9,978
Commercial	9,461		9,635		9,643		9,770		9,705
Industrial	2,249		2,342		2,377		2,320		2,426
Wholesale	787		712		736		851		1,155
Total	22,404		22,783		22,782		23,255		23,264
Customers: (Average)
Residential	1,125,415		1,117,778		1,111,467		1,105,417		1,103,397
Commercial	109,796		109,339		109,093		108,735		108,589
Industrial	3,127		3,163		3,213		3,247		3,301
Total	1,238,338		1,230,280		1,223,773		1,217,399		1,215,287



(Millions of Dollars)	(Decrease)/Increase
Purchased Power and Generation Fuel Costs	$	(56.2	)
Transmission Costs	19.3
Total Purchased Power, Fuel and Transmission	$	(36.9	)



WMECO (Millions of Dollars)	As of December 31,
WMECO (Millions of Dollars)	2016			2015
Notes:
5.900% Senior Notes Series B due 2034	$	50.0		$	50.0
6.700% Senior Notes Series D due 2037	40.0			40.0
5.100% Senior Notes Series E due 2020	95.0			95.0
3.500% Senior Notes Series F due 2021	250.0			250.0
3.880% Senior Notes Series G due 2023	80.0			80.0
2.750% Senior Notes Series H due 2026	50.0			—
Total Notes	565.0			515.0
Unamortized Premiums and Discounts, Net	4.2			5.2
Unamortized Debt Issuance Costs	(2.7		)	(2.9		)
WMECO Long-Term Debt	$	566.5		$	517.3



Financial Performance at 161% (weighted 70%)	~~168%~~113%
Operational Performance at 155% (weighted 30%)	~~115%~~47%
Overall Performance	~~152%~~160%


2016 Annual Incentive Program Awards
2017 Annual Incentive Program Awards			2017 Annual Incentive Program Awards
Named Executive Officer	Award		Award
James J. Judge	$	2,200,000	$	2,285,000
Philip J. Lembo	600,000		700,000
Werner J. Schweiger	700,000		775,000
Gregory B. Butler	575,000		625,000
Joseph R. Nolan, Jr.	550,000		680,000


2015 – 2017 and 2016 – 2018 Long-Term Incentive Program Performance Share Potential Payout
2015 - 2017, 2016 - 2018 and 2017 - 2019 Long-Term Incentive Programs Performance Share Potential Payout											2015 - 2017, 2016 - 2018 and 2017 - 2019 Long-Term Incentive Programs Performance Share Potential Payout
Three-Year Average EPS Growth	Three-Year Relative Total Shareholder Return Percentiles										Three-Year Relative Total Shareholder Return Percentiles
Three-Year Average EPS Growth	Below 10th	20th	30th	40th	50th	60th	70th	80th	90th	Above 90th	Below 10th	20th	30th	40th	50th	60th	70th	80th	90th	Above 90th
9%	110%	120%	130%	140%	150%	160%	170%	180%	190%	200%	110%	120%	130%	140%	150%	160%	170%	180%	190%	200%
8%	100%	110%	120%	130%	140%	150%	160%	170%	180%	190%	100%	110%	120%	130%	140%	150%	160%	170%	180%	190%
7%	90%	100%	110%	120%	130%	140%	150%	160%	170%	180%	90%	100%	110%	120%	130%	140%	150%	160%	170%	180%
6%	80%	90%	100%	110%	120%	130%	140%	150%	160%	170%	80%	90%	100%	110%	120%	130%	140%	150%	160%	170%
5%	70%	80%	90%	100%	110%	120%	130%	140%	150%	160%	70%	80%	90%	100%	110%	120%	130%	140%	150%	160%
4%	60%	70%	80%	90%	100%	110%	120%	130%	140%	150%	60%	70%	80%	90%	100%	110%	120%	130%	140%	150%
3%	40%	50%	70%	80%	90%	100%	110%	120%	130%	140%	40%	50%	70%	80%	90%	100%	110%	120%	130%	140%
2%	20%	40%	60%	70%	80%	90%	100%	110%	120%	130%	20%	40%	60%	70%	80%	90%	100%	110%	120%	130%
1%	—	10%	40%	60%	70%	80%	90%	100%	110%	120%	—	10%	40%	60%	70%	80%	90%	100%	110%	120%
0%	—	—	20%	30%	50%	70%	80%	90%	100%	110%	—	—	20%	30%	50%	70%	80%	90%	100%	110%
Below 0%	—	—			10%	20%	30%	40%	50%	60%	—	—			10%	20%	30%	40%	50%	60%


