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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2018March 31, 2019
 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
   


  

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.
 YesNo
 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).
 YesNo
 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 Energyx ¨ ¨ ¨ ¨
The Connecticut Light and Power Company¨ ¨ x ¨ ¨
NSTAR Electric Company¨ ¨ x ¨ ¨
Public Service Company of New Hampshire¨ ¨ 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):
 YesNo
   
Eversource Energy¨x
The Connecticut Light and Power Company¨x
NSTAR Electric Company¨x
Public Service Company of New Hampshire¨x

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:
Company - Class of StockOutstanding as of July 31, 2018April 30, 2019
  
Eversource Energy Common Shares, $5.00 par value316,885,808317,461,097 shares
The Connecticut Light and Power Company Common Stock, $10.00 par value6,035,205 shares
NSTAR Electric Company Common Stock, $1.00 par value200 shares
Public Service Company of New Hampshire Common Stock, $1.00 par value301 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.

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

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-Q.  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 CompanyEversource Energy and subsidiaries
Eversource parent or ES parentEversource Energy, a public utility holding company
ES parent and other companiesES parent and other companies are comprised of Eversource parent, Eversource Service, Eversource Water Ventures, Inc. (parent company of Aquarion), 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 Eversource parent's equity ownership interests that are not consolidated
CL&PThe Connecticut Light and Power Company
NSTAR ElectricNSTAR Electric Company
PSNHPublic Service Company of New Hampshire
PSNH FundingPSNH Funding LLC 3, a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH
NSTAR GasNSTAR Gas Company
Yankee GasYankee Gas Services Company
AquarionEversource Aquarion Holdings, IncInc. and its subsidiaries (formerly known as Macquarie Utilities Inc)
NPTNorthern Pass Transmission LLC
Northern PassThe HVDC and associated alternating-current transmission line project from Canada into New Hampshire
Eversource ServiceEversource Energy Service Company
Bay State WindA 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
CYAPCConnecticut Yankee Atomic Power Company
MYAPCMaine Yankee Atomic Power Company
YAECYankee Atomic Electric Company
Yankee CompaniesCYAPC, YAEC and MYAPC
Regulated companiesThe Eversource regulated 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, Aquarion, the generation facilities of PSNH, and the solar power facilities of NSTAR Electric
Regulators: 
DEEPConnecticut Department of Energy and Environmental Protection
DOEU.S. Department of Energy
DOERMassachusetts Department of Energy Resources
DPUMassachusetts Department of Public Utilities
EPAU.S. Environmental Protection Agency
FERCFederal Energy Regulatory Commission
ISO-NEISO New England, Inc., the New England Independent System Operator
MA DEPMassachusetts Department of Environmental Protection
NHPUCNew Hampshire Public Utilities Commission
PURAConnecticut Public Utilities Regulatory Authority
SECU.S. Securities and Exchange Commission
SJCSupreme Judicial Court of Massachusetts
Other Terms and Abbreviations:
Access NortheastA 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.
ADITAccumulated Deferred Income Taxes
AFUDCAllowance For Funds Used During Construction
AOCIAccumulated Other Comprehensive Income
AROAsset Retirement Obligation
BcfBillion cubic feet
C&LMConservation and Load Management
CfDContract for Differences
Clean Air ProjectThe 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
CTACompetitive Transition Assessment
CWIPConstruction Work in Progress
EDCElectric distribution company
EDITExcess Deferred Income Taxes
EPSEarnings Per Share
ERISAEmployee Retirement Income Security Act of 1974

i



ESOPEmployee Stock Ownership Plan
Eversource 20172018 Form 10-KThe Eversource Energy and Subsidiaries 20172018 combined Annual Report on Form 10-K as filed with the SEC
FitchFitch Ratings
FMCCFederally Mandated Congestion Charge
FTRFinancial Transmission Rights
GAAPAccounting principles generally accepted in the United States of America
GSCGeneration Service Charge
GSRPGreater Springfield Reliability Project
GWhGigawatt-Hours
HQHydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDCHigh-voltage direct current
Hydro Renewable EnergyHydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPPIndependent Power Producers
ISO-NE TariffISO-NE FERC Transmission, Markets and Services Tariff
kVKilovolt
kVaKilovolt-ampere
kWKilowatt (equal to one thousand watts)
kWhKilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour)
LBRLost Base Revenue
LNGLiquefied natural gas
LRSSupplier of last resort service
MGMillion gallons
MGPManufactured Gas Plant
MMBtuOne million British thermal units
MMcfMillion cubic feet
Moody'sMoody's Investors Services, Inc.
MWMegawatt
MWhMegawatt-Hours
NEEWSNew England East-West Solution
NETOsNew England Transmission Owners (including Eversource, National Grid and Avangrid)
NOx
Nitrogen oxides
OCIOther Comprehensive Income/(Loss)
PAMPension and PBOP Rate Adjustment Mechanism
PBOPPostretirement Benefits Other Than Pension
PBOP PlanPostretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance
PCRBsPollution Control Revenue Bonds
Pension PlanSingle uniform noncontributory defined benefit retirement plan
PPAPension Protection Act
RRBsRate Reduction Bonds
RECsRenewable Energy Certificates
Regulatory ROEThe average cost of capital method for calculating the return on equity related to the distribution and generation business segment excluding the wholesale transmission segment
RNSRegional Network Service
ROEReturn on Equity
RRBRRBsRate Reduction BondBonds or Rate Reduction CertificateCertificates
RSUsRestricted share units
S&PStandard & Poor's Financial Services LLC
SBCSystems Benefits Charge
SCRCStranded Cost Recovery Charge
SERPSupplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SO2
Sulfur dioxide
SSStandard service
TCAMTransmission Cost Adjustment Mechanism
TSATransmission Service Agreement
UIThe United Illuminating Company
VIEVariable Interest Entity


ii



EVERSOURCE ENERGY AND SUBSIDIARIES   
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

TABLE OF CONTENTS
 Page
PART I – FINANCIAL INFORMATION
   
 
   
  
 
 
 
 Condensed Consolidated Statements of Common Shareholders' Equity
   
  
 
 
 
Condensed Statements of Common Stockholder's Equity
 
   
  
 
 
 
Condensed Consolidated Statements of Common Stockholder's Equity
 
   
 Public Service Company of New Hampshire and Subsidiaries (Unaudited) 
 
 
 
Condensed Consolidated Statements of Common Stockholder's Equity
 
   
 
   
 
 
 
   
   
   
PART II – OTHER INFORMATION
   
   
   
   
   

iii




EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of June 30, 2018
As of December 31, 2017As of March 31, 2019
As of December 31, 2018

ASSETS 

  

 
Current Assets: 

  

 
Cash and Cash Equivalents$64,154

$38,165
Cash$35,145

$108,068
Receivables, Net967,590

925,083
1,140,348

994,055
Unbilled Revenues160,301

201,361
159,288

176,285
Taxes Receivable156,236

18,682
Fuel, Materials, Supplies and Inventory171,601
 223,063
277,104
 238,042
Regulatory Assets590,898

741,868
507,255

514,779
Prepayments and Other Current Assets107,379

119,327
181,724

260,995
Assets Held for Sale59,431
 219,550
Total Current Assets2,277,590

2,487,099
2,300,864

2,292,224

Property, Plant and Equipment, Net24,476,890

23,617,463
26,032,781

25,610,428

Deferred Debits and Other Assets: 

 
 

 
Regulatory Assets4,805,440

4,497,447
4,589,427

4,631,137
Goodwill4,427,266

4,427,266
4,427,266

4,427,266
Investments in Unconsolidated Affiliates711,476
 464,286
Marketable Securities576,440

585,419
415,405

417,508
Other Long-Term Assets680,718

605,692
463,788

398,407
Total Deferred Debits and Other Assets10,489,864

10,115,824
10,607,362

10,338,604

Total Assets$37,244,344

$36,220,386
$38,941,007

$38,241,256

LIABILITIES AND CAPITALIZATION 
  
 
Current Liabilities: 
  
 
Notes Payable$1,190,810

$1,088,087
$1,477,830

$910,000
Long-Term Debt – Current Portion387,296

549,631
805,519

837,319
Rate Reduction Bonds – Current Portion30,727
 
43,210
 52,332
Accounts Payable1,010,389

1,085,034
1,006,774

1,119,995
Regulatory Liabilities247,369

128,071
385,442

370,230
Other Current Liabilities662,964

738,222
840,587

823,006
Total Current Liabilities3,529,555

3,589,045
4,559,362

4,112,882

Deferred Credits and Other Liabilities: 
  
 
Accumulated Deferred Income Taxes3,473,870

3,297,518
3,543,052

3,506,030
Regulatory Liabilities3,689,679

3,637,273
3,627,389

3,609,475
Derivative Liabilities394,459

377,257
372,957

379,562
Accrued Pension, SERP and PBOP1,044,397

1,228,091
939,786

962,510
Other Long-Term Liabilities1,069,391

1,073,501
1,259,400

1,196,336
Total Deferred Credits and Other Liabilities9,671,796

9,613,640
9,742,584

9,653,913

Long-Term Debt12,009,264

11,775,889
12,284,330

12,248,743
      
Rate Reduction Bonds604,936
 
561,727
 583,331
      
Noncontrolling Interest – Preferred Stock of Subsidiaries155,570

155,570
155,570

155,570

Common Shareholders' Equity: 
 

 
Common Shares1,669,392

1,669,392
1,669,392

1,669,392
Capital Surplus, Paid In6,229,247

6,239,940
6,242,089

6,241,222
Retained Earnings3,753,343

3,561,084
4,092,895

3,953,974
Accumulated Other Comprehensive Loss(60,988)
(66,403)(57,804)
(60,000)
Treasury Stock(317,771)
(317,771)(309,138)
(317,771)
Common Shareholders' Equity11,273,223

11,086,242
11,637,434

11,486,817






   
Commitments and Contingencies (Note 9)

 







Total Liabilities and Capitalization$37,244,344

$36,220,386
$38,941,007

$38,241,256

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


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars, Except Share Information)2018 2017 2018 20172019 2018
          
Operating Revenues$1,853,856
 $1,762,811
 $4,141,818
 $3,867,946
$2,415,792
 $2,287,962
          
Operating Expenses:          
Purchased Power, Fuel and Transmission653,915
 549,704
 1,600,662
 1,303,353
974,882
 946,747
Operations and Maintenance293,858
 310,193
 626,406
 648,500
335,597
 332,549
Depreciation199,140
 189,881
 403,406
 376,686
214,948
 204,266
Amortization36,203
 (7,807) 81,397
 16,210
70,961
 45,194
Energy Efficiency Programs101,955
 116,398
 236,196
 262,556
140,116
 134,241
Taxes Other Than Income Taxes177,431
 156,234
 359,865
 311,455
184,588
 182,433
Total Operating Expenses1,462,502
 1,314,603
 3,307,932
 2,918,760
1,921,092
 1,845,430
Operating Income391,354
 448,208
 833,886
 949,186
494,700
 442,532
Interest Expense126,404
 107,329
 247,533
 210,758
131,734
 121,129
Other Income, Net50,149
 29,022
 83,938
 50,641
30,985
 33,789
Income Before Income Tax Expense315,099
 369,901
 670,291
 789,069
393,951
 355,192
Income Tax Expense70,452
 137,272
 154,219
 295,103
83,393
 83,766
Net Income244,647
 232,629
 516,072
 493,966
310,558
 271,426
Net Income Attributable to Noncontrolling Interests1,880
 1,880
 3,759
 3,759
1,880
 1,880
Net Income Attributable to Common Shareholders$242,767
 $230,749
 $512,313
 $490,207
$308,678
 $269,546
          
Basic and Diluted Earnings Per Common Share$0.76
 $0.72
 $1.61
 $1.54
$0.97
 $0.85
          
Dividends Declared Per Common Share$0.51
 $0.48
 $1.01
 $0.95
       
Weighted Average Common Shares Outstanding:          
Basic317,344,596
 317,391,365
 317,370,825
 317,427,258
317,624,593
 317,397,052
Diluted317,885,187
 317,947,194
 317,939,094
 318,035,864
318,316,082
 317,992,999

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the Three Months Ended June 30, For the Six Months Ended June 30,
(Thousands of Dollars)2018 2017 2018 2017
        
Net Income$244,647
 $232,629
 $516,072
 $493,966
Other Comprehensive Income/(Loss), Net of Tax:       
Qualified Cash Flow Hedging Instruments471
 514
 1,195
 1,048
Changes in Unrealized (Losses)/Gains on
  Marketable Securities
(144) 960
 (588) 2,605
Changes in Funded Status of Pension, SERP and
   PBOP Benefit Plans
1,815
 (2,268) 4,808
 (1,306)
Other Comprehensive Income/(Loss), Net of Tax2,142
 (794) 5,415
 2,347
Comprehensive Income Attributable to
  Noncontrolling Interests
(1,880) (1,880) (3,759) (3,759)
Comprehensive Income Attributable to
  Common Shareholders
$244,909
 $229,955
 $517,728
 $492,554
 For the Three Months Ended March 31,
(Thousands of Dollars)2019 2018
    
Net Income$310,558
 $271,426
Other Comprehensive Income, Net of Tax:   
Qualified Cash Flow Hedging Instruments316
 724
Changes in Unrealized Gains/(Losses) on Marketable Securities655
 (444)
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans1,225
 2,993
Other Comprehensive Income, Net of Tax2,196
 3,273
Comprehensive Income Attributable to Noncontrolling Interests(1,880) (1,880)
Comprehensive Income Attributable to Common Shareholders$310,874
 $272,819

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


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Unaudited)
 For the Three Months Ended March 31, 2019
 Common Shares 
Capital
Surplus,
Paid In
 Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Common Shareholders' Equity
(Thousands of Dollars, Except Share Information)Shares Amount
Balance as of January 1, 2019316,885,808
 $1,669,392
 $6,241,222
 $3,953,974
 $(60,000) $(317,771) $11,486,817
Net Income 
  
   310,558
     310,558
Dividends on Common Shares - $0.535 Per Share 
  
   (169,757)     (169,757)
Dividends on Preferred Stock 
  
   (1,880)     (1,880)
Long-Term Incentive Plan Activity 
  
 (16,609)       (16,609)
Issuance of Treasury Shares461,662
  
 17,476
     8,633
 26,109
Other Comprehensive Income 
  
     2,196
   2,196
Balance as of March 31, 2019317,347,470
 $1,669,392
 $6,242,089
 $4,092,895
 $(57,804) $(309,138) $11,637,434
 For the Three Months Ended March 31, 2018
 Common Shares 
Capital
Surplus,
Paid In
 Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Common Shareholders' Equity
(Thousands of Dollars, Except Share Information)Shares Amount
Balance as of January 1, 2018316,885,808
 $1,669,392
 $6,239,940
 $3,561,084
 $(66,403) $(317,771) $11,086,242
Net Income 
  
   271,426
     271,426
Dividends on Common Shares - $0.505 Per Share 
  
   (160,027)     (160,027)
Dividends on Preferred Stock 
  
   (1,880)     (1,880)
Long-Term Incentive Plan Activity 
  
 (15,320)       (15,320)
Other Comprehensive Income 
  
     3,273
   3,273
Balance as of March 31, 2018316,885,808
 $1,669,392
 $6,224,620
 $3,670,603
 $(63,130) $(317,771) $11,183,714

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




EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 20172019 2018

Operating Activities: 
  
 
Net Income$516,072

$493,966
$310,558

$271,426
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: 
  
 
Depreciation403,406

376,686
214,948

204,266
Deferred Income Taxes161,883

269,505
18,085

88,481
Pension, SERP and PBOP Expense, Net3,317

11,242
Uncollectible Expense18,565
 19,613
Pension, SERP and PBOP Expense/(Income), Net8,428

(1,965)
Pension and PBOP Contributions(179,002)
(91,400)(4,700)
(171,244)
Regulatory Overrecoveries, Net36,669

85,792
Regulatory (Under)/Over Recoveries, Net(19,232)
70,457
Amortization81,397

16,210
70,961

45,194
Other(74,006)
(110,355)(37,310)
(74,582)
Changes in Current Assets and Liabilities: 
  
 
Receivables and Unbilled Revenues, Net(52,923)
(7,660)(155,823)
(156,888)
Fuel, Materials, Supplies and Inventory65,609

42,425
(39,063)
(26,956)
Taxes Receivable/Accrued, Net(132,999)
23,980
126,381

(5,061)
Accounts Payable(80,059)
(168,221)(13,556)
(61,571)
Other Current Assets and Liabilities, Net(51,229)
(47,220)(70,242)
(23,456)
Net Cash Flows Provided by Operating Activities698,135

894,950
428,000

177,714

Investing Activities: 
  
 
Investments in Property, Plant and Equipment(1,251,678)
(1,146,952)(674,694)
(607,334)
Proceeds from Sales of Marketable Securities316,252

373,853
234,497

145,438
Purchases of Marketable Securities(314,406)
(394,379)(237,794)
(143,264)
Proceeds from the Sale of PSNH Generation Assets116,809
 

 130,641
Investments in Unconsolidated Affiliates(249,138) (7,340)
Other Investing Activities(14,122)
(20,439)4,893

2,140
Net Cash Flows Used in Investing Activities(1,147,145)
(1,187,917)(922,236)
(479,719)

Financing Activities: 
  
 
Cash Dividends on Common Shares(320,055)
(301,042)(169,757)
(160,027)
Cash Dividends on Preferred Stock(3,759)
(3,759)(1,880)
(1,880)
Decrease in Notes Payable(98,500)
(211,000)
Issuance of Rate Reduction Bonds635,663
 
Issuance of Treasury Shares26,109
 
Increase/(Decrease) in Notes Payable829,430

(240,005)
Repayment of Rate Reduction Bonds(30,727) 
Issuance of Long-Term Debt1,150,000

950,000


1,150,000
Retirements of Long-Term Debt(860,421)
(150,000)
Retirement of Long-Term Debt(250,215)
(150,218)
Other Financing Activities(17,958)
(19,254)(9,676)
(19,140)
Net Cash Flows Provided by Financing Activities484,970

264,945
393,284

578,730
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash35,960

(28,022)
Cash, Cash Equivalents and Restricted Cash - Beginning of Period85,890

106,750
Cash, Cash Equivalents and Restricted Cash - End of Period$121,850

$78,728
Net (Decrease)/Increase in Cash and Restricted Cash(100,952)
276,725
Cash and Restricted Cash - Beginning of Period209,324

85,890
Cash and Restricted Cash - End of Period$108,372

$362,615

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





THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
      
ASSETS      
Current Assets:      
Cash$1,794
 $6,028
$7,496
 $87,721
Receivables, Net385,419
 370,676
443,684
 397,026
Accounts Receivable from Affiliated Companies34,555
 28,181
30,363
 23,082
Unbilled Revenues53,114
 54,154
51,300
 56,971
Materials, Supplies and Inventory55,795
 48,438
Materials and Supplies52,109
 44,529
Regulatory Assets198,242
 200,281
147,712
 125,155
Prepaid Property Taxes41,341
 19,555
Prepayments and Other Current Assets20,784
 46,926
20,384
 40,724
Total Current Assets749,703
 754,684
794,389
 794,763
      
Property, Plant and Equipment, Net8,604,611
 8,271,030
9,065,880
 8,909,701
      
Deferred Debits and Other Assets:      
Regulatory Assets1,556,977
 1,444,935
1,496,679
 1,505,488
Other Long-Term Assets172,510
 159,597
197,571
 199,767
Total Deferred Debits and Other Assets1,729,487
 1,604,532
1,694,250
 1,705,255
      
Total Assets$11,083,801
 $10,630,246
$11,554,519
 $11,409,719
      
LIABILITIES AND CAPITALIZATION      
Current Liabilities:      
Notes Payable to Eversource Parent$24,000
 $69,500
Long-Term Debt – Current Portion250,000
 300,000
$
 $250,000
Accounts Payable378,862
 367,605
347,928
 324,983
Accounts Payable to Affiliated Companies88,138
 82,201
94,738
 26,452
Obligations to Third Party Suppliers54,260
 52,860
56,065
 56,248
Accrued Taxes55,693
 38,205
Accrued Interest42,424
 38,395
Regulatory Liabilities106,489
 109,614
Derivative Liabilities52,214
 54,392
59,651
 55,058
Regulatory Liabilities72,183
 38,967
Other Current Liabilities119,839
 127,234
71,461
 84,488
Total Current Liabilities1,039,496
 1,092,759
834,449
 983,443
      
Deferred Credits and Other Liabilities:      
Accumulated Deferred Income Taxes1,157,165
 1,103,367
1,184,425
 1,166,784
Regulatory Liabilities1,124,721
 1,112,136
1,126,279
 1,122,157
Derivative Liabilities394,270
 376,918
372,774
 379,536
Accrued Pension, SERP and PBOP306,469
 354,469
279,914
 282,771
Other Long-Term Liabilities119,518
 128,135
165,307
 155,495
Total Deferred Credits and Other Liabilities3,102,143
 3,075,025
3,128,699
 3,106,743
      
Long-Term Debt3,003,286
 2,759,135
3,265,756
 3,004,016
      
Preferred Stock Not Subject to Mandatory Redemption116,200
 116,200
116,200
 116,200
      
Common Stockholder's Equity:      
Common Stock60,352
 60,352
60,352
 60,352
Capital Surplus, Paid In2,210,765
 2,110,765
2,410,765
 2,410,765
Retained Earnings1,551,241
 1,415,741
1,737,980
 1,727,899
Accumulated Other Comprehensive Income318
 269
318
 301
Common Stockholder's Equity3,822,676
 3,587,127
4,209,415
 4,199,317
      
Commitments and Contingencies (Note 9)

 

   
Total Liabilities and Capitalization$11,083,801
 $10,630,246
$11,554,519
 $11,409,719

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


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Operating Revenues$694,892
 $666,558
 $1,479,875
 $1,398,867
$849,246
 $784,983
          
Operating Expenses:          
Purchased Power and Transmission234,335
 207,211
 536,223
 452,149
319,833
 301,889
Operations and Maintenance109,685
 108,918
 226,977
 237,655
130,637
 117,292
Depreciation69,383
 60,797
 136,881
 120,549
73,289
 67,498
Amortization of Regulatory Assets, Net15,400
 11,422
 43,405
 24,225
35,671
 28,006
Energy Efficiency Programs18,606
 32,153
 41,366
 68,744
25,988
 22,760
Taxes Other Than Income Taxes84,375
 70,437
 174,676
 144,414
92,000
 90,300
Total Operating Expenses531,784
 490,938
 1,159,528
 1,047,736
677,418
 627,745
Operating Income163,108
 175,620
 320,347
 351,131
171,828
 157,238
Interest Expense38,674
 35,299
 75,498
 70,264
35,781
 36,823
Other Income, Net7,063
 4,221
 13,623
 7,489
3,880
 6,560
Income Before Income Tax Expense131,497
 144,542
 258,472
 288,356
139,927
 126,975
Income Tax Expense31,785
 53,249
 60,192
 106,855
29,456
 28,407
Net Income$99,712
 $91,293
 $198,280
 $181,501
$110,471
 $98,568

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


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Net Income$99,712
 $91,293
 $198,280
 $181,501
$110,471
 $98,568
Other Comprehensive Income, Net of Tax:          
Qualified Cash Flow Hedging Instruments13
 91
 65
 202
(6) 52
Changes in Unrealized (Losses)/Gains on
Marketable Securities
(4) 33
 (16) 89
Changes in Unrealized Gains/(Losses) on Marketable Securities23
 (12)
Other Comprehensive Income, Net of Tax9
 124
 49
 291
17
 40
Comprehensive Income$99,721
 $91,417
 $198,329
 $181,792
$110,488
 $98,608

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



THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
 For the Three Months Ended March 31, 2019
 Common Stock 
Capital
Surplus,
Paid In
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income
 
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)Stock Amount    
Balance as of January 1, 20196,035,205
 $60,352
 $2,410,765
 $1,727,899
 $301
 $4,199,317
Net Income 
  
   110,471
   110,471
Dividends on Preferred Stock 
  
   (1,390)   (1,390)
Dividends on Common Stock 
  
   (99,000)   (99,000)
Other Comprehensive Income 
  
     17
 17
Balance as of March 31, 20196,035,205
 $60,352
 $2,410,765
 $1,737,980
 $318
 $4,209,415
 For the Three Months Ended March 31, 2018
 Common Stock 
Capital
Surplus,
Paid In
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income
 
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)Stock Amount    
Balance as of January 1, 20186,035,205
 $60,352
 $2,110,765
 $1,415,741
 $269
 $3,587,127
Net Income 
  
   98,568
   98,568
Dividends on Preferred Stock 
  
   (1,390)   (1,390)
Dividends on Common Stock 
  
   (60,000)   (60,000)
Capital Contributions from Eversource Parent 
  
 9,000
     9,000
Other Comprehensive Income 
  
     40
 40
Balance as of March 31, 20186,035,205
 $60,352
 $2,119,765
 $1,452,919
 $309
 $3,633,345

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



THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 20172019 2018
      
Operating Activities:      
Net Income$198,280
 $181,501
$110,471
 $98,568
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation136,881
 120,549
73,289
 67,498
Deferred Income Taxes50,915
 73,277
15,188
 29,109
Pension, SERP, and PBOP Expense3,861
 4,321
Pension and PBOP Contributions(41,150) (1,250)
Regulatory (Under)/Over Recoveries, Net(39,908) 9,762
Uncollectible Expense4,116
 3,912
Pension, SERP, and PBOP Expense, Net4,063
 3,158
Pension Contributions
 (82,276)
Regulatory Underrecoveries, Net(54,671) (8,878)
Amortization of Regulatory Assets, Net43,405
 24,225
35,671
 28,006
Other(33,078) (27,585)(5,848) (18,940)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net(34,772) (22,333)(60,506) (46,330)
Taxes Receivable/Accrued, Net105
 41,733
41,399
 42,460
Accounts Payable(30,805) (63,813)75,373
 (28,408)
Other Current Assets and Liabilities, Net14,377
 15,304
(40,274) (23,160)
Net Cash Flows Provided by Operating Activities268,111
 355,691
198,271
 64,719
      
Investing Activities:      
Investments in Property, Plant and Equipment(457,677) (419,891)(189,423) (202,126)
Other Investing Activities110
 132
59
 56
Net Cash Flows Used in Investing Activities(457,567) (419,759)(189,364) (202,070)
      
Financing Activities:      
Cash Dividends on Common Stock(60,000) (99,200)(99,000) (60,000)
Cash Dividends on Preferred Stock(2,779) (2,779)(1,390) (1,390)
Capital Contributions from Eversource Parent100,000
 

 9,000
Issuance of Long-Term Debt500,000
 300,000

 500,000
Retirement of Long-Term Debt(300,000) (150,000)(250,000) 
(Decrease)/Increase in Notes Payable to Eversource Parent(45,500) 21,000
Increase/(Decrease) in Notes Payable to Eversource Parent261,600
 (69,500)
Other Financing Activities(6,189) (3,894)(326) (6,539)
Net Cash Flows Provided by Financing Activities185,532
 65,127
Net Cash Flows (Used in)/Provided by Financing Activities(89,116) 371,571
Net (Decrease)/Increase in Cash and Restricted Cash(3,924) 1,059
(80,209) 234,220
Cash and Restricted Cash - Beginning of Period9,619
 8,403
91,613
 9,619
Cash and Restricted Cash - End of Period$5,695
 $9,462
$11,404
 $243,839

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






NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
      
ASSETS 
  
 
  
Current Assets:      
Cash and Cash Equivalents$67
 $1,763
Cash$1,769
 $1,606
Receivables, Net382,019
 341,341
400,082
 361,296
Accounts Receivable from Affiliated Companies20,406
 40,723
20,097
 31,344
Unbilled Revenues48,668
 49,865
31,698
 34,518
Materials, Supplies and Inventory50,459
 95,517
160,221
 114,202
Regulatory Assets244,542
 333,882
234,662
 241,747
Prepayments and Other Current Assets58,105
 24,499
24,643
 51,960
Total Current Assets804,266
 887,590
873,172
 836,673
      
Property, Plant and Equipment, Net8,450,942
 8,246,494
8,915,608
 8,794,700
      
Deferred Debits and Other Assets:      
Regulatory Assets1,271,158
 1,190,575
1,173,851
 1,196,512
Prepaid PBOP147,698
 126,948
139,132
 132,810
Other Long-Term Assets93,240
 84,766
134,536
 109,764
Total Deferred Debits and Other Assets1,512,096
 1,402,289
1,447,519
 1,439,086
      
Total Assets$10,767,304
 $10,536,373
$11,236,299
 $11,070,459
      
LIABILITIES AND CAPITALIZATION      
Current Liabilities:      
Notes Payable$443,810
 $234,000
$368,430
 $278,500
Notes Payable to Eversource Parent4,000
 
22,300
 
Long-Term Debt – Current Portion95,000
 
Accounts Payable315,875
 340,115
306,888
 384,398
Accounts Payable to Affiliated Companies78,305
 91,260
115,676
 89,636
Obligations to Third Party Suppliers101,037
 88,721
110,742
 109,547
Renewable Portfolio Standards Compliance Obligations65,361
 111,524
175,391
 139,898
Regulatory Liabilities90,222
 79,562
193,959
 190,620
Other Current Liabilities61,968
 79,916
52,156
 74,872
Total Current Liabilities1,160,578
 1,025,098
1,440,542
 1,267,471
      
Deferred Credits and Other Liabilities:      
Accumulated Deferred Income Taxes1,301,309
 1,275,814
1,305,518
 1,294,467
Regulatory Liabilities1,540,755
 1,514,451
1,514,557
 1,513,279
Accrued Pension and SERP17,624
 89,995
5,496
 14,145
Other Long-Term Liabilities209,886
 198,176
293,794
 263,096
Total Deferred Credits and Other Liabilities3,069,574
 3,078,436
3,119,365
 3,084,987
      
Long-Term Debt2,944,266
 2,943,759
2,850,196
 2,944,846
      
Preferred Stock Not Subject to Mandatory Redemption43,000
 43,000
43,000
 43,000
      
Common Stockholder's Equity:      
Common Stock
 

 
Capital Surplus, Paid In1,603,442
 1,502,942
1,653,442
 1,633,442
Retained Earnings1,948,052
 1,944,961
2,131,015
 2,098,091
Accumulated Other Comprehensive Loss(1,608) (1,823)(1,261) (1,378)
Common Stockholder's Equity3,549,886
 3,446,080
3,783,196
 3,730,155
      
Commitments and Contingencies (Note 9)

 

   
Total Liabilities and Capitalization$10,767,304

$10,536,373
$11,236,299

$11,070,459

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


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Operating Revenues$690,737
 $704,702
 $1,460,865
 $1,438,510
$797,612
 $770,127
          
Operating Expenses: 
  
  
  
 
  
Purchased Power and Transmission266,108
 231,039
 598,687
 504,891
330,104
 332,579
Operations and Maintenance102,163
 111,820
 220,844
 227,692
112,963
 118,682
Depreciation64,051
 68,477
 134,593
 135,695
72,584
 70,542
Amortization of Regulatory Assets, Net11,954
 2,623
 18,318
 7,112
22,584
 6,364
Energy Efficiency Programs65,184
 67,955
 139,978
 145,932
76,729
 74,793
Taxes Other Than Income Taxes47,627
 44,844
 95,815
 82,664
44,822
 48,186
Total Operating Expenses557,087
 526,758
 1,208,235
 1,103,986
659,786
 651,146
Operating Income133,650
 177,944
 252,630
 334,524
137,826
 118,981
Interest Expense27,359
 29,626
 53,822
 57,905
27,881
 26,464
Other Income, Net14,269
 7,096
 26,870
 15,445
11,086
 12,601
Income Before Income Tax Expense120,560
 155,414
 225,678
 292,064
121,031
 105,118
Income Tax Expense32,639
 60,431
 60,607
 113,700
27,017
 27,969
Net Income$87,921
 $94,983
 $165,071
 $178,364
$94,014
 $77,149

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Net Income$87,921
 $94,983
 $165,071
 $178,364
$94,014
 $77,149
Other Comprehensive Income, Net of Tax:          
Changes in Funded Status of SERP Benefit Plan1
 (4) 2
 (8)1
 1
Qualified Cash Flow Hedging Instruments109
 110
 218
 219
110
 109
Changes in Unrealized (Losses)/Gains on
Marketable Securities
(1) 9
 (5) 25
Changes in Unrealized Gains/(Losses) on Marketable Securities6
 (4)
Other Comprehensive Income, Net of Tax109
 115
 215
 236
117
 106
Comprehensive Income$88,030
 $95,098
 $165,286
 $178,600
$94,131
 $77,255

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



NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
 For the Three Months Ended March 31, 2019
 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, 2019200
 $
 $1,633,442
 $2,098,091
 $(1,378) $3,730,155
Net Income 
  
   94,014
   94,014
Dividends on Preferred Stock 
  
   (490)   (490)
Dividends on Common Stock 
  
   (60,600)   (60,600)
Capital Contributions from Eversource Parent 
  
 20,000
     20,000
Other Comprehensive Income 
  
     117
 117
Balance as of March 31, 2019200
 $
 $1,653,442
 $2,131,015
 $(1,261) $3,783,196
 For the Three Months Ended March 31, 2018
 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, 2018200
 $
 $1,502,942
 $1,944,961
 $(1,823) $3,446,080
Net Income 
  
   77,149
   77,149
Dividends on Preferred Stock 
  
   (490)   (490)
Dividends on Common Stock 
  
   (161,000)   (161,000)
Other 
  
   1
   1
Capital Contributions from Eversource Parent 
  
 92,500
     92,500
Other Comprehensive Income 
  
     106
 106
Balance as of March 31, 2018200
 $
 $1,595,442
 $1,860,621
 $(1,717) $3,454,346

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



NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 20172019 2018
      
Operating Activities: 
  
 
  
Net Income$165,071
 $178,364
$94,014
 $77,149
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: 
  
 
  
Depreciation134,593
 135,695
72,584
 70,542
Deferred Income Taxes29,238
 92,223
3,722
 22,542
Uncollectible Expense5,953
 7,526
Pension, SERP and PBOP Income, Net(19,785) (5,125)(4,279) (9,295)
Pension and PBOP Contributions(59,156) (15,360)(1,503) 
Regulatory Overrecoveries, Net34,090
 9,428
4,329
 17,618
Amortization of Regulatory Assets, Net18,318
 7,112
22,584
 6,364
Other(3,345) (18,883)(8,043) (9,730)
Changes in Current Assets and Liabilities: 
  
 
  
Receivables and Unbilled Revenues, Net(40,073) (28,890)(29,220) (52,949)
Materials, Supplies and Inventory45,058
 30,056
(46,020) (37,427)
Taxes Receivable/Accrued, Net(37,268) 36,030
29,483
 (22,698)
Accounts Payable(17,194) (148,773)(18,109) 43,170
Other Current Assets and Liabilities, Net(46,861) (56,345)11,466
 23,703
Net Cash Flows Provided by Operating Activities202,686
 215,532
136,961
 136,515
      
Investing Activities: 
  
 
  
Investments in Property, Plant and Equipment(356,497) (338,495)(208,540) (192,036)
Other Investing Activities31
 (3,580)17
 (654)
Net Cash Flows Used in Investing Activities(356,466) (342,075)(208,523) (192,690)
      
Financing Activities: 
  
 
  
Cash Dividends on Common Stock(161,000) (112,000)(60,600) (161,000)
Cash Dividends on Preferred Stock(980) (980)(490) (490)
Capital Contributions from Eversource Parent100,500
 1,800
20,000
 92,500
Increase/(Decrease) in Notes Payable213,810
 (108,800)
Issuance of Long-Term Debt
 350,000
Increase in Notes Payable to Eversource Parent22,300
 
Increase in Notes Payable89,930
 133,000
Other Financing Activities(158) (3,159)668
 (78)
Net Cash Flows Provided by Financing Activities152,172
 126,861
71,808
 63,932
(Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash(1,608) 318
Cash, Cash Equivalents and Restricted Cash - Beginning of Period14,708
 15,506
Cash, Cash Equivalents and Restricted Cash - End of Period$13,100
 $15,824
Increase in Cash and Restricted Cash246
 7,757
Cash and Restricted Cash - Beginning of Period14,659
 14,708
Cash and Restricted Cash - End of Period$14,905
 $22,465

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




PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
      
ASSETS      
Current Assets:      
Cash$379
 $900
$3,961
 $1,439
Receivables, Net93,735
 92,774
102,806
 104,854
Accounts Receivable from Affiliated Companies20,235
 5,297
11,520
 8,444
Unbilled Revenues40,452
 49,448
43,289
 47,145
Taxes Receivable31,701
 5,838
7,441
 25,913
Materials, Supplies and Inventory32,629
 40,285
37,361
 37,504
Regulatory Assets87,504
 130,134
76,599
 67,228
Special Deposits21,059
 47,498
Prepayments and Other Current Assets24,335
 23,093
2,940
 17,564
Assets Held for Sale59,431
 219,550
Total Current Assets390,401
 567,319
306,976
 357,589
      
Property, Plant and Equipment, Net2,763,610
 2,642,274
2,920,560
 2,880,073
      
Deferred Debits and Other Assets:      
Regulatory Assets901,718
 810,677
855,369
 862,288
Other Long-Term Assets46,448
 42,391
29,884
 27,406
Total Deferred Debits and Other Assets948,166
 853,068
885,253
 889,694
      
Total Assets$4,102,177
 $4,062,661
$4,112,789
 $4,127,356
      
LIABILITIES AND CAPITALIZATION      
Current Liabilities:      
Notes Payable to Eversource Parent$118,700
 $262,900
$61,000
 $57,000
Long-Term Debt – Current Portion
 110,000
150,000
 150,000
Rate Reduction Bonds – Current Portion30,727
 
43,210
 52,332
Accounts Payable123,717
 128,685
106,398
 111,292
Accounts Payable to Affiliated Companies26,583
 24,676
37,976
 26,029
Dividends Payable to Eversource Parent
 150,000
Renewable Portfolio Standards Compliance Obligations22,185
 27,765
Regulatory Liabilities30,023
 6,251
45,655
 55,526
Other Current Liabilities43,540
 40,159
55,088
 64,046
Total Current Liabilities395,475
 750,436
499,327
 516,225
      
Deferred Credits and Other Liabilities:      
Accumulated Deferred Income Taxes487,441
 443,468
489,434
 481,221
Regulatory Liabilities447,896
 444,397
429,932
 428,069
Accrued Pension, SERP and PBOP129,870
 124,639
122,490
 124,457
Other Long-Term Liabilities35,596
 56,689
37,956
 36,339
Total Deferred Credits and Other Liabilities1,100,803
 1,069,193
1,079,812
 1,070,086
      
Long-Term Debt893,960
 892,438
655,294
 655,173
      
Rate Reduction Bonds604,936
 
561,727
 583,331
      
Common Stockholder's Equity:      
Common Stock
 

 
Capital Surplus, Paid In538,134
 843,134
678,134
 678,134
Retained Earnings572,253
 511,382
641,039
 627,258
Accumulated Other Comprehensive Loss(3,384) (3,922)(2,544) (2,851)
Common Stockholder's Equity1,107,003
 1,350,594
1,316,629
 1,302,541
      
Commitments and Contingencies (Note 9)

 

   
Total Liabilities and Capitalization$4,102,177
 $4,062,661
$4,112,789
 $4,127,356

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



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Operating Revenues$235,146
 $230,383
 $502,497
 $483,541
$276,435
 $267,350
          
Operating Expenses:          
Purchased Power, Fuel and Transmission83,494
 60,442
 193,212
 122,189
113,531
 109,717
Operations and Maintenance46,487
 66,569
 97,867
 130,533
52,630
 51,380
Depreciation22,808
 32,447
 46,301
 63,182
22,919
 23,493
Amortization of Regulatory Assets/(Liabilities), Net8,926
 (18,937) 13,961
 (13,492)
Amortization of Regulatory Assets, Net13,667
 5,035
Energy Efficiency Programs4,674
 3,287
 9,831
 7,032
6,714
 5,157
Taxes Other Than Income Taxes21,879
 23,118
 38,680
 44,001
17,311
 16,801
Total Operating Expenses188,268
 166,926
 399,852
 353,445
226,772
 211,583
Operating Income46,878
 63,457
 102,645
 130,096
49,663
 55,767
Interest Expense14,612
 12,970
 27,386
 25,780
14,367
 12,772
Other Income, Net3,409
 1,891
 8,159
 4,703
7,022
 4,749
Income Before Income Tax Expense35,675
 52,378
 83,418
 109,019
42,318
 47,744
Income Tax Expense9,896
 20,787
 22,547
 43,116
9,537
 12,651
Net Income$25,779
 $31,591
 $60,871
 $65,903
$32,781
 $35,093

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 2017 2018 20172019 2018
          
Net Income$25,779
 $31,591
 $60,871
 $65,903
$32,781
 $35,093
Other Comprehensive Income, Net of Tax:          
Qualified Cash Flow Hedging Instruments277
 290
 567
 581
269
 290
Changes in Unrealized (Losses)/Gains on
Marketable Securities
(8) 58
 (29) 155
Changes in Unrealized Gains/(Losses) on Marketable Securities38
 (21)
Other Comprehensive Income, Net of Tax269
 348
 538
 736
307
 269
Comprehensive Income$26,048
 $31,939
 $61,409
 $66,639
$33,088
 $35,362

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



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
 For the Three Months Ended March 31, 2019
 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, 2019301
 $
 $678,134
 $627,258
 $(2,851) $1,302,541
Net Income 
  
   32,781
   32,781
Dividends on Common Stock 
  
   (19,000)   (19,000)
Other Comprehensive Income 
  
     307
 307
Balance as of March 31, 2019301
 $
 $678,134
 $641,039
 $(2,544) $1,316,629
 For the Three Months Ended March 31, 2018
 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, 2018301
 $
 $843,134
 $511,382
 $(3,922) $1,350,594
Net Income 
  
   35,093
   35,093
Other Comprehensive Income 
  
     269
 269
Balance as of March 31, 2018301
 $
 $843,134
 $546,475
 $(3,653) $1,385,956

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



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Thousands of Dollars)2018 20172019 2018
      
Operating Activities:      
Net Income$60,871
 $65,903
$32,781
 $35,093
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation46,301
 63,182
22,919
 23,493
Deferred Income Taxes41,981
 37,670
6,541
 43,021
Regulatory Underrecoveries, Net(29,816) (1,964)
Amortization of Regulatory Assets/(Liabilities), Net13,961
 (13,492)
Regulatory (Under)/Over Recoveries, Net(26,986) 129
Amortization of Regulatory Assets, Net13,667
 5,035
Other(3,428) (6,747)104
 (15,212)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net(10,510) (1,427)1,103
 (80)
Fuel, Materials, Supplies and Inventory21,803
 12,288
Materials, Supplies and Inventory144
 4,854
Taxes Receivable/Accrued, Net(15,475) (20,945)17,572
 (5,867)
Accounts Payable(4,843) 2,236
58,327
 (18,760)
Other Current Assets and Liabilities, Net(8,050) 5,422
6,472
 24,543
Net Cash Flows Provided by Operating Activities112,795
 142,126
132,644
 96,249
      
Investing Activities:      
Investments in Property, Plant and Equipment(149,925) (155,737)(110,926) (72,287)
Proceeds from the Sale of Generation Assets116,809
 

 130,641
Other Investing Activities243
 26
102
 97
Net Cash Flows Used in Investing Activities(32,873) (155,711)
Net Cash Flows (Used in)/Provided by Investing Activities(110,824) 58,451
      
Financing Activities:      
Cash Dividends on Common Stock(150,000) (23,900)(19,000) (150,000)
Capital Contribution from Eversource Parent225,000
 
Return of Capital(530,000) 
Issuance of Rate Reduction Bonds635,663
 
Retirements of Long-Term Debt(110,000) 
(Decrease)/Increase in Notes Payable to Eversource Parent(144,200) 33,200
Repayment of Rate Reduction Bonds(30,727) 
Increase in Notes Payable to Eversource Parent4,000
 8,400
Other Financing Activities(75) (150)(20) (38)
Net Cash Flows (Used in)/Provided by Financing Activities(73,612) 9,150
Net Increase/(Decrease) in Cash and Restricted Cash6,310
 (4,435)
Net Cash Flows Used in Financing Activities(45,747) (141,638)
Net (Decrease)/Increase in Cash and Restricted Cash(23,927) 13,062
Cash and Restricted Cash - Beginning of Period2,191
 5,953
52,723
 2,191
Cash and Restricted Cash - End of Period$8,501
 $1,518
$28,796
 $15,253

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




EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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 prior periods presented in this combined Quarterly Report on Form 10-Q have been retrospectively recast as if the merger occurred on the first day of the earliest reporting period.  

The unaudited condensed 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 unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."

The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC.  Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations.  The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 20172018 Form 10-K, which was filed with the SEC on February 26, 2018.2019. 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.

The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of June 30, 2018March 31, 2019 and December 31, 2017,2018, and the results of operations, and comprehensive income, for the threecommon shareholders' equity, and six months ended June 30, 2018 and 2017, and the cash flows for the sixthree months ended June 30, 2018March 31, 2019 and 2017.2018. The results of operations, and comprehensive income, for the three and six months ended June 30, 2018 and 2017 and the cash flows for the sixthree months ended June 30,March 31, 2019 and 2018 and 2017 are not necessarily indicative of the results expected for a full year.  

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

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

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

On December 22, 2017, the Tax Cuts and Jobs Act became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, this act reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. Our regulated companies have established a reserve to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal income tax rate. Eversource, CL&P, NSTAR Electric and PSNH's effective tax rate has decreased, as compared to the prior period, as a result of incurring a lower federal income tax expense, which is reflected on the statements of income for the three and six months ended June 30, 2018. See Note 16, "Revenues," for further information on the amounts reserved in revenues.



B.    Accounting Standards
Accounting Standards Issued but Not Yet Effective: In FebruaryJune 2016, the FASB issued Accounting Standards Update ("ASU"(“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Under the new guidance, immediate recognition of all credit losses expected over the life of a financial instrument is required. The new standard also revises the other-than-temporary impairment model for available-for-sale debt securities. The standard is effective January 1, 2020, and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings. The Company is assessing the impacts of this standard on the accounting for credit losses on its financial instruments, including accounts receivable.

Accounting Standards Recently Adopted: On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842),, which changesamended existing lease accounting guidance and is required to be applied in the first quarter of 2019, with earlier application permitted.guidance. The Company will implementapplied the new leases standard in the first quarter of 2019 and apply the 2016-02Topic 842 lease criteria to new leases and lease renewals entered into effective on or after January 1, 2019. The requirements of the new leases standard includeASU required balance sheet recognition of leases previously deemed to be operating leases andas well as additional disclosure requirements.  The recognition, measurement and presentation of expenses and cash flows were not significantly changed.



The Company isalso adopted the modified retrospective transition method allowed in ASU 2018-11, Leases (Topic 842) - Targeted Improvements, which allowed the process of evaluating what impactCompany to adopt the new leases standard will haveas of January 1, 2019, with prior periods presented in the financial statements continuing to follow existing lease accounting guidance under Topic 840 (Leases) in the accounting literature.  Implementation of ASU 2018-11 had no effect on retained earnings, and the requirements of the new lease standard (Topic 842) are reflected in the 2019 financial statements and footnotes.

The Company elected the practical expedient package whereby it did not need to reassess whether or not an existing contract is or contains a lease or whether a lease is an operating or capital lease, and it did not need to reassess initial direct costs for leases. Election of this practical expedient allowed us to carry forward our historical lease classifications. The Company elected the practical expedient to not reevaluate land easements existing at adoption if they were not previously accounted for as leases. The Company also elected to use the discount rate as of the January 1, 2019 implementation date to discount its operating lease liabilities. The Company did not elect the hindsight practical expedient to determine the lease term for existing leases.

The Company determined the impact the ASUs had on its financial statements includingby reviewing its lease population and determining whichidentifying lease data needed for the disclosure requirements. The Company implemented a new lease accounting system in 2019 to ensure ongoing compliance with the ASU’s requirements. Adoption of several practical expedients providedthe new standard resulted in the new guidance it will elect. Asrecording of December 31, 2017, Eversource’s total future undiscounted minimum rental payments, excluding executory costs, under long-term noncancelable operating lease liabilities and capital leases were less than $100 million.

Accounting Standards Recently Adopted: On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted ASU 2014-09, Revenue from Contracts with Customers, which amended existing revenue recognition guidance, usingright-of-use assets on the modified retrospective method (cumulatively at the date of initial application) applying it only to contracts that were not completebalance sheet upon transition at January 1, 2018. Under this method2019 of adoption, prior year reported results were not restated. Implementation of the ASU did not have a material effect on the results of operations, financial position or cash flows of Eversource, CL&P, NSTAR Electric or PSNH. See Note 16, "Revenues,"for further information.

The Company identified an item that was accounted for differently under the new revenue guidance, as compared to the previously existing guidance. As a result of applying guidance on the unit of account under the new standard, purchases of power from and sales of power to ISO-New England are now accounted for net by the hour, rather than net by the month. This change increased Operating Revenues and Purchased Power, Fuel and Transmission by $3 million and $22 million, respectively, for the three and six months ended June 30, 2018, with no impact on net income.

On January 1, 2018, Eversource adopted ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities.  The ASU removed the available-for-sale designation for equity securities, whereby changes in fair value were previously recorded in accumulated other comprehensive income within shareholders' equity, and required changes in fair value of all equity securities to be recorded in earnings effective January 1, 2018. There was no cumulative effect of adoption. Unrealized gains recorded in Other Income, Net were $0.9 million and $0.2 million for the three and six months ended June 30, 2018, respectively. For further information, see Note 5, "Marketable Securities," to the financial statements.  

On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted ASU 2017-07, Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU required separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as non-operating income and not subject to capitalization. The ASU has been applied retrospectively for the separate presentation in the income statement of service costs and other components and prospectively in the balance sheet for the capitalization of only the service cost component. As of June 30, 2018, the non-service cost components of net pension, SERP and PBOP costs that were not capitalized in plant were recorded as an increase to regulatory liabilities of approximately $20 million, as these amounts continue to be included in rates. See Note 1F, "Summary of Significant Accounting Policies - Other Income, Net," to the financial statements for the portion of pension and PBOP costs that are presented as non-operating income for the three and six months ended June 30, 2018 and 2017. For the three months ended June 30, 2017, the amounts which were previously presented within Operations and Maintenance expense on the statements of income, totaled $7.5$58.0 million at Eversource, $0.4 million at CL&P, $4.8$25.3 million at NSTAR Electric, and $1.5 million at PSNH, and have been retrospectively presented to Other Income, Net. For the six months ended June 30, 2017, these amounts were $15.5 million at Eversource, $0.9$0.6 million at CL&P, $9.8and $0.6 million at NSTAR Electric and $3.1 million at PSNH.

On January 1, 2018, Eversource, CL&P, NSTAR Electric and PSNH adopted two accounting standards relating to Implementation of the statement of cash flows; ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, and ASU 2016-18, Restricted Cash. As a result of implementing ASU 2016-15, dividends from equity method investments of $10.4 million and $9.4 million for the six months ended June 30, 2018 and 2017, respectively, are presented in operating activities at Eversource, for which the 2017 amounts were previously classified in investing activities. ASU 2016-18 required that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. Both standards were applied retrospectively, as required, and neither had a materialnew guidance did not have an impact on Eversource's, CL&P's, NSTAR Electric'seach company’s results of operations or PSNH's statements of cash flows. See Note 1H, "Summary of Significant Accounting Policies - Supplemental Cash Flow Information," to the financial statements for a reconciliation of cash and cash equivalents as reported on the balance sheet to the statement of cash flows, which includes amounts described as restricted cash and restricted cash equivalents.

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.  As of June 30, 2018,March 31, 2019, our capitalized Northern Pass project costs were approximately $297$311 million.

In MarchOn January 25, 2018, the Massachusetts EDCs terminated the selection of, and subsequent contract negotiations with, Northern Pass underwas selected as the winning bidder in the Massachusetts Clean Energy RFP, andRequest for Proposals ("RFP"). In March 2018, the New Hampshire Site Evaluation Committee ("NHSEC") issued a written decision denying Northern Pass’ siting application. The NHSEC denialapplication after which the Massachusetts EDCs revoked the selection of, Northern Pass' siting application caused us to review the recoverability of ourand terminated contract negotiations with, Northern Pass project costs inunder the first quarter of 2018. In this recoverability review, we estimated undiscounted expected project cash flows and compared the result to our estimated project costs to determine whether the recorded amount was recoverable. Our undiscounted cash flows were substantially in excess of our estimated project costs. We completed this analysis and concluded that our project costs were recoverable as of March 31, 2018, based on our expectation that the Northern Pass project remains probable of being placed in service.



Massachusetts Clean Energy RFP. On April 27, 2018, NPT filed a motion for rehearing with the NHSEC and on July 12, 2018, the NHSEC issued itsa written decision denying Northern Pass’ April 2018 motion for rehearing. These events did not require an additional review of the recoverability of project costs as of June 30, 2018. We are preparing to initiate an appeal toOn October 12, 2018, the New Hampshire Supreme Court based onaccepted an appeal filed by NPT, which alleged that the NHSEC’s failureNHSEC failed to follow applicable law in its review of the project. In parallel, Northern PassSubsequently, the NHSEC transmitted the record of its proceedings to the New Hampshire Supreme Court on December 11, 2018. Briefing of the appeal began on February 4, 2019 and concluded on April 10, 2019. The New Hampshire Supreme Court will hear oral arguments on May 15, 2019 and a decision is expected later this year. NPT intends to pursue all available optionscontinue to securepursue NHSEC approval and to construct the project.

Consistent with Eversource’s and HQ’s long-term relationship to bring clean energy into New England, Eversource and HQ remain committed to Northern Pass and the many benefits this project will bring to our customers and the region. We continue to believe that our project costs are recoverable based on our expectation that the Northern Pass project remains probable of being placed in service. If, as a result of future events and changes in circumstances, a newfuture recoverability review were to conclude that our project costs are not recoverable, then we would reduce Northern Pass' project costs to the estimated fair value, which could result in most of our $297$311 million of capitalized project costs being written off.impaired. Such a write offan impairment could have a material adverse effect on our financial position and results of operations.