Named Executive Officer	2015 - 2017 Performance Share Grant	2016 - 2018 Performance Share Grant	2016 - 2018 Performance Share Grant	2017 - 2019 Performance Share Grant
James J. Judge	9,800	12,004	12,004	48,259
Philip J. Lembo	1,700	1,844	1,844	11,520
Werner J. Schweiger	9,700	11,805	11,805	11,703
Gregory B. Butler	6,900	7,791	7,791	9,052
Joseph R. Nolan, Jr.	3,800	4,503	4,503	7,920
Thomas J. May	50,100	58,002
David R. McHale	9,800	12,004



~~2014~~2015 – ~~2016~~2017 Long-Term Incentive Program Performance Share Grants at Target
Named Executive Officer	Performance Share Grant
James J. Judge	~~12,718~~11,436
Philip J. Lembo	~~2,154~~1,984
Werner J. Schweiger	~~8,923~~11,319
Gregory B. Butler	~~8,821~~8,052
Joseph R. Nolan, Jr.	~~4,923~~
~~Thomas J. May~~	~~57,336~~
~~David R. McHale~~	~~11,659~~4,434



2014 - 2016 Long-Term Incentive Program Performance Share Award
Three-Year Average EPS Growth	Three-Year Relative Total Shareholder Return Percentiles
Three-Year Average EPS Growth	Below 10th	20th	30th	40th	50th	60th	70th	80th	90th	Above 90th
9%	110%	120%	130%	140%	150%	160%	170%	180%	190%	200%
8%	100%	110%	120%	130%	140%	150%	160%	170%	180%	190%
7%	90%	100%	110%	120%	130%	140%	150%	160%	170%	180%
6%	80%	90%	100%	110%	120%	130%	140%	150%	160%	170%
5%	70%	80%	90%	100%	110%	120%	130%	140%	150%	160%
4%	60%	70%	80%	90%	100%	110%	120%	130%	140%	150%
3%	40%	50%	70%	80%	90%	100%	110%	120%	130%	140%
2%	20%	40%	60%	70%	80%	90%	100%	110%	120%	130%
1%	—	10%	40%	60%	70%	80%	90%	100%	110%	120%
0%	—	—	20%	30%	50%	70%	80%	90%	100%	110%
Below 0%	—	—	—	—	10%	20%	30%	40%	50%	60%


	RSUs Awarded			RSUs Awarded
Named Executive Officer	2014	2015	2016	2015	2016	2017
James J. Judge	12,400	9,800	12,004	9,800	12,004	48,259
Philip J. Lembo	2,100	1,700	1,844	1,700	1,844	11,520
Werner J. Schweiger	8,700	9,700	11,805	9,700	11,805	11,703
Gregory B. Butler	8,600	6,900	7,791	6,900	7,791	9,052
Joseph R. Nolan, Jr.	4,800	3,800	4,503	3,800	4,503	7,920
Thomas J. May	55,900	50,100	58,002
David R. McHale	12,400	9,800	12,004



Executive Officer	Base Salary Multiple
Chief Executive Officer	6
Executive Vice Presidents ~~/ Senior Vice Presidents~~	3
Operating Company Presidents / Senior Vice Presidents	2
Vice Presidents	1 – 1.5



Name and Principal Position	Year	Salary⁽⁶⁾		Stock Awards ⁽⁷⁾		Non-Equity Incentive Plan ⁽⁸⁾		Change in Pension Value and Non- Qualified Deferred Earnings ⁽⁹⁾		All Other Compensation ⁽¹⁰⁾		Total

Current Executive Officers
James J. Judge ⁽¹⁾	2016	$	959,690	$	1,382,021	$	2,200,000	$	1,616,742	$	24,809	$	6,183,262
President and Chief Executive Officer of Eversource Energy; Chairman of CL&P	2015	605,650		1,135,526		690,000		895,929		20,672		3,347,777
	2014	587,975		1,170,436		660,000		1,587,879		20,346		4,026,636
Philip J. Lembo ⁽²⁾	2016	439,208		212,300		600,000		543,133		21,285		1,815,926
Executive Vice President, Chief Financial Officer and Treasurer of Eversource Energy and CL&P