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

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

The total provision for both uncollectible accounts and for uncollectible hardship accounts (the uncollectible hardship balance is included in the total provision) is included in Receivables, Net on the balance sheets, andsheets. The provision for uncollectible hardship accounts is included in the total uncollectible provision balance. The provision balances are as follows:
Total Provision for Uncollectible Accounts Uncollectible HardshipTotal Provision for Uncollectible Accounts Provision for Uncollectible Hardship Accounts
(Millions of Dollars)As of June 30, 2018 As of December 31, 2017 As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018 As of March 31, 2019 As of December 31, 2018
Eversource$211.3
 $195.7
 $126.8
 $122.5
$223.3
 $212.7
 $134.6
 $131.5
CL&P80.4
 78.9
 64.5
 65.5
93.0
 88.0
 75.2
 71.9
NSTAR Electric77.2
 69.7
 44.0
 40.3
74.8
 74.5
 40.9
 42.5
PSNH11.5
 10.5
 
 
11.0
 11.1
 
 

In accordance with new revenue accounting guidance, bad debt

Uncollectible expense associated with customers' accounts receivable included in Operations and Maintenance expense on the statements of income is presented as follows:
 For the Three Months Ended For the Six Months Ended
(Millions of Dollars)June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Eversource$9.5
 $(0.3) $29.3
 $15.7
CL&P3.8
 (4.7) 7.7
 (1.9)
NSTAR Electric3.8
 0.4
 11.3
 6.9
PSNH1.5
 1.9
 3.2
 3.6

The 2017 amounts reflect adjustments to the provision for uncollectible accounts as a result of improved accounts receivable aging from the implementation of enhanced collection efforts.
 For the Three Months Ended
(Millions of Dollars)March 31, 2019 March 31, 2018
Eversource$18.6
 $19.6
CL&P4.1
 3.9
NSTAR Electric6.0
 7.5
PSNH1.7
 1.7

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

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

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

Determination of Fair Value:  The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 11, "Fair Value of Financial Instruments," to the financial statements.

F.    Investments in Unconsolidated Affiliates
Revolution Wind and South Fork Wind: On February 8, 2019, Eversource and Ørsted entered into a 50-50 partnership for key
offshore wind assets in the Northeast. Eversource's initial payment and contribution under the terms of the partnership agreements totaled approximately $225 million for a 50 percent interest in North East Offshore LLC, which holds the Revolution Wind and South Fork Wind power projects, as well as a 257-square-mile tract off the coasts of Massachusetts and Rhode Island. This equity investment is included in long-term assets on the balance sheet and earnings impacts are included in Other Income, Net on the statement of income.

G.    Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
 For the Three Months Ended
 June 30, 2018 June 30, 2017
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Pension, SERP and PBOP Non-Service
  Income Components (1)
$14.6
 $2.4
 $9.5
 $2.1
 $7.5
 $0.4
 $4.8
 $1.5
AFUDC Equity10.9
 3.3
 3.9
 
 8.0
 2.9
 2.2
 
Equity in Earnings (2)
22.9
 
 0.4
 
 13.3
 
 (0.1) 
Investment (Loss)/Income(0.3) 0.4
 0.3
 
 (1.7) (0.4) (0.1) (0.2)
Interest Income1.9
 1.0
 0.2
 1.3
 1.9
 1.3
 0.3
 0.6
Other0.1
 
 
 
 
 
 
 
Total Other Income, Net (1)
$50.1
 $7.1
 $14.3
 $3.4
 $29.0
 $4.2
 $7.1
 $1.9
 For the Six Months Ended
 June 30, 2018 June 30, 2017
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Pension, SERP and PBOP Non-Service
  Income Components (1)
$29.8
 $5.3
 $17.9
 $4.4
 $15.5
 $0.9
 $9.8
 $3.1
AFUDC Equity20.6
 6.1
 7.3
 
 14.6
 4.8
 4.1
 
Equity in Earnings (2)
27.5
 
 0.4
 
 17.9
 
 (0.1) 
Investment Income/(Loss)0.4
 0.2
 0.9
 0.1
 (1.0) (0.6) 1.1
 0.5
Interest Income5.4
 2.0
 0.4
 3.7
 3.6
 2.4
 0.5
 1.1
Other0.2
 
 
 
 
 
 
 
Total Other Income, Net (1)
$83.9
 $13.6
 $26.9
 $8.2
 $50.6
 $7.5
 $15.4
 $4.7

 For the Three Months Ended
 March 31, 2019 March 31, 2018
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Pension, SERP and PBOP Non-Service
   Income Components
$7.4
 $(0.6) $7.0
 $0.5
 $15.2
 $3.0
 $8.4
 $2.3
AFUDC Equity10.9
 2.6
 4.0
 0.2
 9.7
 2.8
 3.4
 
Equity in Earnings5.0
 
 0.2
 
 4.6
 
 
 
Investment Income/(Loss)1.2
 1.7
 (0.3) 0.4
 0.7
 (0.1) 0.6
 
Interest Income (1)
6.5
 0.4
 0.2
 5.9
 3.5
 0.9
 0.2
 2.4
Other
 (0.2) 
 
 0.1
 
 
 
Total Other Income, Net$31.0
 $3.9
 $11.1
 $7.0
 $33.8
 $6.6
 $12.6
 $4.7
(1)
As a result of the adoption of new accounting guidance, the non-service related components of pension, SERP and PBOP benefit costs are presented as non-operating income and recorded in Other Income, Net on the statements of income. The 2017 amounts, which were previously presented within Operations and Maintenance expense on the statements of income, have been retrospectively presented within Other Income, Net for the three and six months ended June 30, 2017. Eversource elected the practical expedient in the accounting guidance that allows the Company to use the amounts disclosed in its Pension Benefits and Postretirement Benefits Other Than Pension footnote for the prior period presentations as the estimation basis for applying the retrospective presentation requirements.

(2)(1) EquitySee Note 2, "Regulatory Accounting" for interest income recognized in earnings includes $17.6 million2019 for the equity return component of unrealized gains associated with an investment in a renewable energy fund for both the three and six months ended June 30, 2018. For both the three and six months ended June 30, 2017, unrealized gainscarrying charges on this investment totaled $9.7 million.storm costs at PSNH.

G.

H.    Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are shownrecorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
For the Three Months Ended For the Six Months EndedFor the Three Months Ended
(Millions of Dollars)June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017March 31, 2019 March 31, 2018
Eversource$35.6
 $35.7
 $79.0
 $77.9
$45.0
 $43.4
CL&P31.5
 31.8
 67.1
 65.7
36.2
 35.6

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.   



SeparatelySeparate from the amounts above are $10.7 million and $12.7 million and $25.4 million of expenseamounts recorded as Taxes Other than Income Taxes infor the three and six months ended June 30,March 31, 2019 and 2018, respectively, related to the future remittance to the State of Connecticut of energy efficiency funds collected from customers in Operating Revenues to the State of Connecticut.Revenues. These amounts are shownrecorded separately, with collections in Operating Revenues and expenseswith payments in Taxes Other than Income Taxes on the Eversource and CL&P statements of income.  

H.I.    Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
(Millions of Dollars)As of June 30, 2018 As of June 30, 2017As of March 31, 2019 As of March 31, 2018
Eversource$305.7
 $172.0
$336.3
 $274.4
CL&P110.9
 85.9
121.9
 117.7
NSTAR Electric71.1
 40.1
83.2
 59.5
PSNH46.6
 20.2
30.4
 36.0

The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash cash equivalents, and restricted cash balance as reported on the statements of cash flows:
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNHEversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Cash and Cash Equivalents as reported on the Balance Sheets$64.2
 $1.8
 $0.1
 $0.4
 $38.2
 $6.0
 $1.8
 $0.9
Cash as reported on the Balance Sheets$35.1
 $7.5
 $1.8
 $4.0
 $108.1
 $87.7
 $1.6
 $1.4
Restricted cash included in:                              
Prepayments and Other Current Assets28.6
 3.5
 12.9
 4.3
 24.4
 3.1
 12.8
 0.5
45.9
 3.6
 13.0
 21.1
 72.1
 3.5
 13.0
 47.5
Marketable Securities25.8
 0.4
 0.1
 0.6
 23.3
 0.5
 0.1
 0.8
24.2
 0.3
 0.1
 0.5
 25.9
 0.4
 0.1
 0.6
Other Long-Term Assets3.2
 
 
 3.2
 
 
 
 
3.2
 
 
 3.2
 3.2
 
 
 3.2
Cash, Cash Equivalents, and Restricted Cash reported on the Statements of Cash Flows$121.8
 $5.7
 $13.1
 $8.5
 $85.9
 $9.6
 $14.7
 $2.2
Cash and Restricted Cash reported on the
Statements of Cash Flows
$108.4
 $11.4
 $14.9
 $28.8
 $209.3
 $91.6
 $14.7
 $52.7

Restricted cash included in Prepayments and Other Current Assets and Other Long-Term Assets shown above, primarily represents required ISO-NE cash deposits and cash collections related to the PSNH RRB customer charges that are held in trust.trust, and required ISO-NE cash deposits. Restricted cash included in Marketable Securities shown above, represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel removal obligations of their nuclear fuel storage facilities.

As a result of implementing new accounting guidance for the statement of cash flows, the reclassification of the change in restricted cash balances, which was previously classified as operating activities, resulted in a decrease of $22.4 million in the total cash and restricted cash change for the six months ended June 30, 2017.facilities obligations.

2.    REGULATORY ACCOUNTING

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

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



Regulatory Assets:  The components of regulatory assets were as follows:
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)Eversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNHEversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNH
Benefit Costs$2,021.6
 $455.5
 $544.8
 $178.0
 $2,068.8
 $469.2
 $560.7
 $212.3
$1,878.7
 $416.0
 $534.9
 $165.8
 $1,914.8
 $424.7
 $544.4
 $169.6
Income Taxes, Net717.6
 451.4
 112.7
 12.2
 768.9
 453.8
 113.2
 21.7
730.9
 454.3
 106.1
 8.0
 728.6
 454.4
 105.9
 8.3
Securitized Stranded Costs628.8
 
 
 628.8
 
 
 
 
597.7
 
 
 597.7
 608.4
 
 
 608.4
Deferred Costs from Generation Asset Sale
 
 
 
 516.1
 
 
 516.1
Storm Restoration Costs625.7
 326.5
 247.7
 51.5
 404.8
 216.7
 146.6
 41.5
Storm Restoration Costs, Net579.0
 307.4
 204.4
 67.2
 576.0
 302.6
 212.9
 60.5
Regulatory Tracker Mechanisms409.3
 93.4
 193.5
 102.3
 509.9
 85.3
 273.0
 116.4
317.7
 54.4
 160.2
 78.0
 316.0
 33.2
 169.1
 67.3
Derivative Liabilities369.5
 369.3
 
 
 367.2
 362.3
 
 
353.5
 353.1
 
 
 356.5
 356.5
 
 
Goodwill-related356.8
 
 306.3
 
 365.2
 
 313.6
 
344.2
 
 295.5
 
 348.4
 
 299.1
 
Asset Retirement Obligations85.9
 31.3
 40.6
 3.2
 101.0
 30.3
 39.0
 17.0
92.8
 32.8
 44.9
 3.4
 89.2
 32.3
 42.2
 3.3
Other Regulatory Assets181.1
 27.8
 70.1
 13.2
 137.4
 27.6
 78.4
 15.8
202.2
 26.4
 62.6
 11.9
 208.0
 27.0
 64.6
 12.1
Total Regulatory Assets5,396.3
 1,755.2

1,515.7

989.2

5,239.3
 1,645.2

1,524.5

940.8
5,096.7
 1,644.4

1,408.6

932.0

5,145.9
 1,630.7

1,438.2

929.5
Less: Current Portion590.9
 198.2
 244.5
 87.5
 741.9
 200.3
 333.9
 130.1
507.3
 147.7
 234.7
 76.6
 514.8
 125.2
 241.7
 67.2
Total Long-Term Regulatory Assets$4,805.4
 $1,557.0

$1,271.2

$901.7

$4,497.4
 $1,444.9

$1,190.6

$810.7
$4,589.4
 $1,496.7

$1,173.9

$855.4

$4,631.1
 $1,505.5

$1,196.5

$862.3

Securitized Stranded Costs:Storm Filings: On May 8,November 16, 2018, PSNH issued $635.7CL&P filed for recovery of $153 million of securitized RRBsstorm costs incurred from October 2017 through May 2018, with recovery over six years to financebegin May 1, 2019.  Through the unrecovered strandedcourse of the proceeding, CL&P updated its request to $145.5 million to reflect final invoicing and capitalization amounts. On April 17, 2019, PURA authorized recovery of $141.0 million as part of storm cost recovery and the remainder to be recorded to capital or other balance sheet accounts.

On March 26, 2019, the NHPUC approved the recovery of $38.1 million, plus carrying charges, of storm costs associated withincurred from December 2013 through April 2016 and the divestituretransfer of its generation assets. Securitizedfunding from PSNH’s major storm reserve to recover those costs. The costs of these storms (excluding the equity return component of the carrying charges) were deferred as regulatory assets, which are not earning anand the funding reserve collected from customers was accrued as a regulatory liability. As a result of the duration of time between incurring storm costs in December 2013 through April 2016 and final approval from the NHPUC in 2019, PSNH recognized $5.2 million (pre-tax) for the equity return are being recovered over the amortization periodcomponent of the associated RRBs. The PSNH RRBs are scheduled to amortize by February 1, 2033. The stranded costs related tocarrying charges within Other Income, Net on the difference between the carrying value and the fair value less costs to sell the thermal generation assets were reflected as a deferred coststatement of income in the table above asfirst quarter of December 31, 2017, and are now reflected2019, which has been collected from customers. Also included in the securitized stranded costs balance as of June 30, 2018.

Storms: In March and May 2018, several significant storms caused extensive damage26, 2019 NHPUC approval is a prospective requirement for PSNH to our electric distribution systems and significant customer outages across all three states. Aannually net its storm must meet certain criteria to qualify for recovery with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies for recovery, all qualifying expenses incurred during storm restoration efforts are deferred and recoveredfunding reserve collected from customers. Costs for storms that do not meet the specific criteria are expensed as incurred. The 2018 storms resulted incustomers against deferred storm restoration costs of approximately $274 million ($142 million for CL&P, $116 million for NSTAR Electric, and $16 million for PSNH) as of June 30, 2018. 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 processes.costs.

Regulatory Costs in Long-Term Assets:  Eversource's regulated companies had $124.4$129.5 million (including $24.1$41.9 million for CL&P, $49.8$52.8 million for NSTAR Electric and $30.2$13.9 million for PSNH) and $105.8$122.9 million (including $18.2$42.1 million for CL&P, $42.7$49.3 million for NSTAR Electric and $27.2$12.2 million for PSNH) of additional regulatory costs as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively, that were included in long-term assets on the balance sheets.  These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency.  However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.

Regulatory Liabilities:  The components of regulatory liabilities were as follows:
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)Eversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNHEversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNH
Excess ADIT due to Tax Cuts and Jobs Act$2,885.3
 $1,031.6
 $1,091.1
 $405.1
 $2,882.0
 $1,031.6
 $1,087.9
 $405.1
EDIT due to Tax Cuts and Jobs Act$2,871.4
 $1,030.7
 $1,096.7
 $394.6
 $2,883.0
 $1,031.0
 $1,103.7
 $396.4
Cost of Removal517.9
 34.8
 299.5
 34.9
 502.1
 23.2
 293.8
 37.9
535.0
 46.2
 313.4
 22.1
 521.0
 39.9
 307.1
 22.1
Benefit Costs131.0
 
 110.9
 
 132.3
 
 112.6
 
87.2
 
 73.6
 
 91.2
 
 76.9
 
Regulatory Tracker Mechanisms235.7
 41.0
 90.6
 29.8
 136.7
 34.6
 77.8
 5.0
332.5
 79.5
 166.7
 39.9
 309.0
 89.5
 163.7
 48.3
AFUDC - Transmission68.1
 48.1
 20.0
 
 67.1
 48.8
 18.3
 
71.4
 47.1
 24.3
 
 70.7
 47.4
 23.3
 
Revenue Subject to Refund36.5
 16.6
 3.7
 6.2
 
 
 
 
Revenue Subject to Refund due to Tax Cuts
and Jobs Act
27.0
 
 
 15.8
 24.6
 
 
 12.6
Other Regulatory Liabilities62.6
 24.8
 15.2
 1.9
 45.2
 12.9
 3.7
 2.7
88.3
 29.3
 33.9
 3.2
 80.2
 24.0
 29.2
 4.2
Total Regulatory Liabilities3,937.1
 1,196.9

1,631.0

477.9

3,765.4
 1,151.1

1,594.1

450.7
4,012.8
 1,232.8

1,708.6

475.6

3,979.7
 1,231.8

1,703.9

483.6
Less: Current Portion247.4
 72.2
 90.2
 30.0
 128.1
 39.0
 79.6
 6.3
385.4
 106.5
 194.0
 45.7
 370.2
 109.6
 190.6
 55.5
Total Long-Term Regulatory Liabilities$3,689.7
 $1,124.7

$1,540.8

$447.9

$3,637.3
 $1,112.1

$1,514.5

$444.4
$3,627.4
 $1,126.3

$1,514.6

$429.9

$3,609.5
 $1,122.2

$1,513.3

$428.1

Revenue Subject to Refund: The regulatory liability balance represents a reserve established to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Effective February 1, 2018 for NSTAR Electric and effective May 1, 2018 for CL&P, base rates charged to customers have been adjusted to reflect the new federal income tax rate. As part of CL&P's 2018 rate case settlement, a new capital tracker regulatory mechanism was established, which will include the refund of the $16.6 million reserve for the higher federal corporate income tax rate to customers between January 1, 2018 through April 30, 2018 in rates, from July 1, 2018 through December 31, 2018.



3.    PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

The following tables summarize property, plant and equipment by asset category:
EversourceAs of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)  
Distribution - Electric$14,695.7
 $14,410.5
$15,245.9
 $15,071.1
Distribution - Natural Gas3,317.1
 3,244.2
3,635.6
 3,546.2
Transmission - Electric9,601.4
 9,270.9
10,251.1
 10,153.9
Distribution - Water1,571.1
 1,558.4
1,649.5
 1,639.8
Solar (1)
107.1
 36.2
169.9
 164.1
Utility29,292.4
 28,520.2
30,952.0
 30,575.1
Other (2)(1)
706.4
 693.7
798.3
 778.6
Property, Plant and Equipment, Gross29,998.8
 29,213.9
31,750.3
 31,353.7
Less: Accumulated Depreciation      
Utility (7,049.9) (6,846.9)(7,229.5) (7,126.2)
Other(313.2) (286.9)(348.7) (336.7)
Total Accumulated Depreciation(7,363.1) (7,133.8)(7,578.2) (7,462.9)
Property, Plant and Equipment, Net22,635.7
 22,080.1
24,172.1
 23,890.8
Construction Work in Progress1,841.2
 1,537.4
1,860.7
 1,719.6
Total Property, Plant and Equipment, Net$24,476.9
 $23,617.5
$26,032.8
 $25,610.4
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)CL&P 
NSTAR
Electric
 PSNH CL&P 
NSTAR
Electric
 PSNHCL&P 
NSTAR
Electric
 PSNH CL&P 
NSTAR
Electric
 PSNH
Distribution$6,015.5
 $6,580.1
 $2,140.4
 $5,888.3
 $6,479.0
 $2,083.4
Transmission4,451.9
 3,864.3
 1,236.5
 4,239.9
 3,821.2
 1,161.3
Distribution - Electric$6,255.8
 $6,828.5
 $2,201.8
 $6,176.4
 $6,756.4
 $2,178.6
Transmission - Electric4,746.4
 4,085.6
 1,370.2
 4,700.5
 4,065.9
 1,338.7
Solar (1)

 107.1
 
 
 36.2
 

 169.9
 
 
 164.1
 
Property, Plant and Equipment, Gross10,467.4
 10,551.5
 3,376.9
 10,128.2
 10,336.4
 3,244.7
11,002.2
 11,084.0
 3,572.0
 10,876.9
 10,986.4
 3,517.3
Less: Accumulated Depreciation(2,319.5) (2,636.6) (754.5) (2,239.0) (2,550.2) (751.8)(2,328.0) (2,749.9) (789.3) (2,302.6) (2,702.0) (772.9)
Property, Plant and Equipment, Net8,147.9
 7,914.9
 2,622.4
 7,889.2
 7,786.2
 2,492.9
8,674.2
 8,334.1
 2,782.7
 8,574.3
 8,284.4
 2,744.4
Construction Work in Progress456.7
 536.0
 141.2
 381.8
 460.3
 149.4
391.7
 581.5
 137.9
 335.4
 510.3
 135.7
Total Property, Plant and Equipment, Net$8,604.6
 $8,450.9
 $2,763.6
 $8,271.0
 $8,246.5
 $2,642.3
$9,065.9
 $8,915.6
 $2,920.6
 $8,909.7
 $8,794.7
 $2,880.1

(1)
On January 10, 2018, PSNH completed the sale of its thermal generation assets, pursuant to an agreement dated October 11, 2017. PSNH expects to complete the sale of its hydroelectric generation assets, pursuant to the agreement dated October 11, 2017, in the third quarter of 2018. As of June 30, 2018 and December 31, 2017, PSNH has classified its generation assets as held for sale. See Note 10, "Assets Held for Sale," for further information.

(2) 
These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.

4.    DERIVATIVE INSTRUMENTS

The electric and natural gas companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers.  The costs associated with supplying energy to customers are recoverable from customers in future rates.  These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts.  

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

Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets.  For the electric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.  



The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets.  The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
 As of June 30, 2018 As of December 31, 2017 As of March 31, 2019 As of December 31, 2018
(Millions of Dollars)Fair Value Hierarchy 
Commodity Supply and Price Risk
Management
 
Netting (1)
 
Net Amount
Recorded as a Derivative
 Commodity Supply and Price Risk
Management
 
Netting (1)
 
Net Amount
Recorded as
a Derivative
Fair Value Hierarchy 
Commodity Supply and Price Risk
Management
 
Netting (1)
 
Net Amount
Recorded as a Derivative
 Commodity Supply and Price Risk
Management
 
Netting (1)
 
Net Amount
Recorded as
a Derivative
Current Derivative Assets:                        
CL&PLevel 3 $8.0
 $(6.0) $2.0
 $9.5
 $(7.1) $2.4
Level 3 $10.4
 $(1.9) $8.5
 $9.6
 $(3.4) $6.2
OtherLevel 2 
 
 
 1.5
 (0.9) 0.6
Long-Term Derivative Assets:                        
CL&PLevel 3 77.5
 (2.3) 75.2
 71.9
 (5.3) 66.6
Level 3 73.1
 (2.2) 70.9
 74.2
 (2.3) 71.9
Current Derivative Liabilities:                        
EversourceLevel 2 (0.4) 0.4
 
 (4.5) 
 (4.5)
CL&PLevel 3 (52.2) 
 (52.2) (54.4) 
 (54.4)Level 3 (59.7) 
 (59.7) (55.1) 
 (55.1)
OtherLevel 2 (0.4) 0.2
 (0.2) 
 
 
Long-Term Derivative Liabilities:                        
EversourceLevel 2 (0.2) 
 (0.2) (0.4) 
 (0.4)
CL&PLevel 3 (394.3) 
 (394.3) (376.9) 
 (376.9)Level 3 (372.8) 
 (372.8) (379.5) 
 (379.5)
OtherLevel 2 (0.2) 
 (0.2) 
 
 

(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.

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

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

As of June 30, 2018March 31, 2019 and December 31, 2017,2018, Eversource had New York Mercantile Exchange ("NYMEX") financial contracts for natural gas futures in order to reduce variability associated with the purchase price of 7.46.2 million and 9.512.5 million MMBtu of natural gas, respectively.

For the three months ended June 30,March 31, 2019 and 2018, and 2017, there were gainslosses of $8.6$5.2 million and losses of $4.4$36.1 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts. For the six months ended June 30, 2018 and 2017, these losses were $27.5 million and $30.9 million, respectively.

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

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

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

The following is a summary of CL&P's Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
CL&PRange Period Covered Range Period CoveredRange Period Covered Range Period Covered
Capacity Prices$4.30
  7.50
 per kW-Month 2022 - 2026 $5.00
  8.70
 per kW-Month 2021 - 2026$4.30
  7.34
 per kW-Month 2023 - 2026 $4.30
  7.44
 per kW-Month 2022 - 2026
Forward Reserve$0.95
  2.00
 per kW-Month 2018 - 2024 $1.00
  2.00
 per kW-Month 2018 - 20240.75
  1.78
 per kW-Month 2019 - 2024 0.75
  1.78
 per kW-Month 2019 - 2024



Exit price premiums of 23.7 percent through 1715.1 percent are also applied to these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts.

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

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.
CL&PFor the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
(Millions of Dollars)2018 2017 2018 20172019 2018
Derivatives, Net:          
Fair Value as of Beginning of Period$(386.5) $(413.5) $(362.3) $(420.5)$(356.5) $(362.3)
Net Realized/Unrealized Gains/(Losses) Included in Regulatory Assets and Liabilities8.6
 (0.6) (28.2) (15.2)
Net Realized/Unrealized Losses Included in Regulatory Assets(5.3) (36.9)
Settlements8.6
 19.3
 21.2
 40.9
8.7
 12.7
Fair Value as of End of Period$(369.3) $(394.8) $(369.3) $(394.8)$(353.1) $(386.5)

5.    MARKETABLE SECURITIES

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

Equity Securities: In accordance with new accounting guidance, unrealizedUnrealized gains and losses on equity securities held in Eversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. The fair value of these equity securities subject to this guidance as of June 30, 2018March 31, 2019 and December 31, 20172018 was $53.6$49.6 million and $50$44.0 million, respectively.  For the three and six months ended June 30,March 31, 2019 and 2018, there were unrealized gains of $0.9$1.0 million and $0.2unrealized losses of $0.7 million, respectively, recorded in Other Income, Net related to these equity securities.

Eversource's equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear decommissioningfuel trusts, which had fair values of $246.8$166.6 million and $263.8$200.0 million as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively.  Unrealized gains and losses for these spent nuclear decommissioningfuel trusts are subject to regulatory accounting treatment and 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.

Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
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 ValueAmortized 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$294.6
 $1.4
 $(2.6) $293.4
 $284.9
 $3.2
 $(1.1) $287.0
$212.3
 $0.9
 $(0.9) $212.3
 $190.0
 $0.4
 $(4.0) $186.4

Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear decommissioningfuel trusts in the amounts of $249.8$170.7 million and $242.3$143.9 million as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively.

Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income. There have been no significant unrealized losses, other-than-temporary impairments, or credit losses for the three and six months ended June 30, 2018March 31, 2019 and 2017.2018.  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.



As of June 30, 2018,March 31, 2019, the contractual maturities of available-for-sale debt securities were as follows:  
Eversource
(Millions of Dollars)
Amortized Cost Fair ValueAmortized Cost Fair Value
Less than one year (1)
$34.7
 $34.6
$29.7
 $29.6
One to five years47.5
 47.8
48.5
 48.5
Six to ten years58.2
 58.1
39.0
 39.4
Greater than ten years154.2
 152.9
95.1
 94.8
Total Debt Securities$294.6
 $293.4
$212.3
 $212.3

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

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

Fair Value Measurements:  The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
Eversource
(Millions of Dollars)
As of June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
Level 1:       
Mutual Funds and Equities$300.4
 $313.8
$216.2
 $244.0
Money Market Funds25.8
 23.3
24.2
 25.9
Total Level 1$326.2
 $337.1
$240.4
 $269.9
Level 2:      
U.S. Government Issued Debt Securities (Agency and Treasury)$77.9
 $70.2
$104.3
 $79.6
Corporate Debt Securities147.3
 50.9
44.7
 39.5
Asset-Backed Debt Securities14.4
 21.2
13.9
 14.0
Municipal Bonds16.3
 110.7
16.0
 19.2
Other Fixed Income Securities11.7
 10.7
9.2
 8.2
Total Level 2$267.6
 $263.7
$188.1
 $160.5
Total Marketable Securities$593.8
 $600.8
$428.5
 $430.4

U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates.  Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instruments and also incorporating yield curves, credit spreads and specific bond terms and conditions.  Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables.  Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information.  Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields.  Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.