Werner J. Schweiger	2016	592,108		1,359,110		700,000		1,156,328		21,135		3,828,681
Executive Vice President and Chief Operating Officer of Eversource Energy and CL&P	2015	600,000		1,123,939		680,000		746,734		21,135		3,171,808
	2014	538,950		821,193		600,000		1,174,893		205,073		3,340,109
Gregory B. Butler	2016	514,494		896,978		575,000		539,638		12,886		2,538,996
Executive Vice President and General Counsel of Eversource Energy and CL&P	2015	474,992		—		525,000		242,980		—		1,242,972
	2014	457,736		811,754		515,000		1,274,208		12,800		3,071,498
Joseph R. Nolan, Jr. ⁽³⁾	2016	419,364		518,430		550,000		826,729		15,876		2,330,399
Executive Vice President-Customer and Corporate Relations of Eversource Energy and Eversource Service

Former Executive Officers
Thomas J. May ⁽⁴⁾	2016	743,048		6,677,885		—		3,775,105		52,408		11,248,446
Chairman of the Board of Eversource Energy; former Chairman of CL&P	2015	1,232,250		5,805,087		2,400,000		165,239		82,260		9,684,836
	2014	1,196,325		5,276,401		2,250,000		182,787		75,004		8,980,517
David R. McHale ⁽⁵⁾	2016	524,380		1,382,021		—		3,355,960		2,247,988		7,510,349
Former Executive Vice President and Chief Administrative Officer of Eversource Energy and CL&P	2015	605,308		1,135,526		630,000		252,131		14,987		2,637,952
	2014	587,643		1,170,436		660,000		2,136,933		10,348		4,565,360



Name and Principal Position	Year	Salary		Stock Awards ⁽²⁾		Non-Equity Incentive Plan ⁽³⁾		Change in Pension Value and Non- Qualified Deferred Earnings ⁽⁴⁾		All Other Compen- sation ⁽⁵⁾		SEC Total		Adjusted SEC Total ⁽⁶⁾
James J. Judge	2017	$	1,230,694	$	5,504,904	$	2,285,000	$	6,869,854	$	25,009	$	15,915,461	$	9,045,607
President and Chief Executive Officer of Eversource Energy; Chairman of CL&P	2016	959,690		1,382,021		2,200,000		1,616,742		24,809		6,183,262		4,566,520
	2015	605,650		1,135,526		690,000		895,929		20,672		3,347,777		2,451,848
Philip J. Lembo ⁽¹⁾	2017	613,847		1,314,086		700,000		1,246,325		21,485		3,895,743		2,649,418
Executive Vice President and Chief Financial Officer of Eversource Energy and CL&P	2016	439,208		212,300		600,000		543,133		21,285		1,815,926		1,272,793

Werner J. Schweiger	2017	634,078		1,334,961		775,000		1,225,581		21,418		3,991,038		2,765,457
Executive Vice President and Chief Operating Officer of Eversource Energy and CL&P	2016	592,108		1,359,110		700,000		1,156,328		21,135		3,828,681		2,672,353
	2015	600,000		1,123,939		680,000		746,734		21,135		3,171,808		2,425,074
Gregory B. Butler	2017	597,886		1,032,562		625,000		1,670,745		15,361		3,941,554		2,270,809
Executive Vice President and General Counsel of Eversource Energy and CL&P	2016	514,494		896,978		575,000		539,638		12,886		2,538,996		1,999,358
	2015	474,992		—		525,000		242,980		—		1,242,972		999,992
Joseph R. Nolan, Jr. ⁽¹⁾	2017	515,578		903,434		680,000		1,486,025		16,076		3,601,113		2,115,088
Executive Vice President-Customer and Corporate Relations of Eversource Energy and CL&P	2016	419,364		518,430		550,000		826,729		15,876		2,330,399		1,503,670


(1)	~~Mr. Judge was elected President~~Messrs. Lembo and Chief Executive Officer of Eversource Energy on April 6, 2016 effective as of the May 4, 2016 Eversource Board of Trustees meeting. He was elected Chairman of CL&P effective May 4, 2016. Mr. Judge previously served as Executive Vice President and Chief Financial Officer of Eversource Energy and CL&P.


~~(4)~~	Mr. May retired as President and CEO and Chairman of CL&P upon the completion of the Eversource Energy Annual Meeting of Shareholders on May 4, 2016. Mr. May currently serves as the non-executive Chairman of the Board of Eversource Energy.