6.    SHORT-TERM AND LONG-TERM DEBT

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt.  Eversource parent, CL&P, PSNH, NSTAR Gas and Yankee Gas are also parties to a five-year $1.45 billion revolving credit facility.facility, which terminates on December 8, 2023. The revolving credit facility terminates on December 8, 2022 and serves to backstop Eversource parent's $1.45 billion commercial paper program.  

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility.facility, which terminates on December 8, 2023. The 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 either the Eversource parent or NSTAR Electric revolving credit facilities as of June 30, 2018 or December 31, 2017. Eversource's water distribution business has a $100 million revolving credit facility, which expires on August 19, 2019, and there were no amounts outstanding as of June 30, 2018 and $76.0 million outstanding as of December 31, 2017.



The amount of borrowings outstanding and available under the commercial paper programs were as follows:
Borrowings Outstanding as of Available Borrowing Capacity as of Weighted-Average Interest Rate as ofBorrowings Outstanding as of Available Borrowing Capacity as of Weighted-Average Interest Rate as of
June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018
(Millions of Dollars)  
Eversource Parent Commercial Paper Program$747.0
 $979.3
 $703.0
 $470.7
 2.28% 1.86%$1,371.0
 $631.5
 $79.0
 $818.5
 2.69% 2.77%
NSTAR Electric Commercial Paper Program443.8
 234.0
 206.2
 416.0
 1.99% 1.55%368.4
 278.5
 281.6
 371.5
 2.49% 2.50%

There were no borrowings outstanding on either the Eversource parent or NSTAR Electric revolving credit facilities as of March 31, 2019 or December 31, 2018. Eversource's water distribution segment has a $100 million revolving credit facility, which expires on August 19, 2019, and there were no borrowings outstanding as of March 31, 2019 or December 31, 2018.

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 Eversource and NSTAR Electric balance sheets as all borrowings are outstanding for no more than 364 days at one time.  As a result of the Eversource parentCL&P long-term debt issuancesissuance on January 8, 2018,April 1, 2019, the net proceeds of which were used to repay CL&P's short-term borrowings, outstanding under its commercial paper program, $201.2$261.6 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified asto Long-Term Debt as of DecemberMarch 31, 2017.2019.

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

Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist them in meeting their short-term borrowing needs. In addition, growth in Eversource's key business initiatives requires cash infusion to those subsidiaries. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of June 30,March 31, 2019, there were intercompany loans from Eversource parent to CL&P of $261.6 million, to PSNH of $61.0 million, and to Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), of $22.3 million. As of December 31, 2018, there were intercompany loans from Eversource parent of $24.0 million to CL&P, $118.7 million to PSNH and $4.0 million to NSTAR Electric.of $57.0 million. Intercompany loans from Eversource parent to other Eversource subsidiaries primarily included $221.6 million to Eversource Service and $149.0 million to NSTAR Gas as of June 30, 2018. 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. Intercompany loans from Eversource parent to other Eversource subsidiaries primarily included $115.9 million to Eversource Service and $198.0 million to NSTAR Gas as of December 31, 2017. These intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and are classified in current liabilities on the respective subsidiary's balance sheets. Intercompany loans from Eversource parent are eliminated in consolidation on Eversource's balance sheets.

We believeAs a result of the future operating cash flows of Eversource, CL&P NSTAR Electric and PSNH, along with our existing borrowing availability and access to financial markets for the issuance of new long-term debt will be sufficientissuance on April 1, 2019, $261.6 million of CL&P's intercompany borrowings were reclassified to meet anyLong-Term Debt as of March 31, 2019. The proceeds from the CL&P April 1, 2019 debt issuance were used to repay CL&P’s short-term borrowings that were outstanding as of March 31, 2019, and to fund capital expenditures and working capital and future operating requirements, and capital investment forecast opportunities.capital.

Long-Term Debt: The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars)Issue Date Issuances/(Repayments) Maturity Date Use of Proceeds for Issuances/
Repayment Information
CL&P:       
4.00% 2018 Series A First Mortgage BondsMarch 2018 $500.0
 April 2048 Repay long-term debt due to mature in 2018 and repay short-term borrowings
5.65% 2008 Series A First Mortgage BondsMay 2008 (300.0) May 2018 Repayment at maturity paid on May 1, 2018
PSNH:       
6.00% 2008 Series O First Mortgage BondsMay 2008 (110.0) May 2018 Repayment at maturity paid on May 1, 2018
Eversource Parent:       
2.50% Series I Senior Notes (1)
January 2018 200.0
 March 2021 Repay long-term debt due to mature in 2018 and repay short-term borrowings
3.30% Series M Senior NotesJanuary 2018 450.0
 January 2028 Repay long-term debt due to mature in 2018
1.60% Series G Senior NotesJanuary 2015 (150.0) January 2018 Repayment at maturity paid on January 15, 2018
1.45% Series E Senior NotesMay 2013 (300.0) May 2018 Repayment at maturity paid on May 1, 2018
(Millions of Dollars)Issue Date Issuance/(Repayment) Maturity Date Use of Proceeds for Issuance/
Repayment Information
CL&P:       
4.00% 2018 Series A First Mortgage Bonds (1)
April 2019 $300.0
 April 2048 Repaid short-term borrowings that were used to repay long-term debt that matured on February 1, 2019 and fund capital expenditures and working capital
5.50% 2009 Series A First Mortgage BondsFebruary 2009 (250.0) February 2019 Repaid at maturity on February 1, 2019

(1) 
These notesbonds are part of the same series issued by Eversource parentCL&P in March 2016.2018. The aggregate outstanding principal amount forof these notesbonds is now $450$800 million.

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.

7.    RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES

Rate Reduction Bonds: PSNH Funding LLC 3 (PSNH Funding) is a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH. PSNH Funding was formed solely to issue rate reduction bonds (RRBs) to finance PSNH’s unrecovered stranded costs associated with the divestiture of its generation assets.

On May 8, 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035.  The RRBs are expected to maturebe repaid by February 1, 2033. RRB payments consist of principal and interest and will be paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance order issued by the NHPUC on January 30, 2018 to recover strandedremaining costs resulting from the divestiture of PSNH’s generatinggeneration assets.



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

PSNH Funding is considered a variable interest entity (VIE)VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements. The following tables summarize the impact of PSNH Funding on PSNH's balance sheetsheets and income statement:statements:
(Millions of Dollars)    
Balance Sheet:As of June 30, 2018As of March 31, 2019 As of December 31, 2018
Restricted Cash - Current Portion (included in Prepayments and Other Current Assets)$4.3
$21.1
 $47.5
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets)3.2
3.2
 3.2
Securitized Stranded Cost (included in Regulatory Assets)628.8
597.7
 608.4
Other Regulatory Assets (included in Regulatory Assets)5.4
Other Regulatory Liabilities (included in Regulatory Liabilities)10.0
 5.8
Accrued Interest (included in Other Current Liabilities)2.8
3.5
 14.4
Rate Reduction Bonds - Current Portion30.7
43.2
 52.3
Rate Reduction Bonds - Long-Term Portion604.9
561.7
 583.3
(Millions of Dollars)
Income Statement:
For the Three Months Ended June 30, 2018 For the Six Months Ended June 30, 2018
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net)$6.8
 $6.8
Interest Expense on RRB Principal (included in Interest Expense)2.8
 2.8

Variable Interest Entities - Other: The Company's variable interests outside of the consolidated group include contracts that are required by regulation and provide for regulatory recovery of contract costs and benefits through customer rates.  Eversource, CL&P and NSTAR Electric hold variable interests in VIEs through agreements with certain entities that own single renewable energy or peaking generation power plants, with other independent power producers and with transmission businesses.  Eversource, CL&P and NSTAR Electric do not control the activities that are economically significant to these VIEs or provide financial or other support to these VIEs.  Therefore, Eversource, CL&P and NSTAR Electric do not consolidate these VIEs.
(Millions of Dollars)For the Three Months Ended
Income Statement:March 31, 2019 March 31, 2018
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net)$10.6
 $
Interest Expense on RRB Principal (included in Interest Expense)5.4
 

8.    PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSION

Eversource provides defined benefit retirement plans ("Pension Plans") that cover eligible employees, including, among others, employees of CL&P, NSTAR Electric and PSNH.employees.  In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans ("SERP Plans"), which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource also provides defined benefit postretirement plans (the "PBOP("PBOP Plans") that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that metmeet certain age and service eligibility requirements.

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


 Pension and SERP
 For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost$19.3
 $4.8
 $3.9
 $2.6
 $22.7
 $5.7
 $4.7
 $2.9
Interest Cost54.2
 11.5
 11.9
 6.2
 48.4
 10.6
 10.8
 5.3
Expected Return on Pension Plan Assets(92.3) (18.8) (24.4) (10.3) (98.0) (20.8) (25.2) (10.9)
Actuarial Loss35.8
 8.1
 9.4
 3.5
 36.0
 7.4
 10.5
 3.3
Prior Service Cost1.1
 
 0.1
 
 2.2
 0.4
 0.2
 0.1
Total Net Periodic Benefit Expense$18.1
 $5.6
 $0.9
 $2.0
 $11.3
 $3.3
 $1.0
 $0.7
Intercompany AllocationsN/A
 $7.8
 $3.0
 $2.4
 N/A
 $1.4
 $1.5
 $0.5
 Pension and SERP
 For the Three Months Ended June 30, 2018 For the Three Months Ended June 30, 2017
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost$20.7
 $5.2
 $4.3
 $2.7
 $17.4
 $4.6
 $3.8
 $2.4
Interest Cost49.1
 10.5
 10.9
 5.5
 47.2
 10.5
 10.7
 5.3
Expected Return on Plan Assets(97.9) (19.4) (26.6) (10.8) (83.5) (17.8) (21.9) (10.0)
Actuarial Loss35.7
 7.1
 10.1
 3.3
 33.9
 6.8
 10.4
 3.0
Prior Service Cost2.1
 0.2
 0.1
 0.1
 1.1
 0.4
 0.2
 0.1
Total Net Periodic Benefit Expense/(Income)$9.7
 $3.6
 $(1.2) $0.8
 $16.1
 $4.5
 $3.2
 $0.8
Intercompany AllocationsN/A
 $1.5
 $1.6
 $0.5
 N/A
 $2.4
 $2.3
 $0.8
Capitalized Pension Expense$5.9
 $1.9
 $1.9
 $0.7
 $5.5
 $2.4
 $2.0
 $0.4
 Pension and SERP
 For the Six Months Ended June 30, 2018 For the Six Months Ended June 30, 2017
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost$43.1
 $11.0
 $9.0
 $5.7
 $36.4
 $9.3
 $7.8
 $4.9
Interest Cost97.8
 20.9
 21.7
 10.9
 93.5
 20.9
 21.2
 10.5
Expected Return on Plan Assets(195.8) (40.2) (51.8) (21.8) (167.0) (36.0) (44.0) (19.9)
Actuarial Loss71.8
 14.8
 20.7
 6.5
 67.5
 13.9
 20.5
 5.8
Prior Service Cost4.1
 0.6
 0.1
 0.2
 2.0
 0.7
 0.4
 0.2
Total Net Periodic Benefit Expense/(Income)$21.0
 $7.1
 $(0.3) $1.5
 $32.4
 $8.8
 $5.9
 $1.5
Intercompany AllocationsN/A
 $3.0
 $3.2
 $1.0
 N/A
 $5.0
 $4.6
 $1.7
Capitalized Pension Expense$13.4
 $4.2
 $4.0
 $1.5
 $10.9
 $4.9
 $3.7
 $0.7
 PBOP
 For the Three Months Ended June 30, 2018 For the Three Months Ended June 30, 2017
(Millions of Dollars)Eversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNH
Service Cost$2.5
 $0.4
 $0.5
 $0.3
 $2.4
 $0.5
 $0.4
 $0.3
Interest Cost6.8
 1.5
 2.2
 0.9
 6.3
 1.2
 2.0
 0.7
Expected Return on Plan Assets(16.7) (2.6) (8.1) (1.5) (16.0) (2.4) (7.2) (1.3)
Actuarial Loss1.6
 0.4
 0.4
 0.2
 2.5
 0.3
 0.8
 0.2
Prior Service Cost/(Credit)(5.7) 0.3
 (4.3) 0.1
 (5.3) 0.3
 (4.3) 0.1
Total Net Periodic Benefit Income$(11.5) $
 $(9.3) $
 $(10.1) $(0.1) $(8.3) $
Intercompany AllocationsN/A
 $(0.2) $(0.3) $(0.1) N/A
 $(0.1) $(0.2) $(0.1)
Capitalized PBOP Expense/(Income)$0.8
 $0.2
 $0.3
 $0.1
 $(4.9) $(0.1) $(4.2) $
PBOPPBOP
For the Six Months Ended June 30, 2018 For the Six Months Ended June 30, 2017For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018
(Millions of Dollars)Eversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNHEversource CL&P 
NSTAR
Electric
 PSNH Eversource CL&P 
NSTAR
Electric
 PSNH
Service Cost$5.0
 $0.9
 $1.0
 $0.6
 $4.7
 $0.9
 $0.9
 $0.6
$2.1
 $0.4
 $0.4
 $0.2
 $2.7
 $0.5
 $0.5
 $0.3
Interest Cost14.4
 2.9
 4.4
 1.6
 13.5
 2.7
 4.3
 1.5
8.1
 1.5
 2.3
 0.9
 7.6
 1.4
 2.2
 0.8
Expected Return on Plan Assets(34.8) (5.2) (16.2) (3.0) (31.9) (4.8) (14.3) (2.7)(16.6) (2.3) (7.5) (1.3) (18.1) (2.6) (8.1) (1.5)
Actuarial Loss4.4
 0.8
 1.1
 0.4
 4.6
 0.5
 1.7
 0.3
2.5
 0.4
 0.9
 0.2
 2.6
 0.3
 0.7
 0.2
Prior Service Cost/(Credit)(11.5) 0.5
 (8.5) 0.3
 (10.7) 0.5
 (8.5) 0.3
(5.8) 0.3
 (4.2) 0.1
 (5.9) 0.3
 (4.3) 0.1
Total Net Periodic Benefit Income$(22.5) $(0.1) $(18.2) $(0.1) $(19.8) $(0.2) $(15.9) $
Total Net Periodic Benefit Expense/(Income)$(9.7) $0.3
 $(8.1) $0.1
 $(11.1) $(0.1) $(9.0) $(0.1)
Intercompany AllocationsN/A
 $(0.5) $(0.7) $(0.2) N/A
 $(0.4) $(0.6) $(0.2)N/A
 $(0.1) $(0.2) $(0.1) N/A
 $(0.3) $(0.3) $(0.1)
Capitalized PBOP Expense/(Income)$1.6
 $0.4
 $0.5
 $0.2
 $(9.5) $(0.2) $(8.1) $



9.    COMMITMENTS AND CONTINGENCIES

A.    Environmental Matters
Eversource, CL&P, NSTAR Electric and PSNH are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric and PSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.

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 June 30, 2018 As of December 31, 2017As of March 31, 2019 As of December 31, 2018
Number of Sites 
Reserve
(in millions)
 Number of Sites 
Reserve
(in millions)
Number of Sites 
Reserve
(in millions)
 Number of Sites 
Reserve
(in millions)
Eversource59
 $64.9
 59
 $54.9
59
 $64.8
 60
 $64.7
CL&P14
 4.9
 14
 4.7
15
 5.6
 15
 5.4
NSTAR Electric16
 6.5
 15
 2.7
15
 10.5
 16
 10.9
PSNH9
 5.5
 10
 5.7
9
 5.3
 9
 5.4

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 $55.2$50.6 million and $49.0$50.1 million as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively, and related primarily to the natural gas business segment. The increase in the reserve balance at the MGP sites was primarily due to changes in cost estimates at sites under investigation for which additional remediation will be required.

These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site.  The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource's, CL&P's, NSTAR Electric's and PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors.  It is possible that new information or future developments could require a reassessment of the potential exposure to relatedrequired environmental matters.remediation.  As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.

B.     Long-Term Contractual Arrangements
On December 28, 2018, under Public Act 17-3, "An Act Concerning Zero Carbon Procurement," DEEP selected the Millstone Nuclear Power Station generation facility, along with smaller generation facilities, in DEEP’s zero-carbon request for proposal. CL&P and UI were directed by DEEP to enter into ten-year contracts to purchase a combined total of approximately 9 million MWh annually from the Millstone generation facility. On March 15, 2019, CL&P and UI each signed a ten-year contract with the owner of Millstone Nuclear Power Station in order to purchase a combined amount of approximately 50 percent of the facility's output (approximately 40 percent by CL&P). The Millstone Nuclear Power Station has a 2,112 MW nameplate capacity. The parties filed the contract with PURA on March 29, 2019 for review and approval. A decision from PURA is expected in the third quarter of 2019.

The significant output of the generation facility, the contract period, and the pricing will result in a significant multi-billion dollar commitment. We plan to sell the energy purchased under this contract into the market and use the proceeds from these energy sales to offset the contract costs.  As the net costs under this contract will be recovered from customers in future rates, the contract will not have an impact on the net income of CL&P.

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

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

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



Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.  The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries to external parties, as of June 30, 2018:March 31, 2019:  
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 (1)
 $185.0
 2021
Eversource Investment LLC 
Revolution Wind and South Fork Wind (1)
 $113.9
 -
Various 
Surety Bonds (2)
 42.5
 2018 - 2019 
Surety Bonds (2)
 32.0
 2019 - 2021
Eversource Service and Rocky River Realty Company Lease Payments for Vehicles and Real Estate 6.9
 2019 - 2024
Rocky River Realty Company and Eversource Service Lease Payments for Real Estate 7.3
 2024
Bay State Wind LLC Real Estate Purchase 2.5
 2019

(1) 
Eversource parent issued a declining balance guaranty on behalf of its subsidiary, Eversource Gas TransmissionInvestment LLC. Eversource parent will guarantee, as a primary obligor, the financial obligations, primarily all post-closing payment obligations of Eversource Investment LLC, to guaranteeunder the Sale and Purchase Agreement and an Irrevocable Equity Commitment Letter with Ørsted. Eversource parent's obligations under the guaranty expire upon the full, final and indefeasible 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.obligations.

(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.  

C.Eversource parent issued a declining balance guaranty on behalf of its subsidiary, Eversource Gas Transmission LLC, to guarantee the payment of the subsidiary's authorized capital contributions for its investment in the Access Northeast project. As of March 31, 2019, the amount of the Access Northeast project capital contribution guaranty was $184.8 million. On April 1, 2019, pursuant to a provision in the partnership agreement jointly entered into by Eversource, Enbridge, Inc. and National Grid plc, through Algonquin Gas Transmission, LLC, the Access Northeast project was terminated. The rights under the guaranty were released, which terminated the obligation of Eversource parent.

D.     Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric and PSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies collectfund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. These companiesCL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies have collected or are currently collectingcollect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.

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

DOE Phase IV Damages - On May 22, 2017, each of the Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal
Claims seekingClaims. The Yankee Companies sought monetary damages totaling approximately $100$104.4 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (“DOE Phase IV”). No date is setOn February 21, 2019, the Yankee Companies received a partial summary judgment and partial final judgment in their favor for the undisputed amount of monetary damages of $103.2 million. The court awarded CYAPC, YAEC and MYAPC damages of $40.7 million, $28.1 million and $34.4 million, respectively. The DOE did not appeal the court's judgment and the decision became final on April 23, 2019. The DOE Phase IV trial.trial for the $1.2 million of remaining damages is expected to begin in June 2019.

D.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, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

In response

The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to appeals of the13.1 percent. On October 16, 2014, the FERC decision inset the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint filedperiod. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the 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.

All amounts associated with the first complaint period have been refunded, which totaled $38.9 million (pre-tax and remandingexcluding interest) at Eversource and reflected both the FERC's decision. The Court found thatbase ROE and incentive cap prescribed by the FERC failed to make an explicit finding thatorder. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.

Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the 11.14second complaint period as of March 31, 2019. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE wasand 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 March 31, 2019.

On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable as required under Section 206 of the Federal Power Act, before it setand, if so, (2) how to calculate a new basereplacement ROE. The Court also found thatparties to these proceedings were directed to submit briefs on this new proposed framework and how they would apply 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 heldproposed framework in December 2017 before the FERC Administrative Law Judge ("ALJ"). On March 27, 2018, the FERC ALJ issued an initial decision in that complaint, finding that the current base ROE of 10.57 percent, which has an incentive cap ROE of 11.74 percent, is not unjust and not unreasonable. 



A summaryeach of the four separate complaintscomplaint proceedings. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.

The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those preliminary calculations indicated that for the first complaint period, for the NETOs that FERC concludes are of average financial risk, (1) a preliminary range of presumptively just and reasonable base ROEs pertinentis 9.60 percent 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 June 30, 2018
(in millions)
 FERC ALJ Recommendation of Base ROE on Second, Third and Fourth Complaints
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%   10.57%

(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. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017.

10.99 percent; (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 June 30, 2018.

On June 5, 2017, the NETOs, including Eversource, submitted a filing to the FERC to reinstate thepre-existing base ROE of 11.14 percent with an associatedis therefore unjust and unreasonable; (3) the preliminary just and reasonable base ROE is 10.41 percent; and (4) the preliminary incentive cap on total ROE is 13.08 percent.

If the results of 13.5 percent effective June 8, 2017, as these illustrative calculations were the last ROEs lawfullyincluded in effect for transmission billing purposes prior to thea final FERC order vacated byfor each of the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57complaint periods, then a 10.41 percent base ROE with an 11.74and a 13.08 percent incentive cap ROE) setwould not have a significant impact on our financial statements for all of the complaint periods.

Although the order provided illustrative calculations, FERC stated that these calculations are merely preliminary. The FERC’s preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order, as changes to the methodology by FERC are possible as a result of the parties’ arguments and calculations in the first complaint proceeding until thebriefing process. Until FERC addresses the Court’s decision. On November 6, 2017, the NETOs submittedissues a request for rehearingfinal decision on each 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 thethese 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 proceedingcomplaints, there is significant uncertainty, and resolve it based on the standards set in the April 14, 2017 Court decision.

Atat this time, the Company cannot reasonably estimate a range of gain or loss for any of the four complaint proceedings. No events in 2017The October 16, 2018 FERC order or 2018 providedthe 2019 briefs did not provide a reasonable basis for a change to the reserve balance of $39.1 million (pre-tax and excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the complaint periods.

Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order. At this time, the Company cannot predict the timing or ultimate effect of the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric or PSNH.

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

E.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"),HEEC, and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants").  The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor.  The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways.  The action also sought civil penalties and other costs.

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



In 2017, as a result of the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the Massachusetts Water Resources Authority for the new cable. This negotiated credit resulted in the initial $17.5 million of construction costs on the new cable being expensed as incurred, all of which werewas fully expensed by June 30,in 2018. Construction of the new cable is underway and is expected to be completed in 2019.

10.    ASSETS HELD FOR SALE

In June 2015, 10.     LEASES

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

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

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

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

CL&P and PSNH entered into certain contracts for the 2015 Public Service Companypurchase of New Hampshire Restructuringenergy that qualify as leases.  These contracts do not have minimum lease payments and Rate Stabilization Agreement, undertherefore are not recognized as a lease liability on 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 planbalance sheet and auction process, were receivedare not reflected in the second half of 2016.  In October 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements")future minimum lease payments table below.  Expense related to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustmentsthese contracts are included as set forthvariable lease cost in the Agreements.table below. The NHPUC approved the Agreements in late November 2017, at which time the Company classifiedexpense and long-term obligation for these assets as held for sale.

On January 10, 2018, PSNH completed the sale of its thermal generation assets, pursuant to the Purchase and Sale Agreement dated October 11, 2017. In accordance with the 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. In the second quarter of 2018, PSNH adjusted the purchase price by approximately $17 million for the thermal generation assets relating to the valuation of certain allowances, and also received amounts in escrow of $3.5 million. As a result of these adjustments, total proceeds from the sale amounted to $116.8 million.

On May 8, 2018, PSNH issued $635.7 million of securitized RRBs to finance the unrecovered stranded costs associated with the divestiture of its generation assets, which included the deferred costs resulting from the sale of the thermal generation assets. As of June 30, 2018, unamortized securitized stranded costs totaled $628.8 million andcontracts are included in Regulatory Assetsthe annually reported contractual obligations table in Note 12B, "Commitments and Contingencies - Long-Term Contractual Arrangements," of the Eversource 2018 Form 10-K.  

The components of lease cost, prior to amounts capitalized, are as follows:
 For the Three Months Ended March 31, 2019
(Millions of Dollars)Eversource CL&P NSTAR Electric PSNH
Financing Lease Cost:   ��   
Amortization of Right-of-use-Assets$0.4
 $0.2
 $
 $
Interest on Lease Liabilities0.3
 0.1
 0.3
 
Total Finance Lease Cost0.7
 0.3
 0.3
 
Operating Lease Cost3.0
 0.1
 0.5
 
Variable Lease Cost15.5
 3.5
 
 12.0
Total Lease Cost$19.2
 $3.9
 $0.8
 $12.0

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

Supplemental balance sheets.sheet information related to leases is as follows:
   As of March 31, 2019
(Millions of Dollars)Balance Sheet Classification Eversource CL&P NSTAR Electric PSNH
Operating Leases:         
Operating Lease Right-of-use-Assets, NetOther Long-Term Assets $56.7
 $0.5
 $25.1
 $0.5
Operating Lease Liabilities         
Operating Lease Liabilities - Current PortionOther Current Liabilities $9.2
 $0.3
 $0.8
 $0.1
Operating Lease Liabilities - Long-TermOther Long-Term Liabilities 47.5
 0.2
 24.3
 0.4
Total Operating Lease Liabilities  $56.7
 $0.5
 $25.1
 $0.5
Finance Leases:         
Finance Lease Right-of-use-Assets, NetProperty, Plant and Equipment, Net $8.8
 $2.9
 $3.5
 $0.9
Finance Lease Liabilities         
Finance Lease Liabilities - Current PortionOther Current Liabilities $1.9
 $1.5
 $
 $0.1
Finance Lease Liabilities - Long-TermOther Long-Term Liabilities 9.1
 2.7
 4.5
 0.8
Total Finance Lease Liabilities  $11.0
 $4.2
 $4.5
 $0.9

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



Other information related to leases is as follows (in millions of dollars, unless otherwise noted):
 For the Three Months Ended March 31, 2019
 Eversource CL&P NSTAR Electric PSNH
Weighted-Average Remaining Lease Term (Years):       
Operating Leases12
 3
 21
 8
Financing Leases11
 3
 23
 10
Weighted-Average Discount Rate (Percentage):       
Operating Leases3.8% 3.2% 4.1% 3.6%
Financing Leases4.5% 10.5% 2.9% 3.5%
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:       
Operating Cash Flows from Operating Leases$2.9
 $0.1
 $0.3
 $
Operating Cash Flows from Finance Leases0.3
 0.2
 0.1
 
Financing Cash Flows from Finance Leases0.4
 0.3
 
 
Supplemental Non-Cash Information on Lease Liabilities:       
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities1.3
 
 
 
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities1.3
 
 
 

Future minimum lease payments, excluding variable costs, under long-term leases, as of March 31, 2019 are as follows:
 Operating Leases Finance Leases

(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
April 1, 2019 through December 31, 2019$8.3
 $0.2
 $1.4
 $0.1
 $2.5
 $1.5
 $0.4
 $0.1
Year Ending December 31,               
20209.6
 0.2
 1.6
 0.1
 3.4
 2.0
 0.5
 0.1
20218.7
 
 1.6
 0.1
 2.9
 1.5
 0.5
 0.1
20227.3
 
 1.6
 0.1
 1.5
 
 0.6
 0.1
20234.8
 
 1.6
 0.1
 0.7
 
 0.6
 0.1
20242.8
 
 1.7
 0.1
 0.7
 
 0.6
 0.1
Thereafter29.7
 0.1
 29.4
 0.1
 13.2
 
 12.8
 0.4
Future lease payments71.2
 0.5
 38.9
 0.7
 24.9
 5.0
 16.0
 1.0
Less amount representing interest14.5
 
 13.8
 0.2
 13.9
 0.8
 11.5
 0.1
Present value of future minimum lease payments$56.7
 $0.5
 $25.1
 $0.5
 $11.0
 $4.2
 $4.5
 $0.9

At December 31, 2017, the deferred2018, future minimum rental payments, excluding executory costs, resulting from the thermal generation asset sale of $516.1 million represented the difference between the carrying valuesuch as property taxes, state use taxes, insurance, and the fair value less cost to sell the thermal generation assets.

On July 16, 2018, FERC issued its order approving the transfer of PSNH's six hydro licenses to the private investors. The order includes a 30-day rehearing period. PSNH expects to complete the sale of its hydroelectric generation assets in the third quarter of 2018 at an amount above net carrying value, and the assets are therefore stated at carrying value. As of June 30, 2018, the difference between the carrying value of the hydroelectric generation assets and the anticipated sale proceeds was $23.2 million. The estimated gain from the sale of these assets was included in the amount of stranded costs securitized.

Full recovery of the costs of PSNH's generation assets and transaction-related expenses is expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs primarily via the issuance of bonds that are secured by a non-bypassable charge billed to PSNH's customers. For further information on the securitized RRB issuance, see Note 7, "Rate Reduction Bonds and Variable Interest Entities."

For the three and six months ended June 30, 2018, pre-tax income associated with the hydroelectric assets held for sale was $3.3 million and $9.2 million, respectively. For the three and six months ended June 30, 2017, pre-tax income associated with PSNH's generation assets was $15.3 million and $30.1 million, respectively.

As of June 30, 2018 and December 31, 2017, PSNH's generation assets held for sale, which are included in current assets on the Eversource and PSNH balance sheets, and are part of the Electric Distribution reportable segment,maintenance were as follows:
(Millions of Dollars)As of June 30, 2018 As of December 31, 2017
Thermal Gross Plant$
 $1,091.4
Hydroelectric Gross Plant86.8
 83.0
Accumulated Depreciation(27.5) (575.4)
Net Plant59.3
 599.0
Fuel and Inventory
 87.7
Materials and Supplies0.1
 27.3
Emissions Allowances
 19.1
Other Assets
 2.6
Deferred Costs from Thermal Generation Asset Sale
 (516.1)
Total Generation Assets Held for Sale$59.4
 $219.6
Operating Leases
(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH
2019$11.5
 $1.5
 $7.2
 $0.5
20209.8
 1.4
 6.0
 0.4
20218.7
 1.2
 5.3
 0.4
20227.2
 1.1
 4.4
 0.4
20234.7
 0.5
 3.1
 0.2
Thereafter32.7
 0.2
 29.5
 0.3
Future minimum lease payments$74.6
 $5.9
 $55.5
 $2.2
Capital Leases
(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH
2019$3.4
 $2.0
 $0.5
 $0.1
20203.4
 2.0
 0.5
 0.1
20212.9
 1.5
 0.5
 0.1
20221.5
 
 0.6
 0.1
20230.7
 
 0.6
 0.1
Thereafter13.9
 
 13.4
 0.5
Future minimum lease payments25.8
 5.5
 16.1
 1.0
Less amount representing interest13.8
 1.0
 12.4
 0.1
Present value of future minimum lease payments$12.0
 $4.5
 $3.7
 $0.9



11.    FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Preferred Stock, Long-Term Debt and Rate Reduction Bonds:  The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections.  The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields.  The fair values provided in the table below are classified as Level 2 within the fair value hierarchy.  Carrying amounts and estimated fair values are as follows:
Eversource CL&P NSTAR Electric PSNHEversource 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
 
Carrying
Amount
 
Fair
Value
As of June 30, 2018:               
As of March 31, 2019:               
Preferred Stock Not Subject to Mandatory Redemption$155.6
 $156.4
 $116.2
 $113.9
 $43.0
 $42.5
 $
 $
$155.6
 $157.1
 $116.2
 $114.2
 $43.0
 $42.9
 $
 $
Long-Term Debt12,396.6
 12,501.7
 3,253.3
 3,473.3
 2,944.3
 3,019.9
 894.0
 909.0
13,089.8
 13,519.6
 3,265.8
 3,538.0
 2,945.2
 3,107.3
 805.3
 831.1
Rate Reduction Bonds635.7
 638.3
 
 
 
 
 635.7
 638.3
604.9
 623.3
 
 
 
 
 604.9
 623.3
                              
As of December 31, 2017:               
As of December 31, 2018:               
Preferred Stock Not Subject to Mandatory Redemption$155.6
 $160.8
 $116.2
 $116.5
 $43.0
 $44.3
 $
 $
$155.6
 $156.8
 $116.2
 $113.8
 $43.0
 $43.0
 $
 $
Long-Term Debt12,325.5
 12,877.1
 3,059.1
 3,430.5
 2,943.8
 3,156.5
 1,002.4
 1,038.2
13,086.1
 13,154.9
 3,254.0
 3,429.2
 2,944.8
 3,024.1
 805.2
 819.5
Rate Reduction Bonds635.7
 645.8
 
 
 
 
 635.7
 645.8

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

12.    ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in accumulated other comprehensive income/(loss) by component, net of tax, isare as follows:
For the Six Months Ended June 30, 2018 For the Six Months Ended June 30, 2017For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018
Eversource
(Millions of Dollars)
Qualified
Cash Flow
Hedging
Instruments
 
Unrealized
Losses on
Marketable
Securities
 
Defined
Benefit Plans
 Total 
Qualified
Cash Flow
Hedging
Instruments
 
Unrealized
Gains 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
Losses on
Marketable
Securities
 
Defined
Benefit Plans
 Total
Balance as of Beginning of Period$(6.2) $
 $(60.2) $(66.4) $(8.2) $0.4
 $(57.5) $(65.3)
Balance as of January 1st$(4.4) $(0.5) $(55.1) $(60.0) $(6.2) $
 $(60.2) $(66.4)
                              
OCI Before Reclassifications
 (0.6) 2.6
 2.0
 
 2.6
 (3.5) (0.9)
 0.7
 
 0.7
 
 (0.4) 
 (0.4)
Amounts Reclassified from AOCI1.2
 
 2.2
 3.4
 1.1
 
 2.2
 3.3
0.3
 
 1.2
 1.5
 0.7
 
 3.0
 3.7
Net OCI1.2
 (0.6) 4.8
 5.4
 1.1
 2.6
 (1.3) 2.4
0.3
 0.7
 1.2
 2.2
 0.7
 (0.4) 3.0
 3.3
Balance as of End of Period$(5.0) $(0.6) $(55.4) $(61.0) $(7.1) $3.0
 $(58.8) $(62.9)
Balance as of March 31st$(4.1) $0.2
 $(53.9) $(57.8) $(5.5) $(0.4) $(57.2) $(63.1)

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 AOCI and is being amortized into Net Income over the term of the underlying debt instrument.  CL&P, NSTAR Electric and PSNH continue to amortize interest rate swaps settled in prior years from AOCI 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 that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI. For further information, see Note 1F, "Summary of Significant Accounting Policies - Other Income, Net," and Note 8, "Pension Benefits and Postretirement Benefits Other Than Pension."



13.    COMMON SHARES

The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric and PSNH that were authorized and issued, as well as the respective per share par values:  
SharesShares
  Authorized as of June 30, 2018 and Issued as of  Authorized as of March 31, 2019 and December 31, 2018 Issued as of
Par Value December 31, 2017 June 30, 2018 December 31, 2017Par Value March 31, 2019 December 31, 2018
Eversource$5
 380,000,000
 333,878,402
 333,878,402
$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
 200
 200
$1
 100,000,000
 200
 200
PSNH$1
 100,000,000
 301
 301
$1
 100,000,000
 301
 301

As of both June 30, 2018March 31, 2019 and December 31, 2017,2018, there were 16,530,932 and 16,992,594 Eversource common shares held as treasury shares.shares, respectively. As of both June 30, 2018March 31, 2019 and December 31, 2017, there were 316,885,8082018, Eversource common shares outstanding.outstanding were 317,347,470 and 316,885,808, respectively.

Beginning in 2019, Eversource began issuing treasury shares to satisfy awards under the Company's incentive plan, shares issued under the dividend reinvestment plan, and matching contributions under the Eversource 401k Plan.

14.    COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for each of the three months ended June 30, 2018March 31, 2019 and 2017 and $3.8 million for each of the six months ended June 30, 2018 and 2017.2018. 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 June 30, 2018March 31, 2019 and December 31, 2017.2018. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to theEversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.

15.    EARNINGS PER SHARE

Basic EPS is computed based upon the weighted average number of common shares outstanding during each period.  Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into common shares.  The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method.  RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied.  

The following table sets forth the components of basic and diluted EPS:
Eversource
(Millions of Dollars, except share information)
For the Three Months Ended For the Six Months EndedFor the Three Months Ended
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017March 31, 2019 March 31, 2018
Net Income Attributable to Common Shareholders$242.8
 $230.7
 $512.3
 $490.2
$308.7
 $269.5
Weighted Average Common Shares Outstanding:          
Basic317,344,596
 317,391,365
 317,370,825
 317,427,258
317,624,593
 317,397,052
Dilutive Effect540,591
 555,829
 568,269
 608,606
691,489
 595,947
Diluted317,885,187
 317,947,194
 317,939,094
 318,035,864
318,316,082
 317,992,999
Basic and Diluted EPS$0.76
 $0.72
 $1.61
 $1.54
$0.97
 $0.85



16.    REVENUES

On January 1, 2018, Eversource, including CL&P, NSTAR Electric and PSNH, adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” using the modified retrospective approach.The core principle of this accounting guidance is that revenue is recognized when promised goods or services (referred to as performance obligations) are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard uses a five-step model for recognizing and measuring revenue from contracts with customers, which includes identifying the contract with the customer, identifying the performance obligations promised within the contract, determining the transaction price (the amount of consideration to which the company expects to be entitled), allocating the transaction price to the performance obligations and recognizing revenue when (or as) the performance obligation is satisfied.

The following table presentstables present operating revenues disaggregated by revenue source:
 For the Three Months Ended June 30, 2018
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Revenue from Contracts with Customers             
Retail Tariff Sales             
Residential$794.4
 $104.1
 $
 $32.3
 $
 $
 $930.8
Commercial622.0
 70.0
 
 15.7
 
 (2.0) 705.7
Industrial88.4
 23.5
 
 1.1
 
 (2.4) 110.6
Total Retail Tariff Sales Revenue1,504.8

197.6
 
 49.1


 (4.4) 1,747.1
Wholesale Transmission Revenue
 
 310.8
 
 12.6
 (268.0) 55.4
Wholesale Market Sales Revenue34.2
 12.1
 
 0.9
 
 
 47.2
Other Revenue from Contracts with Customers18.4
 (0.6) 3.2
 1.9
 224.4
 (225.1) 22.2
Reserve for Revenue Subject to Refund(7.3) (3.5) 
 (0.5) 
 
 (11.3)
Total Revenue from Contracts with Customers1,550.1

205.6
 314.0
 51.4

237.0
 (497.5) 1,860.6
Alternative Revenue Programs(14.4) 0.1
 3.4
 1.9
 
 (2.9) (11.9)
Other Revenue4.2
 0.8
 
 0.2
 
 
 5.2
Total Operating Revenues$1,539.9

$206.5
 $317.4
 $53.5

$237.0
 $(500.4) $1,853.9
 For the Three Months Ended March 31, 2019
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Revenues from Contracts with Customers             
Retail Tariff Sales             
Residential$1,033.3
 $258.9
 $
 $27.0
 $
 $
 $1,319.2
Commercial652.6
 143.8
 
 14.3
 
 (1.1) 809.6
Industrial82.1
 30.9
 
 1.1
 
 (2.7) 111.4
Total Retail Tariff Sales Revenues1,768.0

433.6
 
 42.4


 (3.8) 2,240.2
Wholesale Transmission Revenues
 
 324.9
 
 13.5
 (270.8) 67.6
Wholesale Market Sales Revenues51.5
 21.7
 
 1.0
 
 
 74.2
Other Revenues from Contracts with Customers12.6
 0.9
 3.2
 1.7
 244.6
 (245.4) 17.6
Reserve for Revenues Subject to Refund(3.1) 1.6
 
 (0.8) 
 
 (2.3)
Total Revenues from Contracts with Customers1,829.0

457.8
 328.1
 44.3

258.1
 (520.0) 2,397.3
Alternative Revenue Programs2.1
 10.4
 12.4
 0.9
 
 (11.1) 14.7
Other Revenues (1)
2.8
 0.7
 
 0.3
 
 
 3.8
Total Operating Revenues$1,833.9

$468.9
 $340.5
 $45.5

$258.1
 $(531.1) $2,415.8
 For the Six Months Ended June 30, 2018
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Revenue from Contracts with Customers             
Retail Tariff Sales             
Residential$1,788.7
 $352.9
 $
 $59.7
 $
 $
 $2,201.3
Commercial1,233.4
 204.7
 
 30.0
 
 (2.1) 1,466.0
Industrial169.9
 53.1
 
 2.1
 
 (5.0) 220.1
Total Retail Tariff Sales Revenue3,192.0
 610.7
 
 91.8
 
 (7.1) 3,887.4
Wholesale Transmission Revenue
 
 624.5
 
 22.7
 (526.7) 120.5
Wholesale Market Sales Revenue92.7
 29.9
 
 1.7
 
 
 124.3
Other Revenue from Contracts with Customers35.3
 (0.9) 6.2
 3.7
 445.2
 (446.3) 43.2
Reserve for Revenue Subject to Refund(26.5) (8.0) 
 (2.0) 
 
 (36.5)
Total Revenue from Contracts with Customers3,293.5
 631.7
 630.7
 95.2
 467.9
 (980.1) 4,138.9
Alternative Revenue Programs(5.7) (1.7) (8.3) 2.6
 
 7.7
 (5.4)
Other Revenue6.7
 1.4
 
 0.2
 
 
 8.3
Total Operating Revenues$3,294.5
 $631.4
 $622.4
 $98.0
 $467.9
 $(972.4) $4,141.8


 For the Three Months Ended March 31, 2018
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Revenues from Contracts with Customers             
Retail Tariff Sales             
Residential$994.4
 $248.9
 $
 $26.4
 $
 $
 $1,269.7
Commercial611.4
 134.7
 
 13.8
 
 
 759.9
Industrial81.5
 29.5
 
 1.0
 
 (2.5) 109.5
Total Retail Tariff Sales Revenues1,687.3
 413.1
 
 41.2
 
 (2.5) 2,139.1
Wholesale Transmission Revenues
 
 313.6
 
 10.1
 (258.7) 65.0
Wholesale Market Sales Revenues58.5
 17.8
 
 0.8
 
 
 77.1
Other Revenues from Contracts with Customers16.0
 (0.6) 3.1
 4.0
 220.8
 (221.4) 21.9
Reserve for Revenues Subject to Refund(19.3) (4.5) 
 (2.2) 
 
 (26.0)
Total Revenues from Contracts with Customers1,742.5
 425.8
 316.7
 43.8
 230.9
 (482.6) 2,277.1
Alternative Revenue Programs8.7
 (1.7) (11.7) 0.7
 
 10.6
 6.6
Other Revenues3.4
 0.8
 
 0.1
 
 
 4.3
Total Operating Revenues$1,754.6
 $424.9
 $305.0
 $44.6
 $230.9
 $(472.0) $2,288.0
For the Three Months Ended June 30, 2018 For the Six Months Ended June 30, 2018For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018
(Millions of Dollars)CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNHCL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH
Revenue from Contracts with Customers           
Revenues from Contracts with Customers           
Retail Tariff Sales                      
Residential$387.1
 $292.5
 $114.8
 $870.4
 $656.7
 $261.6
$510.5
 $371.0
 $151.8
 $483.4
 $364.2
 $146.8
Commercial220.7
 325.5
 76.2
 443.2
 640.0
 151.1
236.7
 336.5
 79.8
 222.5
 314.4
 74.9
Industrial36.5
 30.9
 21.0
 72.3
 59.0
 38.6
34.6
 28.8
 18.7
 35.8
 28.1
 17.6
Total Retail Tariff Sales Revenue644.3
 648.9
 212.0
 1,385.9
 1,355.7
 451.3
Wholesale Transmission Revenue139.9
 120.9
 50.1
 290.6
 239.5
 94.3
Wholesale Market Sales Revenue10.6
 13.4
 10.9
 21.0
 38.2
 34.9
Other Revenue from Contracts with Customers8.3
 9.3
 3.9
 16.2
 18.3
 7.5
Reserve for Revenue Subject to Refund(4.2) 
 (3.1) (16.6) (3.7) (6.2)
Total Revenue from Contracts with Customers798.9
 792.5
 273.8
 1,697.1
 1,648.0
 581.8
Total Retail Tariff Sales Revenues781.8
 736.3
 250.3
 741.7
 706.7
 239.3
Wholesale Transmission Revenues154.8
 122.6
 47.5
 150.8
 118.6
 44.2
Wholesale Market Sales Revenues13.7
 24.4
 13.4
 10.3
 24.9
 24.1
Other Revenues from Contracts with Customers8.9
 4.0
 3.6
 7.5
 8.3
 3.5
Reserve for Revenues Subject to Refund
 
 (3.1) (12.5) (3.7) (3.1)
Total Revenues from Contracts with Customers959.2
 887.3
 311.7
 897.8
 854.8
 308.0
Alternative Revenue Programs1.0
 (6.9) (5.0) (4.1) (0.2) (9.6)5.7
 7.3
 1.5
 (5.1) 6.7
 (4.6)
Other Revenue2.4
 1.6
 0.2
 3.3
 2.7
 0.6
Other Revenues (1)
1.0
 1.5
 0.3
 1.3
 1.7
 0.4
Eliminations(107.4) (96.5) (33.9) (216.4) (189.6) (70.3)(116.7) (98.5) (37.1) (109.0) (93.1) (36.4)
Total Operating Revenues$694.9
 $690.7
 $235.1
 $1,479.9
 $1,460.9
 $502.5
$849.2
 $797.6
 $276.4
 $785.0
 $770.1
 $267.4

Retail Tariff Sales: (1) Regulated utilities provide products and services to their regulated customers under rates, pricing, payment terms and conditions of service, regulated by each state regulatory agency. The arrangement whereby a utility provides commodity service to a customer for a price approved by the respective state regulatory commission is referred to as a tariff sale contract, and the tariff governs all aspects of the provision of regulated services by utilities. The majority of revenue for Eversource, CL&P, NSTAR Electric and PSNH is derived from regulated retail tariff sales for the sale and distribution of electricity, natural gas and water to residential, commercial and industrial retail customers.

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

In regulated tariff sales, the transaction prices are the rates approved by the respective state regulatory commissions.  In general, rates can only be changed through formal proceedings with the state regulatory commissions. These rates are designed to recover the costs to provide service to customers and include a return on investment. Regulatory commission-approved tracking mechanisms are included in these rates and are also used to recover, on a fully-reconciling basis, certain costs, such as the procurement of energy supply, retail transmission charges, energy efficiency program costs, net metering for distributed generation, and restructuring and stranded costs. These tracking mechanisms result in rates being changed periodically to ensure recovery of actual costs incurred.

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

Wholesale Transmission Revenues:  The Eversource electric transmission-owning companies (CL&P, NSTAR Electric and PSNH) each own and maintain transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. CL&P, NSTAR Electric and PSNH, as well as most other New England utilities, are parties to a series of agreements that provide for coordinated planning and operation of the region's transmission facilities and the rules by which they acquire transmission services.  The Eversource electric transmission-owning companies have a combination of FERC-approved regional and local formula rates that work in tandem to recover all their transmission costs. These rates are part of the ISO-NE Tariff. Regional rates recover the costs of higher voltage transmission facilities that benefit the region and are collected from all New England transmission customers, including the Eversource distribution businesses. Eversource's local rates recover the companies' total transmission revenue requirements, less revenues received from regional rates and other sources, and are collected from Eversource's distribution businesses and other transmission customers. The distribution businesses of Eversource, in turn, recover the FERC approved charges from retail customers through annual or semiannual tracking mechanisms, which are retail tariff sales.

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



Wholesale Market Sales Revenues: Wholesale market sales transactions include sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and also the sale of RECs to various counterparties. ISO-NE oversees the region's wholesale electricity market and administers the transactions and terms and conditions, including payment terms, which are established in the ISO-NE tariff, between the buyers and sellers in the market. Pricing is set by the wholesale market. The wholesale transactions in the ISO-NE market occur on a day-ahead basis or a real-time basis (daily) and are, therefore, short-term. Transactions are tracked and reported by ISO-NE net by the hour, which is the net hourly position of energy sales and purchases by each market participant. Beginning in the first quarter of 2018, the performance obligation for ISO-NE energy transactions is defined to be the net by hour transaction. Revenue is recognized when the performance obligation for these energy sales transactions is satisfied, when the sale occurs and the energy is transferred to the customer. For sales of natural gas, transportation, and natural gas pipeline capacity to third party marketers, revenue is recognized when the performance obligation is satisfied at the point in time the sale occurs and the natural gas or related product is transferred to the marketer. RECs are sold to various counterparties, and revenue is recognized when the performance obligation is satisfied upon transfer of title to the customer through the New England Power Pool Generation Information System.

Other Revenue from Contracts with Customers: Other revenue from contracts with customers primarily includes property rentals that are not deemed leases. These revenues are generally recognized on a straight-line basis over time as the service is provided to the customer.

Reserve for Revenue Subject to Refund: Current base rates include an estimate of income taxes, which was based on the U.S. federal corporate income tax rate in effect at the time of the rate proceeding. Eversource established a reserve, recorded as a reduction to revenue, to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Eversource expects to refund these amounts to customers through various rate mechanisms in the future, depending on regulatory outcomes. Effective February 1, 2018, NSTAR Electric's base rates charged to customers have been adjusted to reflect the new federal income tax rate, effective May 1, 2018, CL&P's rates charged to customers reflect the new income tax rate and effective July 1, 2018, NSTAR Gas' rates reflect the new income tax rate.

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

Eversource’s ARPs include the revenue decoupling mechanism and the annual reconciliation adjustment to transmission formula rates, described below.

Certain Eversource electric, natural gas and water companies, including CL&P and NSTAR Electric, have revenue decoupling mechanisms approved by a regulatory commission ("decoupled companies"). Decoupled companies’ distribution revenues are not directly based on sales volumes. The decoupled companies reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues, with any difference between the allowed level of distribution revenue and the actual amount realized adjusted through subsequent rates.

The transmission formula rates provide for the annual reconciliation and recovery or refund of estimated costs to actual costs.  The financial impacts of differences between actual and estimated costs are deferred for future recovery from, or refund to, transmission customers.  This transmission deferral reconciles billed transmission revenues to the revenue requirement for our transmission businesses.

Other Revenues:Other Revenues include certain fees charged to customers, and lease revenue thatwhich are not considered revenue from contracts with customers. Other revenues also includes lease revenues under lessor accounting guidance of $1.0 million at Eversource, $0.2 million at CL&P, and $0.6 million at NSTAR Electric for the three months ended March 31, 2019.

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

Receivables: Receivables, Net on the balance sheet include trade receivables from our retail customers and receivables arising from ISO-NE billing related to wholesale transmission contracts and wholesale market transactions, sales of natural gas and capacity to marketers, sales of RECs, and property rentals. In general, retail tariff customers and wholesale transmission customers are billed monthly and the payment terms are generally due and payable upon receipt of the bill.

Unbilled Revenues on the balance sheet represent estimated amounts due from retail customers for electricity, natural gas or water delivered to customers but not yet billed. The utility company has satisfied its performance obligation and the customer has received and consumed the commodity as of the balance sheet date, and therefore, the utility company records revenue for those services in the period the services were provided. Only the passage of time is required before the company is entitled to payment for the satisfaction of the performance obligation. Payment from customers is due monthly as services are rendered and amounts are billed. Actual amounts billed to customers when meter readings become available may vary from the estimated amount.



Unbilled revenues are recognized by allocating estimated unbilled sales volumes to the respective customer classes, and then applying an estimated rate by customer class to those sales volumes. Unbilled revenue estimates reflect seasonality, weather, customer usage patterns, customer rates in effect for customer classes, and the timing of customer billing. The companies that have a decoupling mechanism record a regulatory deferral to reflect the actual allowed amount of revenue associated with their respective decoupled distribution rate design.

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

17.    SEGMENT INFORMATION

Presentation:Eversource is organized amonginto the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates.  These reportable segments represent substantially all of Eversource's total consolidated revenues.  Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer.  The Electric Distribution reportable segment includes the results of PSNH's generation facilities prior to sales in January and August 2018, and NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources. On December 4, 2017, Eversource acquired Aquarion, which was considered to be a new operating segment, water distribution. Though the water distribution segment does not meet quantitative thresholds under the segment reporting accounting guidance, based on qualitative factors including the nature of the water distribution business, Water Distribution was deemed a reportable segment beginning in the first quarter of 2018.
 
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) Eversource Water Ventures, Inc., parent company of Aquarion, and 4)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 certainthat are not consolidated, which include a natural gas pipeline projectsproject owned by Enbridge, Inc., the Bay State Wind project,offshore wind business, 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 projectsproject 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.