~~(6)~~	Includes amounts deferred in 2016 under the deferred compensation program for Mr. McHale of $9,690. For more information, see the Executive Contributions in the Last Fiscal Year column of the Non-Qualified Deferred Compensation Plans Table.


~~(7)~~(2)	Reflects the aggregate grant date fair value of RSUs and performance shares granted in each fiscal year, calculated in accordance with FASB ASC Topic 718.


~~(8)~~(3)	Includes payments to the Named Executive Officers under the ~~2016~~2017 Annual Incentive Program (Mr. Judge: ~~$2,200,000,~~$2,285,000, Mr. Lembo: ~~$600,000;~~$700,000; Mr. Schweiger: ~~$700,000;~~$775,000; Mr. Butler: ~~$575,000;~~$625,000; and Mr. Nolan: ~~$550,000)~~$680,000).


												All Other Stock Awards: Number of Shares of Stock or Units (#) ⁽²⁾	Grant Date Fair Value of Stock and Option Awards ($) ⁽³⁾													All Other Stock Awards: Number of Shares of Stock or Units (#) ⁽²⁾	Grant Date Fair Value of Stock and Option Awards ($) ⁽³⁾
		Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards ⁽¹⁾								Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards ⁽¹⁾
	Grant Date	Threshold ($)		Target ($)		Maximum ($)		Threshold ($)		Target (#)	Maximum (#)				Grant Date	Threshold ($)		Target ($)		Maximum ($)		Threshold ($)		Target (#)	Maximum (#)
Name
Current Executive Officers
James J. Judge
Annual Incentive⁽⁴⁾	02/03/16	$	690,000	$	1,380,000	$	2,760,000	$	—	—	—	—	$	—	02/03/17	$	714,000	$	1,428,000	$	2,856,000	$	—	—	—	—	$	—
Long-Term Incentive⁽⁵⁾	02/03/16	—		—		—		—		12,004	24,008	12,004	1,382,021		02/03/17	—		—		—		—		48,259	96,518	48,259	5,504,904
Philip J. Lembo
Annual Incentive ⁽⁴⁾	02/03/16	214,000		428,000		856,000		—		—	—	—	—		02/03/17	236,500		473,000		946,000		—		—	—	—	—
Long-Term Incentive ⁽⁵⁾	02/03/16	—		—		—		—		1,844	3,688	1,844	212,300		02/03/17	—		—		—		—		11,520	23,040	11,520	1,314,086
Werner J. Schweiger
Annual Incentive ⁽⁴⁾	02/03/16	232,000		464,000		928,000		—		—	—	—	—		02/03/17	240,000		480,000		960,000		—		—	—	—	—
Long-Term Incentive ⁽⁵⁾	02/03/16	—		—		—		—		11,805	23,610	11,805	1,359,110		02/03/17	—		—		—		—		11,703	23,406	11,703	1,334,961
Gregory B. Butler
Annual Incentive ⁽⁴⁾	02/03/16	182,000		364,000		728,000		—		—	—	—	—		02/03/17	195,000		390,000		780,000		—		—	—	—	—
Long-Term Incentive⁽⁵⁾	02/03/16	—		—		—		—		7,791	15,582	7,791	896,978		02/03/17	—		—		—		—		9,052	18,104	9,052	1,032,562
Joseph R. Nolan, Jr.
Annual Incentive ⁽⁴⁾	02/03/16	159,500		319,000		638,000		—		—	—	—	—		02/03/17	170,500		341,000		682,000		—		—	—	—	—
Long-Term Incentive⁽⁵⁾	02/03/16	—		—		—		—		4,503	9,006	4,503	518,430		02/03/17	—		—		—		—		7,920	15,840	7,920	903,434
Former Executive Officers
Thomas J. May
Annual Incentive ⁽⁴⁾	02/03/16	735,000		1,470,000		2,940,000		—		—	—	—	—
Long-Term Incentive ⁽⁵⁾	02/03/16	—		—		—		—		58,003	116,006	58,003	6,677,885
David R. McHale
Annual Incentive ⁽⁴⁾	02/03/16	235,500		471,000		942,000		—		—	—	—	—
Long-Term Incentive⁽⁵⁾	02/03/16	—		—		—		—		12,004	24,008	12,004	1,382,021


(3)	Reflects the grant date fair value, determined in accordance with FASB ASC Topic 718, of RSUs and performance shares granted to the Named Executive Officers on February 3, ~~2016~~2017 under the ~~2016~~2017 - ~~2018~~2019 Long-Term Incentive Program.