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

Eversource's segment information is as follows:
For the Three Months Ended June 30, 2018 (1)
For the Three Months Ended March 31, 2019
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Operating Revenues$1,539.9
 $206.5
 $317.4
 $53.5
 $237.0
 $(500.4) $1,853.9
$1,833.9
 $468.9
 $340.5
 $45.5
 $258.1
 $(531.1) $2,415.8
Depreciation and Amortization(135.5) (19.3) (57.0) (12.2) (11.9) 0.6
 (235.3)(179.2) (20.4) (61.5) (11.8) (13.6) 0.6
 (285.9)
Other Operating Expenses(1,233.0) (170.6) (88.8) (24.5) (211.7) 501.4
 (1,227.2)(1,475.6) (341.3) (98.8) (25.0) (225.5) 531.0
 (1,635.2)
Operating Income$171.4
 $16.6
 $171.6
 $16.8
 $13.4
 $1.6
 $391.4
$179.1
 $107.2
 $180.2
 $8.7
 $19.0
 $0.5
 $494.7
Interest Expense$(52.1) $(11.4) $(30.0) $(8.6) $(32.3) $8.0
 $(126.4)$(49.2) $(11.7) $(30.6) $(8.6) $(44.2) $12.6
 $(131.7)
Other Income/(Loss), Net19.0
 1.6
 9.9
 (0.6) 302.0
 (281.8) 50.1
Net Income Attributable to Common Shareholders101.3
 5.0
 112.7
 7.2
 288.8
 (272.2) 242.8
             
For the Six Months Ended June 30, 2018 (1)
Eversource
(Millions of Dollars)
Electric Distribution Natural Gas Distribution Electric Transmission Water Distribution Other Eliminations Total
Operating Revenues$3,294.5
 $631.4
 $622.4
 $98.0
 $467.9
 $(972.4) $4,141.8
Depreciation and Amortization(279.9) (45.7) (113.5) (22.9) (23.9) 1.1
 (484.8)
Other Operating Expenses(2,676.5) (483.2) (172.0) (48.4) (416.3) 973.3
 (2,823.1)
Operating Income$338.1
 $102.5
 $336.9
 $26.7
 $27.7
 $2.0
 $833.9
Interest Expense$(99.5) $(22.5) $(59.7) $(16.9) $(64.3) $15.4
 $(247.5)
Other Income/(Loss), Net38.6
 3.5
 17.8
 (1.1) 662.1
 (637.0) 83.9
Other Income, Net18.2
 0.2
 8.1
 0.4
 431.7
 (427.6) 31.0
Net Income Attributable to Common Shareholders205.5
 62.8
 220.1
 8.7
 634.8
 (619.6) 512.3
120.1
 76.5
 118.2
 0.9
 407.5
 (414.5) 308.7
Cash Flows Used for Investments in Plant475.6
 150.3
 508.5
 40.2
 77.1
 
 1,251.7
279.3
 87.4
 231.4
 20.7
 55.9
 
 674.7
For the Three Months Ended June 30, 2017For the Three Months Ended March 31, 2018
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Operating Revenues$1,275.9
 $186.0
 $324.6
 $
 $217.0
 $(240.7) $1,762.8
$1,754.6
 $424.9
 $305.0
 $44.6
 $230.9
 $(472.0) $2,288.0
Depreciation and Amortization(105.4) (17.9) (51.4) 
 (7.9) 0.5
 (182.1)(144.4) (26.4) (56.6) (10.7) (12.0) 0.6
 (249.5)
Other Operating Expenses(931.9) (150.8) (94.9) 
 (196.0) 241.1
 (1,132.5)(1,443.5) (312.6) (83.2) (23.9) (204.7) 471.9
 (1,596.0)
Operating Income$238.6
 $17.3
 $178.3
 $
 $13.1
 $0.9
 $448.2
$166.7
 $85.9
 $165.2
 $10.0
 $14.2
 $0.5
 $442.5
Interest Expense$(49.4) $(10.9) $(28.9) $
 $(21.6) $3.5
 $(107.3)$(47.4) $(11.1) $(29.7) $(8.4) $(31.9) $7.4
 $(121.1)
Other Income, Net9.1
 0.9
 6.8
 
 257.7
 (245.5) 29.0
Net Income Attributable to Common Shareholders121.9
 4.5
 96.4
 
 249.0
 (241.1) 230.7
             
For the Six Months Ended June 30, 2017
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 
Electric
Transmission
 Water Distribution Other Eliminations Total
Operating Revenues$2,677.0
 $589.6
 $641.5
 $
 $453.4
 $(493.6) $3,867.9
Depreciation and Amortization(235.2) (39.6) (102.0) 
 (17.2) 1.1
 (392.9)
Other Operating Expenses(1,980.9) (441.0) (185.0) 
 (412.8) 493.9
 (2,525.8)
Operating Income$460.9
 $109.0
 $354.5
 $
 $23.4
 $1.4
 $949.2
Interest Expense$(97.6) $(21.5) $(57.0) $
 $(41.3) $6.6
 $(210.8)
Other Income, Net21.0
 1.8
 11.9
 
 586.8
 (570.9) 50.6
Other Income/(Loss), Net19.6
 2.0
 8.0
 (0.6) 360.1
 (355.3) 33.8
Net Income Attributable to Common Shareholders236.0
 55.3
 190.6
 
 571.2
 (562.9) 490.2
104.2
 57.8
 107.4
 1.5
 346.0
 (347.4) 269.5
Cash Flows Used for Investments in Plant515.0
 139.7
 415.6
 
 76.7
 
 1,147.0
236.0
 70.4
 239.2
 19.0
 42.7
 
 607.3

(1)
Effective January 1, 2018, upon implementation of the new revenue accounting guidance, the electric distribution segment is presented gross and intercompany transmission billings are presented in the eliminations column, as Eversource believes that the electric distribution segment acts as a principal, rather than an agent, in its contracts with retail customers. Retail customers contract directly with the electric distribution utility and do not differentiate between distribution and transmission services. Therefore, the electric distribution segment revenues, which are derived from retail customer billings, are presented gross of the eliminations. Prior to 2018, the electric distribution segment presented intercompany electric transmission billings net, based on indicators of net presentation prior to the new revenue guidance.  See Note 16, "Revenues," regarding accounting for revenues.

The following table summarizes Eversource's segmented total assets:
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 Electric
Transmission
 Water Distribution Other Eliminations Total
As of June 30, 2018$21,116.3
 $3,656.7
 $10,085.7
 $2,500.4
 $16,456.3
 $(16,571.1) $37,244.3
As of December 31, 201719,250.4
 3,595.2
 9,401.2
 2,470.0
 15,933.8
 (14,430.2) 36,220.4
Eversource
(Millions of Dollars)
Electric
Distribution
 
Natural Gas
Distribution
 Electric
Transmission
 Water Distribution Other Eliminations Total
As of March 31, 2019$21,507.0
 $4,019.1
 $10,533.4
 $2,268.3
 $18,939.8
 $(18,326.6) $38,941.0
As of December 31, 201821,389.1
 3,904.9
 10,285.0
 2,253.0
 17,874.2
 (17,464.9) 38,241.3

18.     ACQUISITION OF AQUARION

On December 4, 2017, Eversource acquired Aquarion from Macquarie Infrastructure Partners for a purchase price of $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. Aquarion is a holding company that owns three separate regulated water utility subsidiaries engaged in the water collection, treatment and distribution business that operate 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. Aquarion and its subsidiaries became wholly-owned subsidiaries of Eversource, and Eversource's consolidated financial information includes Aquarion and its subsidiaries' activity beginning December 4, 2017. The approximate $880 million cash purchase price included the $745 million equity purchase price plus a $135 million shareholder loan that was repaid at closing.

Purchase Price Allocation: The purchase price allocation reflects a measurement period adjustment recorded in the first quarter of 2018 to revise the fair value of Aquarion's regulated debt. The $7.9 million increase to the fair value of Long-Term Debt and corresponding increase to Regulatory Assets, included within Other Noncurrent Assets, excluding Goodwill in the table below, will be amortized over the life of the related debt. The allocation of the cash purchase price is as follows:
(Millions of Dollars) 
Current Assets$41.2
PP&E1,034.9
Goodwill907.9
Other Noncurrent Assets, excluding Goodwill215.5
Current Liabilities(121.9)
Noncurrent Liabilities(421.6)
Long-Term Debt(778.3)
Total Cash Purchase Price$877.7


EVERSOURCE ENERGY AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, the combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, as well as the Eversource 20172018 Form 10-K.  References in this combined Quarterly Report on Form 10-Q 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 unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."  

Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q 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 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.  We use this non-GAAP financial measure to evaluate and provide details of earnings results by business.  We believe that the non-GAAP presentation is 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.  This non-GAAP financial measure 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.

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:

cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers,
acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our transmission and distribution systems,
ability or inability to commence and complete our major strategic development projects and opportunities,
actions or inaction of local, state and federal regulatory, public policy and taxing bodies,
substandard performance of third-party suppliers and service providers,
fluctuations in weather patterns, including extreme weather due to climate change,
changes in business conditions, which could include disruptive technology related to our current or future business model,
increased conservation measures of customers and development of alternative energy sources,
contamination of, or disruption in, our water supplies,
changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
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,
changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations,
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 Quarterly Report on Form 10-Q and in Eversource's 20172018 combined Annual Report on Form 10-K.  This combined Quarterly Report on Form 10-Q and Eversource's 20172018 combined Annual Report on Form 10-K also describe 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.


Financial Condition and Business Analysis

Executive Summary

The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:

Results:Earnings Overview:  

We earned $242.8$308.7 million, or $0.76 per share, in the second quarter of 2018, and $512.3 million, or $1.61$0.97 per share, in the first halfquarter of 2018,2019, compared with $230.7$269.5 million, or $0.72 per share, in the second quarter of 2017, and $490.2 million, or $1.54$0.85 per share, in the first halfquarter of 2017.2018.  

Our electric distribution segment earned $101.3 million, or $0.32 per share, in the second quarter of 2018, and $205.5 million, or $0.65 per share, in the first half of 2018, compared with $121.9$120.1 million, or $0.38 per share, in the secondfirst quarter of 2017, and $236.02019, compared with $104.2 million, or $0.74$0.33 per share, in the first halfquarter of 2017.2018.  Our electric transmission segment earned $112.7$118.2 million, or $0.35 per share, in the second quarter of 2018, and $220.1 million, or $0.69$0.37 per share, in the first halfquarter of 2018,2019, compared with $96.4$107.4 million, or $0.30 per share, in the second quarter of 2017, and $190.6 million, or $0.60$0.34 per share, in the first halfquarter of 2017.2018.  Our natural gas distribution segment earned $5.0$76.5 million, or $0.02 per share, in the second quarter of 2018, and $62.8 million, or $0.20$0.24 per share, in the first halfquarter of 2018,2019, compared with $4.5$57.8 million, or $0.01 per share, in the second quarter of 2017, and $55.3 million, or $0.17$0.18 per share, in the first halfquarter of 2017.2018.  Our water distribution segment earned $7.2$0.9 million or $0.02 per share in the second quarter of 2018, and $8.7 million, or $0.03 per share, in the first halfquarter of 2019, compared with $1.5 million in the first quarter of 2018.

Eversource parent and other companies earned $16.6had a net loss of $7.0 million or $0.05 per share, in the second quarter of 2018 and $15.2 million, or $0.04 per share, in the first halfquarter of 2018,2019, compared with $7.9a net loss of $1.4 million or $0.03 per share, in the second quarter of 2017 and $8.3 million, or $0.03 per share, in the first halfquarter of 2017.2018.  

Liquidity:

Cash flows provided by operating activities totaled $698.1$428.0 million in the first halfquarter of 2018,2019, compared with $895.0$177.7 million in the first halfquarter of 2017.2018, due primarily to the $166.5 million decrease in pension and PBOP cash contributions in the first quarter of 2019, compared to the first quarter of 2018. Investments in property, plant and equipment totaled $1.25 billion$674.7 million in the first halfquarter of 2018,2019, compared with $1.15 billion$607.3 million in the first halfquarter of 2017.2018.  Cash and cash equivalents totaled $64.2$35.1 million as of June 30, 2018,March 31, 2019, compared with $38.2$108.1 million as of December 31, 2017.2018.

On May 8, 2018, PSNHApril 1, 2019, CL&P issued $635.7$300 million of securitized RRBsnew long-term debt. Proceeds from this new issuance were used primarily to repay short-term borrowings, which were previously used to repay, at maturity, $250 million of long-term debt previously issued by CL&P that matured in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035.  The RRBs were issued to finance PSNH’s unrecovered stranded costs associated with the divestiture of its generation assets.

In the secondfirst quarter of 2018, we repaid, at maturity, $710 million of previously issued long-term debt, consisting of $300 million at CL&P, $110 million at PSNH2019, and $300 million at Eversource parent.  to fund capital expenditures and working capital.

On May 2, 2018,February 6, 2019, our Board of Trustees approved a common share dividend payment of $0.505$0.535 per share, which was paid on March 29, 2019 to shareholders of record as of March 5, 2019. On May 1, 2019, our Board of Trustees approved a common share dividend payment of $0.535 per share, payable on June 29, 2018,28, 2019, to shareholders of record as of May 24, 2018.23, 2019.

We expect our total capital expenditures related to our operating companies (including shared services) for the period from 2019 to 2021 to increase from approximately $6.5 billion, as reported in our 2017 Form 10-K, to approximately $7.1 billion. The approximately $600 million increase in projected capital spending is comprised of approximately $300 million at our electric transmission segment, approximately $200 million at our electric distribution segment and approximately $100 million at our natural gas distribution segment, related to resiliency and reliability infrastructure investments.

Strategic, Legislative, Regulatory, Policy and Other Items:

In March and May 2018, several significant storms caused extensive damage to our electric distribution systems and significant customer outages across all three states. The 2018 storms resulted in deferred storm restoration costs of approximately $274 million ($142 million for CL&P, $116 million for NSTAR Electric, and $16 million for PSNH). Management believes that recovery of these costs from customers is probable through the applicable regulatory recovery processes.



Earnings Overview

Consolidated:  Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measure of EPS by business to the most directly comparable GAAP measure of diluted EPS, for the second quarter and the first half of 2018 and 2017.  EPS.
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
2018 2017 2018 20172019 2018
(Millions of Dollars, Except Per Share Amounts)Amount Per Share Amount Per Share Amount Per Share Amount Per ShareAmount Per Share Amount Per Share
Net Income Attributable to
Common Shareholders (GAAP)
$242.8
 $0.76
 $230.7
 $0.72
 $512.3
 $1.61
 $490.2
 $1.54
$308.7
 $0.97
 $269.5
 $0.85
Regulated Companies$226.2
 $0.71
 $222.8
 $0.69
 $497.1
 $1.57
 $481.9
 $1.51
$315.7
 $0.99
 $270.9
 $0.85
Eversource Parent and Other Companies16.6
 0.05
 7.9
 0.03
 15.2
 0.04
 8.3
 0.03
(7.0) (0.02) (1.4) 
Net Income Attributable to Common Shareholders (GAAP)$242.8
 $0.76
 $230.7

$0.72
 $512.3
 $1.61
 $490.2
 $1.54
$308.7
 $0.97
 $269.5

$0.85

Regulated Companies:  Our regulated companies comprise the electric distribution, (including PSNH's remaining hydroelectric generation facilities and NSTAR Electric's solar power facilities), electric transmission, natural gas distribution and water distribution segments. A summary of our segment earnings and EPS is as follows: 
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
2018 2017 2018 20172019 2018
(Millions of Dollars, Except Per Share Amounts)Amount Per Share Amount Per Share Amount Per Share Amount Per ShareAmount Per Share Amount Per Share
Electric Distribution$101.3
 $0.32
 $121.9
 $0.38
 $205.5
 $0.65
 $236.0
 $0.74
$120.1
 $0.38
 $104.2
 $0.33
Electric Transmission112.7
 0.35
 96.4
 0.30
 220.1
 0.69
 190.6
 0.60
118.2
 0.37
 107.4
 0.34
Natural Gas Distribution5.0
 0.02
 4.5
 0.01
 62.8
 0.20
 55.3
 0.17
76.5
 0.24
 57.8
 0.18
Water Distribution7.2
 0.02
 N/A
 N/A
 8.7
 0.03
 N/A
 N/A
0.9
 
 1.5
 
Net Income - Regulated Companies$226.2
 $0.71
 $222.8
 $0.69
 $497.1
 $1.57
 $481.9
 $1.51
$315.7
 $0.99
 $270.9
 $0.85



Our electric distribution segment earnings decreased $20.6increased $15.9 million in the secondfirst quarter of 2018,2019, as compared to the secondfirst quarter of 2017,2018, due primarily to lower electric distribution margin, which includes the seasonal impact of a decoupled rate structure at NSTAR Electric in 2018 as compared to a traditional rate structure with LBR recovery in 2017, partially offset by a net earnings benefit from lower income tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act. Earnings were also unfavorably impacted by lower generation earnings due to the sale of PSNH's thermal generation assets on January 10, 2018 and higher property tax expense. The earnings decrease was partially offset by lower employee benefit plan costs and the impact of the CL&P base distribution rate increase effective May 1, 2018.

Our electric distribution segment2018 and the recognition in 2019 of carrying charges on PSNH storm costs approved for recovery. The earnings decreased $30.5 millionincrease was partially offset by the absence in the first half2019 of 2018, as compared to the first half of 2017, due primarily to lower generation earnings at PSNH due to the sale of PSNH'sits thermal and hydroelectric generation assets on January 10,in 2018, higher property tax expense, higher depreciation expense higher operations and maintenance expense and lower electric distribution margin. The lower electric distribution margin is the result of the seasonal impact of a decoupled rate structure at NSTAR Electric in 2018 as compared to a traditional rate structure with LBR recovery in 2017, partially offset by a net earningsnon-service income from our benefit from lower income tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act. The earnings decrease was partially offset by lower employee benefit plan costs, and the impact of the CL&P base distribution rate increase effective May 1, 2018.plans.

Our electric transmission segment earnings increased $16.3 million and $29.5$10.8 million in the secondfirst quarter and first half of 2018, respectively,2019, as compared to the secondfirst quarter and first half of 2017,2018, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.

Our natural gas distribution segment earnings increased $0.5$18.7 million in the secondfirst quarter of 2018,2019, as compared to the secondfirst quarter of 2017,2018, due primarily to anthe impact of the Yankee Gas base distribution rate increase effective November 15, 2018 and higher earnings from capital tracker mechanisms due to continued investment in sales volumesinfrastructure. Yankee Gas' decoupled rate structure is seasonally structured and demand revenues driven by colder April weatherprovides greater earnings in Connecticut in 2018, as compared to the same period in 2017,winter heating months. The earnings increase was partially offset by higher operations and maintenance expense, higher property and higher depreciation expense.

Our natural gas distribution segment earnings increased $7.5 million in the first half of 2018, as compared to the first half of 2017, due primarily to an increase in sales volumes and demand revenues driven by colder January and April weather in Connecticut in 2018, as compared to the same periods in 2017, as well as growth in new customer base, and a net earnings benefit from lower income tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act, partially offset by higher operations and maintenanceother taxes expense, and higher depreciation expense.

Our second quarter and first half of 2018 water distribution segment results reflectearnings decreased $0.6 million in the earningsfirst quarter of 2019, as compared to the Aquarionfirst quarter of 2018. Our water distribution business which was acquired on December 4, 2017.is seasonal in nature, with lower earnings occurring during the winter months and higher earnings occurring during the summer months.

Eversource Parent and Other Companies:  Eversource parent and other companies had earningsa net loss of $16.6 million in the second quarter of 2018 and $15.2$7.0 million in the first halfquarter of 2018,2019, compared with $7.9 million in the second quartera net loss of 2017 and $8.3$1.4 million in the first halfquarter of 2017.2018.  The increase in earnings in both periodsincreased loss was due primarily to increased unrealized gains on our investment inhigher interest expense and a renewable energy fund and an incomehigher effective tax benefit associated with our investments,rate, partially offset by higher interest expense.return at Eversource Service as a result of increased investments in property, plant and equipment.



Electric, Natural Gas and Water Sales Volumes:  Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption.  Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes.  In our service territories, weather impacts both electric and water 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 PSNH and natural gas sales volumes at Yankee Gas impact earnings ("Traditional" in the table below).  For CL&P, NSTAR Electric, (effective February 1, 2018, as a result of the DPU-approved rate case decision)Yankee Gas, and NSTAR Gas, fluctuations in retail sales volumes do not impact earnings due to their respective regulatory commission approvedcommission-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.  Fluctuations in water sales volumes largely do not impact earnings as our Connecticut water distribution business is also decoupled.

CL&P and NSTAR Electric reconcile their annual base distribution rate recovery amounts to their respective pre-established levels of baseline distribution delivery service revenues of approximately $1.1 billion (effective May 1, 2018) and $947 million, respectively. Any difference between the allowed level of distribution revenue and the actual amount realized during a 12-month period is adjusted through rates in the following period.

A 2016 DPU-approved energy efficiency plan at NSTAR Electric authorized recovery of LBR in its eastern Massachusetts service territory until LBR was covered under a decoupled rate structure, which occurred on February 1, 2018. NSTAR Electric recognized LBR of $7.0 million in the first half of 2018, compared to $18.7 million and $35.9 million in the second quarter and first half of 2017, and no longer has an LBR mechanism effective February 1, 2018.

A summary of our retail electric GWh sales volumes, our firm natural gas MMcf sales volumes, and our water MG sales volumes, and percentage changes, for the three and six months ended June 30, 2018, as compared to 2017, is as follows:  
 Electric Firm Natural Gas Water
 Sales Volumes (GWh) Percentage
Increase/
(Decrease)
 Sales Volumes (MMcf) Percentage
Increase/
(Decrease)
 Sales Volumes (MG) Percentage
Increase/
(Decrease)
 2018 
2017 (1)
  2018 2017  2018 
2017 (2)
 
Three Months Ended June 30:                 
Traditional1,803
 1,823
 (1.1)% 9,287
 7,778
 19.4 % 485
 472
 2.8 %
Decoupled10,330
 10,341
 (0.1)% 8,812
 8,106
 8.7 % 5,016
 5,387
 (6.9)%
Special Contracts (3)
N/A
 N/A
 N/A
 833
 1,132
 (26.4)% N/A
 N/A
 N/A
Total - Decoupled and Special Contracts10,330
 10,341
 (0.1)% 9,645
 9,238
 4.4 % 5,016
 5,387
 (6.9)%
Total Sales Volumes12,133
 12,164
 (0.3)% 18,932
 17,016
 11.3 % 5,501
 5,859
 (6.1)%
Six Months Ended June 30:                 
Traditional5,650
 5,522
 2.3 % 29,760
 26,683
 11.5 % 953
 904
 5.4 %
Decoupled19,704
 19,813
 (0.6)% 30,685
 29,130
 5.3 % 9,373
 9,827
 (4.6)%
Special Contracts (3)
N/A
 N/A
 N/A
 1,538
 2,349
 (34.5)% N/A
 N/A
 N/A
Total - Decoupled and Special Contracts19,704
 19,813
 (0.6)% 32,223
 31,479
 2.4 % 9,373
 9,827
 (4.6)%
Total Sales Volumes25,354
 25,335
 0.1 % 61,983
 58,162
 6.6 % 10,326
 10,731
 (3.8)%
 For the Three Months Ended March 31, 2019 Compared to 2018
 Electric Firm Natural Gas Water
 Sales Volumes (GWh) Percentage
Decrease
 Sales Volumes (MMcf) Percentage
Increase
 Sales Volumes (MG) Percentage
Increase/
(Decrease)
 2019 
2018 (1)
  2019 
2018 (2)
  2019 2018 
Traditional1,968
 1,972
 (0.2)% 
 
 % 451
 467
 (3.4)%
Decoupled and Special Contracts (3)
11,183
 11,249
 (0.6)% 45,376
 43,179
 5.1% 4,378
 4,357
 0.5 %
Total Sales Volumes13,151
 13,221
 (0.5)% 45,376
 43,179
 5.1% 4,829
 4,824
 0.1 %

(1) 
In 2017 and in the month of January 2018, NSTAR Electric operated under two different rate structures (traditional and decoupled) based on its service territory geography.
Effective February 1, 2018, NSTAR Electric operated entirely under a decoupled rate structure. The 20172018 sales volumes for NSTAR Electric have been recast to present February through June 2017January 2018 as decoupled to conform to the 2018 presentation for comparative purposes.current year presentation.

(2) 
Eversource acquired its water distribution business on December 4, 2017. Prior year
Effective November 15, 2018, Yankee Gas operated under a decoupled rate structure. The 2018 sales volumes for Yankee Gas have been presented for comparative purposes.recast to present 2018 as decoupled to conform to the current year presentation.

(3) 
Special contracts are unique to Yankee Gas 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.

Traditional retail electric sales volumes were lower in the second quarter of 2018, as compared to the second quarter of 2017, due primarily to increased customer energy conservation efforts. Traditional retail electric sales volumes were higher in the first half of 2018, as compared to the first half of 2017, due primarily to colder weather in January 2018 at NSTAR Electric (prior to its decoupled rate structure). Heating degree days in January of 2018 were 21.7 percent higher in the Boston metropolitan, as compared to January 2017.



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 our natural gas distribution segment.  Consolidated firm natural gas sales volumes were higher in the second quarter of 2018, as compared to the second quarter of 2017, due primarily to colder April weather in 2018. Consolidated firm natural gas sales volumes were higher in the first half of 2018, as compared to the first half of 2017, due primarily to colder January and April weather in 2018. Heating degree days in the second quarter and first half of 2018 were 12.8 percent and 4.4 percent higher in Connecticut, respectively, as compared to the same periods in 2017.

Liquidity

Consolidated:  Cash and cash equivalents totaled $64.2$35.1 million as of June 30, 2018,March 31, 2019, compared with $38.2$108.1 million as of December 31, 2017.2018.

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt.  Eversource parent, CL&P, PSNH, NSTAR Gas and Yankee Gas are also parties to a five-year $1.45 billion revolving credit facility.facility, which terminates on December 8, 2023. The revolving credit facility terminates on December 8, 2022 and serves to backstop Eversource parent's $1.45 billion commercial paper program.  



NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility.facility, which terminates on December 8, 2023. The revolving credit facility terminates on December 8, 2022 and serves to backstop NSTAR Electric's $650 million commercial paper program.  

The amount of borrowings outstanding and available under the commercial paper programs were as follows:
 Borrowings Outstanding as of Available Borrowing Capacity as of Weighted-Average Interest Rate as of
 March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018
(Millions of Dollars)     
Eversource Parent Commercial Paper Program$1,371.0
 $631.5
 $79.0
 $818.5
 2.69% 2.77%
NSTAR Electric Commercial Paper Program368.4
 278.5
 281.6
 371.5
 2.49% 2.50%

There were no borrowings outstanding on either the Eversource parent or NSTAR Electric revolving credit facilities as of June 30, 2018March 31, 2019 or December 31, 2017.2018. Eversource's water distribution businesssegment has a $100 million revolving credit facility, which expires on August 19, 2019, and there were no amountsborrowings outstanding as of June 30, 2018 and $76.0 million outstanding as ofMarch 31, 2019 or December 31, 2017.

The amount of borrowings outstanding and available under the commercial paper programs were as follows:
 Borrowings Outstanding as of Available Borrowing Capacity as of Weighted-Average Interest Rate as of
 June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017
(Millions of Dollars)     
Eversource Parent Commercial Paper Program$747.0
 $979.3
 $703.0
 $470.7
 2.28% 1.86%
NSTAR Electric Commercial Paper Program443.8
 234.0
 206.2
 416.0
 1.99% 1.55%
2018.

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 Eversource and NSTAR Electric balance sheets as all borrowings are outstanding for no more than 364 days at one time.  As a result of the Eversource parentCL&P long-term debt issuancesissuance on January 8, 2018,April 1, 2019, the net proceeds of which were used to repay CL&P's short-term borrowings, outstanding under its commercial paper program, $201.2$261.6 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified asto Long-Term Debt as of DecemberMarch 31, 2017.2019.

Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist them in meeting their short-term borrowing needs. In addition, growth in Eversource's key business initiatives requires cash infusion to those subsidiaries. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of June 30,March 31, 2019, there were intercompany loans from Eversource parent to CL&P of $261.6 million, to PSNH of $61.0 million, and to Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), of $22.3 million. As of December 31, 2018, there were intercompany loans from Eversource parent of $24.0 million to CL&P, $118.7 million to PSNH and $4.0 million to NSTAR Electric.of $57.0 million. Intercompany loans from Eversource parent to other Eversource subsidiaries primarily included $221.6 million to Eversource Service and $149.0 million to NSTAR Gas as of June 30, 2018. 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. Intercompany loans from Eversource parent to other Eversource subsidiaries primarily included $115.9 million to Eversource Service and $198.0 million to NSTAR Gas as of December 31, 2017. These intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and are classified in current liabilities on the respective subsidiary's balance sheets. Intercompany loansAs a result of the CL&P long-term debt issuance on April 1, 2019, $261.6 million of CL&P's intercompany borrowings were reclassified to Long-Term Debt as of March 31, 2019. The proceeds from Eversource parent are eliminated in consolidation on Eversource's balance sheets.






the CL&P April 1, 2019 debt issuance were used to repay CL&P’s short-term borrowings that were outstanding as of March 31, 2019, and to fund capital expenditures and working capital.

Long-Term Debt: The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars)Issue Date Issuances/(Repayments) Maturity Date Use of Proceeds for Issuances/
Repayment Information
CL&P:       
4.00% 2018 Series A First Mortgage BondsMarch 2018 $500.0
 April 2048 Repay long-term debt due to mature in 2018 and repay short-term borrowings
5.65% 2008 Series A First Mortgage BondsMay 2008 (300.0) May 2018 Repayment at maturity paid on May 1, 2018
PSNH:       
6.00% 2008 Series O First Mortgage BondsMay 2008 (110.0) May 2018 Repayment at maturity paid on May 1, 2018
Eversource Parent:       
2.50% Series I Senior Notes (1)
January 2018 200.0
 March 2021 Repay long-term debt due to mature in 2018 and repay short-term borrowings
3.30% Series M Senior NotesJanuary 2018 450.0
 January 2028 Repay long-term debt due to mature in 2018
1.60% Series G Senior NotesJanuary 2015 (150.0) January 2018 Repayment at maturity paid on January 15, 2018
1.45% Series E Senior NotesMay 2013 (300.0) May 2018 Repayment at maturity paid on May 1, 2018
(Millions of Dollars)Issue Date Issuance/(Repayment) Maturity Date Use of Proceeds for Issuance/
Repayment Information
CL&P:       
4.00% 2018 Series A First Mortgage Bonds (1)
April 2019 $300.0
 April 2048 Repaid short-term borrowings that were used to repay long-term debt that matured on February 1, 2019 and fund capital expenditures and working capital
5.50% 2009 Series A First Mortgage BondsFebruary 2009 (250.0) February 2019 Repaid at maturity on February 1, 2019

(1) 
These notesbonds are part of the same series issued by Eversource parentCL&P in March 2016.2018. The aggregate outstanding principal amount forof these notesbonds is now $450$800 million.

Rate Reduction Bonds: PSNH Funding LLC 3 (PSNH Funding) is a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH. PSNH Funding was formed solely to issue RRBs to finance PSNH’s unrecovered stranded costs associated with the divestiture of its generation assets.

On May 8, 2018, PSNH issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035.  The RRBs are expected to mature by February 1, 2033.PSNH's RRB payments consist of principal and interest and will beare paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance orderissued byPSNH paid $30.7 million of RRB principal payments and $16.2 million of interest payments in the NHPUC on January 30, 2018 to recover stranded costs resulting from the divestiturefirst quarter of PSNH’s generating assets.2019.

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

Cash Flows:  Cash flows provided by operating activities totaled $698.1$428.0 million in the first halfquarter of 2018,2019, compared with $895.0$177.7 million in the first halfquarter of 2017.2018. The decreaseincrease in operating cash flows was due primarily to the $166.5 million decrease in pension and PBOP cash payments made in 2018 for storm restoration costs of approximately $172 million, an increase of $109.2 million in income tax paymentscontributions made in the first halfquarter of 2019 compared to the first quarter of 2018, as compared to 2017, and an increaseapproximately $70 million of $87.6 million in 2018 of Pension and PBOP contributions. Partially offsetting these unfavorable impacts was the benefit related to the timing ofstorm restoration cost payments of our working capital items, including accounts payable, and the increases in certain regulatory overrecoveries. The 2018 Pension Plan cash contribution of approximately $170 million was made in the first quarter of 2018, and the timing of accounts payable cash payments. Also contributing to the increase were tax refunds received in the first quarter of 2019 of $52.6 million, compared withto tax payments of $11.5 million in 2018. Partially offsetting these favorable impacts were the 2017timing of collections for regulatory tracking mechanisms and the timing of cash contributions of approximately $235 million that were made over the twelve month period ended December 31, 2017.collections and payments related to other working capital items.

We believe the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our existing borrowing availability and access to financial markets for the issuance of new long-term debt, will be sufficient to meet any working capital and future operating requirements, and capital investment forecast opportunities.

On May 2, 2018,February 6, 2019, our Board of Trustees approved a common share dividend payment of $0.505$0.535 per share, which was paid on March 29, 2019 to shareholders of record as of March 5, 2019. In the first quarter of 2019, we paid cash dividends of $169.8 million, compared with $160.0 million paid in the first quarter of 2018. On May 1, 2019, our Board of Trustees approved a common share dividend payment of $0.535 per share, payable on June 29, 2018,28, 2019, to shareholders of record as of May 24, 2018. In the first half of 2018, we paid cash dividends of $320.1 million, compared with $301.0 million paid in the first half of 2017.23, 2019.

In the first halfquarter of 2018,2019, CL&P, NSTAR Electric and PSNH paid $60.0$99.0 million, $161.0$60.6 million, and $150.0$19.0 million, respectively, in common stock dividends to Eversource parent. In



Beginning in 2019, Eversource began issuing treasury shares to satisfy awards under the second quarter of 2018, PSNH returned $530 million of capital toCompany's incentive plan, shares issued under the dividend reinvestment plan, and matching contributions under the Eversource parent.401k Plan.

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 and deferred portions of pension and PBOP expense.  In the first halfquarter of 2018,2019, investments for Eversource, CL&P, NSTAR Electric, and PSNH were $1.25 billion, $457.7$674.7 million, $356.5$189.4 million, $208.5 million, and $149.9$110.9 million, respectively.

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

Credit Ratings:On June 14, 2018, Moody’s raisedFebruary 12, 2019, S&P changed the outlook on all its credit ratings for Eversource, CL&P, NSTAR Electric and PSNH from stable to positive.negative. On June 27, 2018, Moody’s upgraded CL&P’sMarch 22, 2019, Fitch changed the outlook on the credit ratings of Eversource parent from positive to stable.

A summary of our corporate credit rating to A3 from Baa1ratings and the credit rating of CL&P’s senior secured debt to A1 from A2.outlooks by Moody's, S&P and Fitch is as follows:
Moody'sS&PFitch
CurrentOutlookCurrentOutlookCurrentOutlook
Eversource ParentBaa1StableA+NegativeBBB+Stable
CL&PA3StableA+NegativeA- Stable
NSTAR ElectricA2PositiveA+NegativeA  Stable
PSNHA3StableA+NegativeA-Stable



Business Development and Capital Expenditures

Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP expense (all of which are non-cash factors), totaled $1.18 billion in the first half of 2018, compared to $1.03 billion in the first half of 2017.  These amounts included $69.8 million and $58.6$603.1 million in the first halfquarter of 20182019, compared to $496.2 million in the first quarter of 2018.  These amounts included $49.3 million and 2017,$30.9 million in the first quarter of 2019 and 2018, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.

Offshore Wind Projects: 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 of the Atlantic Ocean approximately 25 miles off the coast of Massachusetts that has the ultimate potential to generate at least 2,000 MW of clean, renewable energy. Eversource and Ørsted each hold a 50 percent ownership interest in Bay State Wind.

Based on current clean energy requirements in New England and New York, future solicitations for offshore wind are expected to occur in late 2018 and early 2019. Bay State Wind expects to participate in some or all of the following opportunities:

Connecticut issued a draft RFP for zero carbon resources in which nuclear and clean energy resources, including offshore wind, are eligible to participate. Bids are expected to be due in the third quarter of 2018 with a decision expected in either late 2018 or early 2019.

Massachusetts’ second offshore wind RFP for 400 MW to 800 MW is expected to be issued in 2019.

Rhode Island announced a 400 MW clean energy RFP with bids due in the fourth quarter of 2018 and a decision scheduled in 2019.

New York has a goal of 2,400 MW of offshore wind by 2030; 800 MW is expected to be procured by 2019, with the first RFP expected to be issued later this year.

Bay State Wind had previously participated in certain other New England RFPs earlier this year and was not selected.

Electric Transmission Business:  

Our consolidated electric transmission business capital expenditures increased by $111.7$3.9 million in the first halfquarter of 2018,2019, as compared to the first halfquarter of 2017.2018.  A summary of electric transmission capital expenditures by company is as follows:  
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Millions of Dollars)2018 20172019 2018
CL&P$240.4
 $185.7
$112.2
 $101.1
NSTAR Electric138.6
 118.0
59.3
 53.7
PSNH88.7
 50.6
27.7
 33.4
NPT19.4
 21.1
5.0
 12.1
Total Electric Transmission Segment$487.1
 $375.4
$204.2
 $200.3

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 to date, including receiving the following major permits:

NHPUC approval on February 12, 2018 for the proposed leasemajority of certain landfederal, state and easement rights from PSNHCanadian permits required to NPT, concluding that the lease isbe constructed and placed in the public interest;

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

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

DOE Record of Decision and Presidential Permit on November 16, 2017, which will allow construction of transmission facilities at the Québec-New Hampshire border; and

DOE final Environmental Impact Statement issued on August 10, 2017, which concluded that the proposed Northern Pass route is the preferred alternative, providing substantial benefits with only minimal impacts.


hydropower. Three permits remain outstanding.

On January 25, 2018, Northern Pass was selected from the 46 proposal packages submitted as the winning bidder in the Massachusetts clean energy requestClean Energy Request for proposalProposals ("RFP"), which successfully positioned Northern Pass to provide a firm delivery of hydropower to Massachusetts.  On February 1,. In March 2018, the NHSEC voted to deny Northern Pass’ siting application. On March 28, 2018, the Massachusetts EDCs, in coordination with the DOER and an independent evaluator, notified Northern Pass that the EDCs had terminated its selection and all contract negotiations.

On March 30, 2018, the NHSEC released its written decision confirming its denial. NPT reviewed the written decision and filedNew Hampshire Site Evaluation Committee ("NHSEC") issued a motion for rehearing with the NHSEC on April 27, 2018. The NHSEC issued its written decision denying Northern Pass’ siting application after which the Massachusetts EDCs revoked the selection of, and terminated contract negotiations with, Northern Pass under the Massachusetts Clean Energy RFP. On July 12, 2018, the NHSEC issued a written decision denying Northern Pass’ April 2018 motion for rehearing on Julyrehearing. On October 12, 2018. We are preparing to initiate an appeal to2018, the New Hampshire Supreme Court based onaccepted an appeal filed by NPT, which alleged that the NHSEC’s failureNHSEC failed to follow applicable law in its review of the project. In parallel, Northern PassSubsequently, the NHSEC transmitted the record of its proceedings to the New Hampshire Supreme Court on December 11, 2018. Briefing of the appeal began on February 4, 2019 and concluded on April 10, 2019. The New Hampshire Supreme Court will hear oral arguments on May 15, 2019 and a decision is expected later this year. NPT intends to pursue all available optionscontinue to securepursue NHSEC approval and to construct the project.

The March 2018 NHSEC decision denying Northern Pass' siting application caused us to review the recoverability of our Northern Pass project costs in the first quarter of 2018. In this recoverability review, we estimated undiscounted expected project cash flows and compared the result to our estimated project costs to determine whether the recorded amount was recoverable. Our undiscounted cash flows were substantially in excess of our estimated project costs. We completed this analysis and concluded that our project costs were recoverable as of March 31, 2018, based on our expectation that the Northern Pass project remains probable of being placed in service. The events that occurred subsequent to March 31, 2018 did not require an additional review of recoverability of the Northern Pass project costs as of June 30, 2018, which were approximately $297 million.

Consistent with Eversource’s and HQ’s long-term relationship to bring clean energy into New England, Eversource and HQ remain committed to Northern Pass and the many benefits this project will bring to our customers and the region. We continue to believe that our project costs are recoverable based on our expectation that the Northern Pass project remains probable of being placed in service. If, as a result of future events and changes in circumstances, a newfuture recoverability review were to conclude that our project costs are not recoverable, then we would reduce Northern Pass' project costs to the estimated fair value, which could result in most of our $297$311 million of capitalized project costs being written off.impaired. Such a write offan impairment could have a material adverse effect on our financial position and results of operations.

Greater Boston Reliability SolutionSolution:: In February 2015, ISO-NE selected the The Greater Boston and New Hampshire 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 in southern New Hampshire and northern Massachusetts and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory. The NHSEC issued its written order approving theterritory (two in New Hampshire upgrades on October 4, 2016. All theand 26 in Massachusetts). The two New Hampshire upgrades, including the Merrimack Valley Reliability Project, have been completedplaced in service and 16 Massachusetts upgrades have been placed in service. Seven upgrades are under construction and one upgrade is expected to enter construction in the second quarter of 2019. We are currently pursuing the necessary regulatory and siting application approvals in Massachusetts. To date, we have receivedanticipate approval for five of these projects from the Massachusetts Energy Facilities Siting Board. Construction has also begunBoard on multiplethe two remaining projects severalin the second quarter of which have been placed in service.2019. Most upgrades are expected to be completed by the end of 2019.  One project is nowFour projects are expected to be in service by the end of 2020 and another project by mid 2021.mid-2021. We estimate our portion of the investment in the Solution will be approximately $560 million, of which $273.0$369.0 million has been spent and capitalized through June 30, 2018.March 31, 2019.

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 thatmillion. As of March 31, 2019, 23 projects have been placed in service, and four projects are scheduledin active construction and are expected to be placed in service through 2019. As of June 30, 2018, 21 projects have been placed in service, and three projects are in active construction. The remaining three projects are expected to enter construction in the third quarter of 2018. As of June 30, 2018,March 31, 2019, CL&P had spent and capitalized $224.7$240.0 million in costs associated with GHCC.

Seacoast Reliability Project:  On April 12, 2016, PSNH filed a siting application with the 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 designdesigns to help meet the growing demand for electricity in the Seacoast region. In June 2016,On December 10, 2018, the NHSEC accepted the application as complete. On February 28, 2018, the New Hampshire Department of Environmental Services issued a final decision and recommendedindicated its unanimous approval of the application to the NHSEC.project, and subsequently issued its written decision on January 31, 2019. On July 1, 2018, PSNH filed withApril 11, 2019, the NHSEC perissued its order, a more detailed review of potential construction methodswritten decision denying motions for installing the underwater line. The review supports the original proposed method of embedding the cablerehearing submitted by three entities that intervened in the floor of the bay as cost effective with minimal environmental impacts. The NHSEC decision is expected in late 2018 or early 2019.proceeding. This project is scheduled to be completed by the end of 2019.  We estimate the investment in this project to be approximately $84 million, of which PSNH had spent and capitalized $27.2$32.2 million in costs through June 30, 2018.March 31, 2019.



Distribution Business:

A summary of distribution capital expenditures is as follows:
For the Six Months Ended June 30,For the Three Months Ended March 31,
(Millions of Dollars) CL&P  NSTAR Electric  PSNH  Total Electric  Natural Gas Water  Total CL&P  NSTAR Electric  PSNH  Total Electric  Natural Gas Water  Total
2019             
Basic Business$33.3
 $66.8
 $8.1
 $108.2
 $11.2
 $2.1
 $121.5
Aging Infrastructure45.2
 43.0
 25.4
 113.6
 53.2
 13.0
 179.8
Load Growth and Other14.3
 17.4
 3.9
 35.6
 10.0
 0.4
 46.0
Total Distribution92.8
 127.2
 37.4
 257.4
 74.4
 15.5
 347.3
Solar
 2.3
 
 2.3
 
 
 2.3
Total$92.8
 $129.5
 $37.4
 $259.7
 $74.4
 $15.5
 $349.6
2018                          
Basic Business$87.2
 $92.6
 $37.5
 $217.3
 $29.0
 $7.5
 $253.8
$49.8
 $38.7
 $17.6
 $106.1
 $10.0
 $2.2
 $118.3
Aging Infrastructure54.2
 45.3
 41.0
 140.5
 87.6
 27.8
 255.9
22.7
 20.1
 19.9
 62.7
 28.7
 9.2
 100.6
Load Growth and Other34.9
 14.1
 5.9
 54.9
 19.1
 1.1
 75.1
13.3
 2.7
 3.6
 19.6
 4.7
 0.4
 24.7
Total Distribution176.3
 152.0
 84.4
 412.7
 135.7
 36.4
 584.8
85.8
 61.5
 41.1
 188.4
 43.4
 11.8
 243.6
Generation and Solar
 38.5
 0.8
 39.3
 
 
 39.3
Solar and Generation
 21.0
 0.4
 21.4
 
 
 21.4
Total$176.3
 $190.5
 $85.2
 $452.0
 $135.7
 $36.4
 $624.1
$85.8
 $82.5
 $41.5
 $209.8
 $43.4
 $11.8
 $265.0
             
2017             
Basic Business$106.8
 $80.0
 $37.7
 $224.5
 $35.3
 N/A
 $259.8
Aging Infrastructure77.9
 40.2
 42.1
 160.2
 81.4
 N/A
 241.6
Load Growth and Other26.4
 32.2
 8.1
 66.7
 15.9
 N/A
 82.6
Total Distribution211.1
 152.4
 87.9
 451.4
 132.6
 N/A
 584.0
Generation and Solar
 7.2
 4.5
 11.7
 
 N/A
 11.7
Total$211.1
 $159.6
 $92.4
 $463.1
 $132.6
 N/A
 $595.7

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.

For the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements to acquisitions, installation of new services, and interconnections of systems.



Projected Capital Expenditures:Offshore Wind Business: We expect our total capital expenditures related to our operating companies (including shared services)Our offshore wind business includes ownership interests in key offshore wind assets in the Northeast, including contracts for the period fromRevolution Wind and South Fork Wind projects. Our offshore wind projects are being developed in partnership with Ørsted.
This business also participates in opportunities for future solicitations for offshore wind in the Northeast U.S.

On February 8, 2019, Eversource and Ørsted entered into a 50-50 partnership for key offshore wind assets in the Northeast. Eversource's initial payment and contribution under the terms of the partnership agreements totaled approximately $225 million for a 50 percent interest in North East Offshore LLC, which holds the Revolution Wind and South Fork Wind power projects, as well as a 257-square-mile tract off the coasts of Massachusetts and Rhode Island.

This transaction augments our existing 50-50 partnership with Ørsted for Bay State Wind. Bay State Wind is located on a separate 300-square-mile ocean tract adjacent to 2021the North East Offshore area. Together, the Bay State Wind and the North East Offshore lease sites jointly-owned by Eversource and Ørsted could eventually host at least 4,000 MW of offshore wind generation.

Eversource and Ørsted have jointly participated, or expect to increase fromparticipate, in the following opportunities for future solicitations for offshore wind based on each state's clean energy requirements:

The New York State Energy Research and Development Authority ("NYSERDA") RFP for 800 MW, issued in November 2018. NYSERDA has the authority to award more than 800 MW in the first solicitation if sufficient attractive offers are received. On February 14, 2019, Eversource and Ørsted submitted joint proposals in response to the RFP under the project name Sunrise Wind. NYSERDA will award contracts to its selected bidders in 2019. 

Massachusetts’ second offshore wind RFP for 400 MW to 800 MW, expected to be issued by mid-2019.

Revolution Wind and South Fork Wind: Revolution Wind is a 700 MW offshore wind power project, located approximately $6.5 billion, as reported15 miles south of the Rhode Island coast, that will deliver power to Rhode Island (400 MW) and Connecticut (300 MW). The Revolution Wind project was selected under Connecticut and Rhode Island RFPs based on each state's clean energy requirements. In Connecticut, 20-year power purchase agreements for a total of 200 MW were executed and have been approved by the PURA. In Rhode Island, a 20-year power purchase agreement for 400 MW was executed and is awaiting regulatory approval. The remaining 100 MW was awarded in our 2017 Form 10-K, to approximately $7.1 billion. The approximately $600 million increase in projected capital spendingthe Connecticut RFP, and a power purchase agreement is comprised of approximately $300 million at our electric transmission segment, approximately $200 million at ourcurrently under negotiation with the electric distribution segmentcompanies.

South Fork Wind is a 130 MW offshore wind power project, located approximately 35 miles east of Long Island, that will interconnect into eastern Long Island where it will deliver power to the Long Island Power Authority households. The South Fork Wind project was selected by the Long Island Power Authority, and a 20-year power purchase agreement for 90 MW was executed. Subsequently, the Long Island Power Authority agreed to expand the original power purchase agreement to 130 MW through an amendment to the original agreement. Negotiations are currently underway to finalize this amendment.

South Fork Wind is expected to be commissioned by the end of 2022, and Revolution Wind is expected to be commissioned in 2023. The completion dates are subject to permitting, engineering, siting and finalizing power purchase agreements, where applicable.

Bay State Wind: Bay State Wind is located approximately $100 million25 miles south of the coast of Massachusetts and has the ultimate potential to generate at least 2,000 MW of clean, renewable energy.

Natural Gas Transmission Project: On April 1, 2019, pursuant to a provision in the partnership agreement jointly entered into by Eversource, Enbridge, Inc. and National Grid plc, through Algonquin Gas Transmission, LLC, the Access Northeast project was terminated. The full carrying value of our natural gas distribution segment, related to resiliency and reliability infrastructure investments. equity method investment in the Access Northeast project was written off in 2018.

FERC Regulatory Matters

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, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap") of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the maximum ROE for transmission incentive ("incentive cap")cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the "Court").

All amounts associated with the first complaint period have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of June 30, 2018.March 31, 2019. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of June 30, 2018.March 31, 2019.



InOn October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the fourthissues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. The parties to these proceedings were directed to submit briefs on this new proposed framework and how they would apply the proposed framework in each of the four complaint proceedings. Initial briefs were filed April 29, 2016,by the NETOs, Complainants challengedand FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the NETOs'overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.

The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those preliminary calculations indicated that for the first complaint period, for the NETOs that FERC concludes are of average financial risk, (1) a preliminary range of presumptively just and reasonable base ROEs is 9.60 percent to 10.99 percent; (2) the pre-existing base ROE of 10.5711.14 percent is therefore unjust and unreasonable; (3) the preliminary just and reasonable base ROE is 10.41 percent; and (4) the preliminary incentive cap on total ROE is 13.08 percent.

If the results of 11.74these illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent assertingbase ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods.

Although the order provided illustrative calculations, FERC stated that these ROEs were unjustcalculations are merely preliminary. The FERC’s preliminary calculations are not binding and unreasonable. Hearingsdo not represent what we believe to be the most likely outcome of a final FERC order, as changes to the methodology by FERC are possible as a result of the parties’ arguments and calculations in the briefing process. Until FERC issues a final decision on the fourth complaint were held in December 2017 before the FERC Administrative Law Judge ("ALJ"). On March 27, 2018, the FERC ALJ issued an initial decision in that complaint, finding that the current base ROEeach of 10.57 percent, which has an incentive cap ROE of 11.74 percent,these four complaints, there is not unjustsignificant uncertainty, and not unreasonable. 

Atat this time, the Company cannot reasonably estimate a range of gain or loss for any of the four complaint proceedings. No events in 2017The October 16, 2018 FERC order or 2018 providedthe 2019 briefs did not provide a reasonable basis for a change to the reserve balance of $39.1 million (pre-tax and excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the complaint periods.

Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order. At this time, the Company cannot predict the timing or ultimate effect of the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric or PSNH.

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

FERC Notices of Inquiry: On March 21, 2019, FERC issued two Notices of Inquiry ("NOI") that may affect Eversource transmission ROEs and incentives. One NOI seeks comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. The other NOI seeks comments on FERC's policies for implementing electric transmission incentives. Initial comments on both NOIs are due in June 2019 with reply comments due in July 2019. At this time, Eversource cannot predict how these NOIs will affect its ROEs or incentives.

Regulatory Developments and Rate Matters

Electric, Natural Gas and Water Utility Base Distribution Rates:

The 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. Other than as described below, for the first halfquarter of 2018,2019, changes made to the regulated companies’ rates did not have a material impact on their earnings, financial position, or cash flows.  For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 20172018 Form 10-K.

U.S. Federal Corporate Income Taxes:

On December 22, 2017, the Tax Cuts and Jobs Act became law, which amended existing federal tax rules and included numerous provisions that impacted corporations. In particular, this act reducedto reduce 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 beare (1) the benefit of incurring a lower federal income tax expense which we expect to be passed back to customers depending on regulatory outcomes, and (2) the provisional regulatedreduction in ADIT liabilities (now excess ADIT liabilities that we expect will benefit our customers in future periods,or EDIT), which wereare estimated to be approximately $2.9 billion and recognized asincluded in regulatory liabilities as of June 30, 2018.

We are currently working with our stateMarch 31, 2019. The refund of these EDIT regulatory commissions, who have opened investigationsliabilities to examinecustomers will generally be made over the impactsame period as the remaining useful lives of this act on customer rates. As partthe underlying assets that gave rise to the ADIT liabilities. The refund of this regulatory process, eachEDIT has begun at several of our utilitydistribution companies is quantifying, or has quantified, the refund amount being deferred in current rates and the excess ADIT, and is working on proposals with estimated timing toreflected in rates. The refund these amounts to customers which will be, or have already been, submittedresults in filings tolower Revenues on the state regulatory commissions.

On March 15, 2018, the FERC issued a noticestatements of inquiry requesting comments from FERC-regulated utilities on whetherincome, and how the FERC should address changes in ADITlower current tax expense as a result of this act. Effective January 1, 2018, the local transmission service rates were updated to reflect the lower U.S. corporate federal incomerevenue and the amortization of the EDIT regulatory liabilities, both of which are recognized as a reduction to Income Tax Expense on the statements of income. The refund of EDIT results in a lower effective tax rate that resulted from the act, which impacts only the revenue requirements we currently bill customers, not the excess ADIT. On June 28, 2018, FERC granted a one-time tariff waiver related to the corporate federal income tax rate so that effective June 1, 2018, the regional transmission service rates reflect the reduced federal corporate income tax rate at 21 percent.

NSTAR Electric (effective February 1, 2018), CL&P (effective May 1, 2018) and NSTAR Gas (effective July 1, 2018) lowered rates charged to customers to reflect the impacts of the lower U.S. corporate federal income tax rate, which impacts only the revenue requirements we currently bill customers, not the excess ADIT. For further informationno impact on these rate changes, see "Connecticut" and "Massachusetts" sections below.

We will continue to evaluate the impacts of the Tax Cuts and Jobs 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.

Storms:

In March and May 2018, several significant storms caused extensive damage to our electric distribution systems and significant customer outages across all three states. A storm must meet certain criteria to qualify for recovery with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies for recovery, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. Costs for storms that do not meet the specific criteria are expensed as incurred. The 2018 storms resulted in deferred storm restoration costs of approximately $274 million ($142 million for CL&P, $116 million for NSTAR Electric, and $16 million for PSNH) as of June 30, 2018. 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 processes.


net income.
                         
Connecticut:

CL&P Rate Case Settlement:Storm Filing: On April 18, 2018, PURACL&P's approved the distribution rate case settlement agreement that was reached by CL&P, the Prosecutorial Unit of PURA, and the OCC on December 15, 2017, as amended on March 23, 2018. The distribution rate case settlement agreement included, among other things, rate increases of $64.3 million, $31.1 million, and $29.2 million, effective May 1,in 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, effective July 1, 2018, for capital expenditures and for capital additions for system resiliency and grid modernization. In addition, the rates charged to customers were adjusted to reflect the impacts of a lower federal income tax rate from the Tax Cuts and Jobs Act. Amounts related to the excess ADIT liabilities will be addressed in a separate proceeding. The settlement agreement also incorporated $18.6 million of rate base recovery for catastrophic storms occurring after December 31, 2016, subject to a future storm filing.  On November 16, 2018, CL&P filed for recovery of $153 million of storm costs incurred from October 2017 through May 2018, with recovery over six years to begin May 1, 2019.  Through the course of the proceeding, CL&P updated its request to $145.5 million to reflect final invoicing and capitalization amounts. On April 17, 2019, PURA authorized recovery of $141.0 million as part of storm cost recovery and the remainder to be recorded to capital or other balance sheet accounts.