(5)	Reflects the range of potential payouts, if any, pursuant to performance share awards under the ~~2016~~2017 - ~~2018~~2019 Long-Term Incentive Program, as described in the CD&A.


	Option Awards ⁽¹⁾			Stock Awards ⁽²⁾				Stock Awards ⁽¹⁾
	Number of Securities Underlying Unexercised Options Exercisable (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)⁽³⁾	Market Value of Shares or Units of Stock That Have Not Vested ($) ⁽⁴⁾	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) ⁽⁵⁾	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽⁶⁾	Number of Shares or Units of Stock That Have Not Vested (#)⁽²⁾	Market Value of Shares or Units of Stock That Have Not Vested ($) ⁽³⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) ⁽⁴⁾	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽⁵⁾
Name		Option Exercise Price ($)	Option Expiration Date
Current Executive Officers
James J. Judge	—	—		23,916	1,320,894	36,518	2,016,880	61,900	$	3,910,906	73,351	$	4,634,346
Philip J. Lembo	—	—		3,885	214,544	6,033	333,179	13,818	873,019		15,719	993,112
Werner J. Schweiger	39,360 48,544 36,736	24.74 25.93 26.90	1/24/2018 1/22/2019 1/28/2020	22,278	1,230,440	32,125	1,774,271	24,010	1,516,957		35,317	2,231,300
Gregory B. Butler	—	—		16,109	889,676	24,886	1,374,439	17,400	1,099,253		25,227	1,593,835
Joseph R. Nolan, Jr.	—	—		9,114	503,387	13,624	752,453	12,761	806,219		17,147	1,083,333
Former Executive Officers
Thomas J. May	—	—		—	—	—	—
David R. McHale	—	—		—	—	—	—


(1)	~~Options held by Mr. Schweiger were granted by NSTAR (which merged into Eversource Energy in 2012) and were assumed by Eversource Energy.~~


~~(2)~~	Awards and market values of awards appearing in the table and the accompanying notes have been rounded to whole units.


~~(4)~~(3)	The market value of RSUs is determined by multiplying the number of RSUs by ~~$55.23,~~$63.18, the closing price per share of ~~Eversource~~ common shares on December ~~30, 2016,~~29, 2017, the last trading day of the year.


~~(5)~~(4)	Reflects the target payout level for performance shares granted under the ~~2014 - 2016 Program, the~~ 2015 - 2017 Program, ~~and~~ the 2016 - 2018 Program and the 2017 - 2019 Program.


~~(6)~~(5)	The market value is determined by multiplying the number of performance shares in the adjacent column by ~~$55.23,~~$63.18, the closing price of Eversource Energy common shares on December ~~30, 2016,~~29, 2017, the last trading day of the year.


	Option Awards			Stock Awards			Option Awards			Stock Awards
	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ⁽¹⁾		Number of Shares Acquired on Vesting (#) ⁽²⁾	Value Realized on Vesting ⁽³⁾		Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ⁽¹⁾		Number of Shares Acquired on Vesting (#) ⁽²⁾	Value Realized on Vesting ⁽³⁾
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ⁽¹⁾		Number of Shares Acquired on Vesting (#) ⁽²⁾	Value Realized on Vesting ⁽³⁾		Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ⁽¹⁾		Number of Shares Acquired on Vesting (#) ⁽²⁾	Value Realized on Vesting ⁽³⁾
Current Executive Officers
James J. Judge	—	$	—	29,156	$	1,579,312	—	$	—	24,892	$	1,395,241
Philip J. Lembo	—	—		4,922	266,571		—	—		4,164	233,432
Werner J. Schweiger	47,232	597,437		21,608	1,169,834		124,640	4,380,089		19,632	1,100,165
Gregory B. Butler	—	—		20,282	1,098,605		—	—		17,116	959,431
Joseph R. Nolan, Jr.	—	—		11,335	614,018		—	—		9,589	537,460
Former Executive Officers
Thomas J. May	—	—		236,147	13,291,143
David R. McHale	—	—		37,207	1,995,453


(1)	Represents the amounts realized upon option exercises, which is the difference between the option exercise price and the market price at the time of exercise.


(2)	Includes RSUs and performance shares granted to ~~our~~the Named Executive Officers under ~~our~~the long-term incentive programs, including dividend reinvestments, as follows:

Type of Plant

Number
of Sites

Year
Installed

Claimed Capability**
(kilowatts)

Solar Fixed Tilt, Photovoltaic