Yankee Gas Rate CaseClean Energy RFP: On JuneDecember 28, 2018, under Public Act 17-3, "An Act Concerning Zero Carbon Procurement," DEEP selected the Millstone Nuclear Power Station generation facility, along with smaller generation facilities, in DEEP’s zero-carbon request for proposal. CL&P and UI were directed by DEEP to enter into ten-year contracts to purchase a combined total of approximately 9 million MWh annually from the Millstone generation facility. On March 15, 2018, Yankee Gas2019, CL&P and UI each signed a ten-year contract with the owner of Millstone Nuclear Power Station in order to purchase a combined amount of approximately 50 percent of the facility's output (approximately 40 percent by CL&P). The Millstone Nuclear Power Station has a 2,112 MW nameplate capacity. The parties filed its applicationthe contract with PURA which sought rate increases of $49.0 million, $21.0 millionon March 29, 2019 for review and $16.0 million effective January 1, 2019, 2020, and 2021, respectively. As part of this filing, Yankee Gas proposes to continue its ongoing gas system expansion program; implement a Distribution Integrity Management Program cost recovery mechanism; implement a revenue decoupling rate mechanism; and recover merger costs. Yankee Gas is requesting a regulatory ROE of 10.25 percent. In addition, the rates to be charged to customers will be adjusted to reflect the impacts of a lower corporate federal income tax rate from the Tax Cuts and Jobs Act. Amounts related to excess ADIT are also being addressed in this proceeding. approval. A final decision from PURA is expected in late 2018, with newthe third quarter of 2019.

The significant output of the generation facility, the contract period, and the pricing will result in a significant multi-billion dollar commitment. We plan to sell the energy purchased under this contract into the market and use the proceeds from these energy sales to offset the contract costs.  As the net costs under this contract will be recovered from customers in future rates, anticipated to be effective January 1, 2019.the contract will not have an impact on the net income of CL&P.

Massachusetts:

NSTAR Electric Grid Modernization PlanHingham Condemnation:: On May 10, 2018,April 22, 2019, the DPU issued an order approving a grid modernization plan for NSTAR Electric.  Intown of Hingham, Massachusetts voted to acquire the order,water system and treatment plant that supply the DPU pre-authorized $133 million in grid-facing investments over three years, adopted a regulatory review construct for pre-authorizationtowns of grid modernization investments,Hingham, Hull and allowed targeted cost recovery of eligible incremental grid-modernization capital and operations and maintenance expenses.north Cohasset with water.  The pre-authorized $133 millionacquisition price is in additioncurrently estimated to be more than $100 million, associated with energy storagesubject to adjustment based on actual capital investments as legally required and electric vehicle infrastructure previously approved byother future closing adjustments.  Aquarion will continue to operate the DPU inwater system during the November 30, 2017 order issued intransition period until the NSTAR Electric distribution rate case.

Massachusetts Tax Proceeding:sale occurs.  The DPU opened an investigation intoCompany is evaluating the impact of the Tax Cutssale on its financial statements, which will be recorded when the sale transaction occurs. No loss is expected. The transaction is expected to close by the end of 2019. As of March 31, 2019, these water distribution assets were included within Property, Plant and Jobs ActEquipment, Net on Massachusetts regulated utilities. On June 29, 2018, the DPU issued a decision ordering NSTAR Gas to lower rates effective July 1, 2018 by an annualized $7.3 million. For NSTAR Electric, lower rates due to the reductionbalance sheet and were also reflected in the corporate federal income tax rate were effective February 1, 2018. A second phase of the investigation will address the excess ADIT issueWater Distribution segment and any potential rate refund for the period January 1, 2018 to the effective date of the rate changes that have occurred.reporting unit.

New Hampshire:

Generation DivestitureDistribution Rates::  In June 2015, Eversource andOn April 26, 2019, PSNH entered intofiled an application with 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 halfa temporary annual base distribution rate increase of 2016. In October 2017,approximately $33 million, effective July 1, 2019. Also on April 26, 2019, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase pricesfiled a notice 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 assets, pursuant to the Purchase and Sale Agreement dated October 11, 2017. In accordanceintent with the Agreement,NHPUC to request an increase in permanent base distribution rates of $70 million, effective July 1, 2020, which is inclusive of the original purchase price of $175$33 million was adjustedtemporary rate increase request.  PSNH expects to reflect working capital adjustments, closing date adjustments and proration of taxes and fees prior to closing, totaling $40.9 million, resultingfile an application with the NHPUC for the permanent increase in net proceeds of $134.1 million. Inbase distribution rates in the second quarter of 2018, PSNH adjusted2019.

2013 through 2016 Storm Costs:On March 26, 2019, the purchase price by approximately $17NHPUC approved the recovery of $38.1 million, forplus carrying charges, of storm costs incurred from December 2013 through April 2016 and the thermal generationtransfer of funding from PSNH’s major storm reserve to recover those costs. The costs of these storms (excluding the equity return component of the carrying charges) were deferred as regulatory assets, relating toand the valuation of certain allowances, and also received amounts in escrow of $3.5 million.funding reserve collected from customers was accrued as a regulatory liability. As a result of these adjustments, total proceedsthe duration of time between incurring storm costs in December 2013 through April 2016 and final approval from the sale amounted to $116.8 million.

On July 16, 2018, FERC issued its order approvingNHPUC in 2019, PSNH recognized $5.2 million (pre-tax) for the transferequity return component of PSNH's six hydro licenses to the private investors. The order includes a 30-day rehearing period. PSNH expects to completecarrying charges within Other Income, Net on the salestatement of its hydroelectric generation assetsincome in the thirdfirst quarter of 2018 at2019, which has been collected from customers. Also included in the March 26, 2019 NHPUC approval is a sale price of $83 million, subjectprospective requirement for PSNH to closing adjustments.

Full recovery of the costs of PSNH's generation assets and transaction-related expenses is expected to occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs primarily via the issuance of bonds that are secured by a non-bypassable charge billed to PSNH's customers. On May 8, 2018, PSNH issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates rangingannually net its storm funding reserve collected from 2026 to 2035.  For further information on the securitized RRB issuance, see "Liquidity - Rate Reduction Bonds" in this customers against deferred storm costs.Management's Discussion and Analysis of Financial Condition and Results of Operations.

Legislative, Policy and Litigation Matters

New Hampshire: On January 11, 2018, the New Hampshire Supreme Court issued a decision that affirmed 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.  The result of this decision was that approximately $7.4 million in property taxes and interest was payable to PSNH. Of this amount, $6.9 million was refunded to PSNH as of March 31, 2018 and the remainder was received as of June 30, 2018.



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 communicates to and discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies.  Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 20172018 Form 10-K.  There have been no material changes with regard to these critical accounting policies.

Other Matters

Accounting Standards:  For information regarding new accounting standards, see Note 1B, "Summary of Significant Accounting Policies –Accounting– Accounting Standards," to the financial statements.

Contractual Obligations and Commercial Commitments:  There have been no material contractual obligations identifiedRefer to Note 9B, "Commitments and noContingencies – Long-Term Contractual
Arrangements," for discussion of material changes with regard to the contractual obligations and commercial commitments previously disclosed in the Eversource 2017 Form 10-K.obligations.

Web Site:  Additional financial information is available through our website at 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's, CL&P's, NSTAR Electric's and PSNH's combined Annual Reports on Form 10-K, combined 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 combined Quarterly Report on Form 10-Q.



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 three and six months ended June 30,March 31, 2019 and 2018 and 2017 included in this combined Quarterly Report on Form 10-Q:  
For the Three Months Ended June 30, For the Six Months Ended June 30, For the Three Months Ended March 31,
(Millions of Dollars)2018 2017 Increase/
(Decrease)
 2018 2017 Increase/
(Decrease)
 2019 2018 Increase/
(Decrease)
Operating Revenues$1,853.9
 $1,762.8
 $91.1
 $4,141.8
 $3,867.9
 $273.9
 $2,415.8
 $2,288.0
 $127.8
Operating Expenses: 
  
  
    
  
  
  
  
Purchased Power, Fuel and Transmission653.9
 549.7
 104.2
 1,600.7
 1,303.3
 297.4
 974.9
 946.8
 28.1
Operations and Maintenance293.9
 310.2
 (16.3) 626.4
 648.5
 (22.1) 335.6
 332.5
 3.1
Depreciation199.1
 189.9
 9.2
 403.4
 376.7
 26.7
 214.9
 204.3
 10.6
Amortization36.2
 (7.8) 44.0
 81.4
 16.2
 65.2
 71.0
 45.2
 25.8
Energy Efficiency Programs102.0
 116.4
 (14.4) 236.2
 262.6
 (26.4) 140.1
 134.2
 5.9
Taxes Other Than Income Taxes177.5
 156.2
 21.3
 359.8
 311.4
 48.4
 184.6
 182.5
 2.1
Total Operating Expenses1,462.6
 1,314.6
 148.0
 3,307.9
 2,918.7
 389.2
 1,921.1
 1,845.5
 75.6
Operating Income391.3
 448.2
 (56.9) 833.9
 949.2
 (115.3) 494.7
 442.5
 52.2
Interest Expense126.4
 107.3
 19.1
 247.5
 210.7
 36.8
 131.7
 121.1
 10.6
Other Income, Net50.1
 29.0
 21.1
 83.9
 50.6
 33.3
 31.0
 33.8
 (2.8)
Income Before Income Tax Expense315.0
 369.9
 (54.9) 670.3
 789.1
 (118.8) 394.0
 355.2
 38.8
Income Tax Expense70.4
 137.3
 (66.9) 154.2
 295.1
 (140.9) 83.4
 83.8
 (0.4)
Net Income244.6
 232.6
 12.0
 516.1
 494.0
 22.1
 310.6
 271.4
 39.2
Net Income Attributable to Noncontrolling Interests1.9
 1.9
 
 3.8
 3.8
 
 1.9
 1.9
 
Net Income Attributable to Common Shareholders$242.7
 $230.7
 $12.0
 $512.3
 $490.2
 $22.1
 $308.7
 $269.5
 $39.2

Operating Revenues
Operating Revenues by segment increased for the three and six months ended June 30, 2018, as compared to the same periods in 2017, as follows (the variance in electric distribution revenues reflects intercompany transmission billings in both periods):
(Millions of Dollars)Three Months Ended Six Months Ended
Electric Distribution$17.5
 $128.1
Natural Gas Distribution20.5
 41.8
Electric Transmission(7.2) (19.1)
Water Distribution53.5
 98.0
Other20.0
 14.5
Eliminations(13.2) 10.6
Total Operating Revenues$91.1
 $273.9

Sales Volumes: A summary of our retail electric GWh sales volumes, our firm natural gas MMcf sales volumes, and our water MG sales volumes, and percentage changes, for the three and six months ended June 30, 2018, as compared to 2017, is as follows: 
 Electric Firm Natural Gas Water
 Sales Volumes (GWh) Percentage
Increase/
(Decrease)
 Sales Volumes (MMcf) Percentage
Increase/
(Decrease)
 Sales Volumes (MG) Percentage
Increase/
(Decrease)
 2018 
2017 (1)
  2018 2017  2018 
2017 (2)
 
Three Months Ended June 30:                 
Traditional1,803
 1,823
 (1.1)% 9,287
 7,778
 19.4 % 485
 472
 2.8 %
Decoupled10,330
 10,341
 (0.1)% 8,812
 8,106
 8.7 % 5,016
 5,387
 (6.9)%
Special Contracts (3)
N/A
 N/A
 N/A
 833
 1,132
 (26.4)% N/A
 N/A
 N/A
Total - Decoupled and Special Contracts10,330
 10,341
 (0.1)% 9,645
 9,238
 4.4 % 5,016
 5,387
 (6.9)%
Total Sales Volumes12,133
 12,164
 (0.3)% 18,932
 17,016
 11.3 % 5,501
 5,859
 (6.1)%
Six Months Ended June 30:                 
Traditional5,650
 5,522
 2.3 % 29,760
 26,683
 11.5 % 953
 904
 5.4 %
Decoupled19,704
 19,813
 (0.6)% 30,685
 29,130
 5.3 % 9,373
 9,827
 (4.6)%
Special Contracts (3)
N/A
 N/A
 N/A
 1,538
 2,349
 (34.5)% N/A
 N/A
 N/A
Total - Decoupled and Special Contracts19,704
 19,813
 (0.6)% 32,223
 31,479
 2.4 % 9,373
 9,827
 (4.6)%
Total Sales Volumes25,354
 25,335
 0.1 % 61,983
 58,162
 6.6 % 10,326
 10,731
 (3.8)%


 For the Three Months Ended March 31, 2019 Compared to 2018
 Electric Firm Natural Gas Water
 Sales Volumes (GWh) Percentage
Decrease
 Sales Volumes (MMcf) Percentage
Increase
 Sales Volumes (MG) Percentage
Increase/
(Decrease)
 2019 
2018 (1)
  2019 
2018 (2)
  2019 2018 
Traditional1,968
 1,972
 (0.2)% 
 
 % 451
 467
 (3.4)%
Decoupled and Special Contracts (3)
11,183
 11,249
 (0.6)% 45,376
 43,179
 5.1% 4,378
 4,357
 0.5 %
Total Sales Volumes13,151
 13,221
 (0.5)% 45,376
 43,179
 5.1% 4,829
 4,824
 0.1 %

(1) 
In 2017 and in the month of January 2018, NSTAR Electric operated under two different rate structures (traditional and decoupled) based on its service territory geography. Effective February 1, 2018, NSTAR Electric operated entirely under a decoupled rate structure. The 20172018 sales volumes for NSTAR Electric have been recast to present February through June 2017January 2018 as decoupled to conform to the 2018 presentation for comparative purposes.current year presentation.

(2) 
Eversource acquired its water distribution business on December 4, 2017. Prior yearEffective November 15, 2018, Yankee Gas operated under a decoupled rate structure. The 2018 sales volumes for Yankee Gas have been presented for comparative purposes.recast to present 2018 as decoupled to conform to the current year presentation.

(3) 
Special contracts are unique to Yankee Gas 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.

Fluctuations in retail electric sales volumes at PSNH and natural gas sales volumes at Yankee Gas impact earnings ("Traditional" in the table above).  For CL&P, NSTAR Electric, (effective February 1, 2018, as a result of the DPU-approved rate case decision)Yankee Gas, and NSTAR Gas, fluctuations in retail sales volumes do not impact earnings due to their respective 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.  Fluctuations in water sales volumes largely do not impact earnings as our Connecticut water distribution business is also decoupled.



Three Months Ended:Operating Revenues: Operating Revenues which primarily consist of base distribution revenues and tracked revenues further described below,by segment increased $91.1 million for the three months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017.  2018, as follows:

Base Electric and Natural Gas Distribution Revenues:
(Millions of Dollars)Three Months Ended
Electric Distribution$79.3
Natural Gas Distribution44.0
Electric Transmission35.5
Water Distribution0.9
Other27.2
Eliminations(59.1)
Total Operating Revenues$127.8

Electric Distribution Revenues:
Base electric distribution revenues decreased $40increased $18.3 million due primarily to lower base distribution rates at NSTAR Electric, as per the DPU-approved rate case decision that became effective February 1, 2018, in which rates were adjusted to reflect the new lower federal corporate income tax rate (most of which did not impact earnings). Electric distribution revenues also decreased at NSTAR Electric due to the seasonal impact of a decoupled rate structure in 2018 as compared to a traditional rate structure with LBR recovery in 2017. The decrease in revenues was partially offset by CL&P's base distribution rate increase as a result of the PURA-approved rate case settlement that became effective May 1, 2018 (a portion of which did not impact earnings).

Electric distribution revenues also decreased $7.3 million due to the reserve established to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal corporate income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Effective February 1, 2018 for NSTAR Electric and May 1, 2018 for CL&P, rates charged to customers have been adjusted to reflect the new federal corporate income tax rate.

Base natural gas distribution revenues increased $3.1 million due primarily to a $6.6 million increase in sales volumes and demand revenues driven by colder April weather in Connecticut in 2018, as well as growth in new customer base. The increase in revenues was partially offset by a $3.5 million decrease due to the reserve established to reflect the impact of the reduction in federal corporate income tax rates, effective January 1, 2018.

Tracked Electric and Natural Gas Distribution Revenues: Tracked revenues consist of certain costs that are recovered from customers in retail 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 and other energy-related costs, for our electric and natural gas customers, retail transmission charges, energy efficiency program costs, net metering for distributed generation and restructuring and stranded cost recovery revenues.revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation. In addition, tracked revenues include certain incentives earned and carrying charges that are billed in rates to customers.

Tracked retail electric distribution revenues increased as a result of an increase in electric energy supply costs ($27.656.1 million), driven by increased average retail prices. In addition, there was an increase in stranded cost recovery revenues ($23.023.5 million), and an increase in other distribution tracking mechanisms ($18.3 million), partially offset by a decrease in retail electric transmission charges ($8.931.8 million). Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties, which decreased $7.0 million.

Natural Gas Distribution Revenues:
Base natural gas distribution revenues increased $20.2 million due primarily to the decoupled rate structure at Yankee Gas beginning November 15, 2018, which is seasonally structured and provides higher revenues in the winter heating months.

Tracked natural gas distribution revenues increased as a result of an increase in natural gas supply costs ($17.421.2 million).

Water: Water operating revenues totaled $53.5 million for the three months ended June 30, 2018 as a result and an increase in wholesale sales of the acquisition of Aquarion on December 4, 2017.natural gas to third party suppliers ($3.9 million).

Electric Transmission Revenues:  The electricElectric transmission segment revenues decreased $7.2increased $35.5 million due to lower revenue requirements primarily related to the lower federal corporate income tax rate that was reflected in 2018 transmission revenues, partially offset by an increase related to ongoing investments in our transmission infrastructure.



Six Months Ended:Other Revenues and Eliminations: Operating Revenues, whichOther revenues primarily consistinclude the revenues of base distribution revenues and tracked revenues further described below, increased $273.9 million for the six months ended June 30, 2018, as compared to the same period in 2017.  

Base Electric and Natural Gas Distribution Revenues:

Electric distribution revenues decreased $49.6 million due primarily to lower base distribution rates at NSTAR Electric, as per the DPU-approved rate case decision that became effective February 1, 2018, in which rates were adjusted to reflect the new lower federal corporate income tax rate (mostEversource's service company, most of which did not impact earnings). Electric distribution revenues also decreased at NSTAR Electric due to the seasonal impact of a decoupled rate structureare eliminated in 2018 as compared to a traditional rate structure with LBR recovery in 2017. The decrease in revenues was partially offset by CL&P's base distribution rate increase as a result of the PURA-approved rate case settlement that became effective May 1, 2018 (a portion of which did not impact earnings), and an increase in sales volumes primarily driven by the colder weather in January 2018, as compared to the same period in 2017, at NSTAR Electric (prior to its decoupled rate structure). Effective February 1, 2018, NSTAR Electric operated entirely under a decoupled rate structure.

Electric distribution revenues also decreased $26.5 million due to the reserve established to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal corporate income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Effective February 1, 2018 for NSTAR Electric and May 1, 2018 for CL&P, rates charged to customers have been adjusted to reflect the new federal corporate income tax rate.

Base natural gas distribution revenues increased $5.0 million due primarily to a $13.0 million increase in sales volumes and demand revenues driven by colder January and April weather in Connecticut in 2018, as well as growth in new customer base. The increase in revenues was partially offset by an $8.0 million decrease due to the reserve established to reflect the impact of the reduction in federal corporate income tax rates, effective January 1, 2018.

Tracked Electric and Natural Gas Distribution Revenues: Tracked revenues consist of certain costs thatconsolidation. Intercompany eliminations 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 and other energy-related costs for our electric and natural gas customers, 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 that are billed in rates to customers.

Tracked electric distribution revenues increased as a result of an increase in electric energy supply costs ($136.6 million), driven by increased average retail prices. In addition, there was an increase in stranded cost recovery revenues ($18.1 million) and an increase in retail electric transmission charges ($32.9 million).

Tracked natural gas distribution revenues increased as a result of an increase in natural gas supply costs ($33.6 million) and an increase in energy efficiency program revenues ($4.9 million).

Water: Water operating revenues totaled $98.0 million for the six months ended June 30, 2018 as a result of the acquisition of Aquarion on December 4, 2017.

Electric Transmission Revenues:  The electric transmission segment revenues decreased $19.1 million due to lower revenue requirements primarily related to the lower federal corporate income tax rate that was reflected in 2018Eversource electric transmission revenues partially offset by an increase relatedthat are derived
from ISO-NE regional transmission charges to ongoing investments in ourthe distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the
wholesale transmission infrastructure.business, and revenues from Eversource's service company.

Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas and water, on behalf of our customers.  These electric and natural gas 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 increasedincreased/(decreased) for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, due primarily to the following:
(Millions of Dollars)Three Months Ended Six Months EndedThree Months Ended
Electric Distribution$62.2
 $192.5
$60.4
Natural Gas Distribution15.9
 28.1
25.6
Transmission14.2
 42.8
(27.4)
Water Distribution0.3
 0.7
Eliminations11.6
 33.3
(30.5)
Total Purchased Power, Fuel and Transmission$104.2
 $297.4
$28.1

The variance in electric distribution reflects intercompany transmission charges in both periods. The increase in purchased power expense at the electric distribution business for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, was driven primarily by higher prices associated with the procurement of energy supply as well as higher purchased volumes at PSNH. As a result of the sale of PSNH's thermal generation assets on January 10, 2018, PSNH purchased power in place of its self-generation output in the first half of 2018.supply. The increase in natural gas supply costs at our natural gas distribution business was due primarily to higher average prices and sales volumes.



The increasedecrease in transmission costs for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and an increasea decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.customers, and a decrease in costs billed by ISO-NE that support regional grid investments. This was partially offset by a decreasean increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network.



Operations and Maintenance expense includes tracked costs and costs that are part of base electric, natural gas and water distribution rates with changes impacting earnings (non-tracked costs).  Operations and Maintenance expense increased/(decreased) for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, due primarily to the following:
(Millions of Dollars)
Three Months
Ended
 
Six Months
Ended
Three Months Ended
Base Electric Distribution (Non-Tracked Costs):    
Bad debt expense$8.1
 $11.0
Shared corporate costs (including computer software depreciation at Eversource Service)5.4
 9.9
Employee-related expenses, including labor and benefits(2.0) 0.1
$(12.4)
Storm restoration costs(8.7) (6.5)
Operations-related expenses, including vegetation management, vehicles, and outside services (excluding storm restoration costs)(4.2) (12.7)10.2
Other non-tracked operations and maintenance0.5

4.8
0.3
Total Base Electric Distribution (Non-Tracked Costs)(0.9)
6.6
(1.9)
Base Natural Gas Distribution (Non-Tracked Costs)2.3
 7.6
3.0
Water Distribution (Addition of Aquarion operations and maintenance expenses due to acquisition on December 4, 2017)19.6
 38.9
Tracked Costs (Electric Distribution, Electric Transmission and Natural Gas Distribution) - Decrease primarily due to lower PSNH generation operations expenses due to the January 10, 2018 sale of thermal generation assets and lower transmission expenses(30.3)
(61.7)
Water Distribution0.8
Tracked Costs (Electric Distribution, Electric Transmission and Natural Gas Distribution) - Increase due primarily to higher electric transmission expenses, partially offset by the absence in 2019 of PSNH generation operations expenses due to the 2018 sales of thermal and hydroelectric generation assets9.3
Other and eliminations:    
Eversource Parent and Other Companies - other operations and maintenance0.9
 0.1
20.6
Eliminations(7.9) (13.6)(28.7)
Total Operations and Maintenance$(16.3)
$(22.1)$3.1

Depreciation expense increased for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, due primarily to higher netutility plant in service balances and new depreciation rates effective with the CL&P distribution rate case settlement agreement. Partially offsetting these increases werewas lower depreciation expense at PSNH as a result of the sale of the thermal and hydroelectric generation assets on January 10, 2018 and lower depreciation expense at NSTAR Electric due to lower depreciation composite rates effective with the NSTAR Electric rate case decision.in 2018.

Amortization expense includes the deferral of energy supply and energy-related costs included in certain regulatory commission-approved cost tracking mechanisms, and the amortization of certain costs.  This deferral adjusts expense to match the corresponding revenues. Amortization increased for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, 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 the electric, natural gas and water companies are recovered from customers in rates and have no impact on earnings. In addition, the increase includes amortization of PSNH's securitized regulatory asset of $10.6 million related to the 2018 RRB issuance.

Energy Efficiency Programs expense decreasedincreased for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, due primarily to a State of Connecticut policy change requiringhigher spending for CL&P to remit 2018&P's, NSTAR Electric's and PSNH's energy efficiency funds to the State of Connecticut. For the three and six months ended June 30, 2018, these amounts totaled $12.7 million and $25.4 million, respectively. These costs were collected from CL&P's customers and remitted to the State of Connecticut; as such we have classified these amounts as Taxes Other than Income Taxes.programs. The costs for the majority of the 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 for the three and six months ended June 30, 2018,March 31, 2019, as compared to the same periodsperiod in 2017,2018, due primarily to higher property taxes as a Stateresult of Connecticut policy change requiringhigher utility plant in service balances and higher gross earnings taxes (the costs of which are tracked), partially offset by a decrease related to CL&P to remit 2018&P's future remittance of energy efficiency funds to the State of Connecticut (which totaled $10.7 million in the first three months of 2019, as compared to $12.7 million in the first three months of 2018) and $25.4 million for the three and six months ended June 30, 2018, respectively), as well as highera decrease in NSTAR Electric's property taxes due to higher utility planta decrease in service balances.tax rates.

Interest Expense increased for the three months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to interest expense on the 2018 PSNH RRB issuance ($5.4 million), an increase in interest on notes payable ($4.3 million) and an increase in interest on long-term debt ($10.04.2 million) as a result of new debt issuances, the addition of Aquarion operations in 2018 ($6.5 million),issuances. Partially offsetting these increases was an increase related to interest expense on the 2018 RRB issuance ($2.8 million) and an increase in interest on notes payable ($2.5 million), partially offset by higher AFUDC related to debt funds ($2.0 million) and a decrease in regulatory deferrals, primarily at NSTAR Electric, which decreasedother capitalized interest expense ($0.94.6 million).

Interest Expense increasedOther Income, Net decreased for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to an increase in interest on long-term debt ($23.1 million) as a result of new debt issuances, the addition of Aquarion operations in 2018 ($12.8 million) and an increase in interest on notes payable ($3.8 million), partially offset by higher AFUDC related to debt funds ($4.0 million) and a decrease in regulatory deferrals, primarily at NSTAR Electric, which decreased interest expense ($2.1 million).



Other Income, Net increased for the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to an increase related to pension, SERP and PBOP non-service income components ($7.17.8 million), an increasepartially offset by the recognition in gains on investments ($9.6 million), primarilythe first quarter of 2019 of $5.2 million of the equity return component of the carrying charges related to Eversource's investmentstorms incurred from December 2013 through April 2016 recorded in a renewable energy fund, and higher AFUDC related to equity funds ($2.9 million).

Other Income, Net increased for the six months ended June 30, 2018, as compared to the same period in 2017, due primarily to an increase related to pension, SERP and PBOP non-serviceinterest income components ($14.3 million), an increase in gains on investments ($9.6 million), primarily related to Eversource's investment in a renewable energy fund, higher AFUDC related to equity funds ($6.0 million) and changes in the market value related to deferred compensation plans ($4.2 million).at PSNH.

Income Tax Expense decreased for the three months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the new federal tax law enacted December 22, 2017, the Tax Cuts and Jobs Act, reducing the federal corporate income tax rate from 35 percent to 21 percent and lower pre-tax earningsamortization of EDIT ($63.38.1 million), and by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($3.60.4 million).

Income Tax Expensedecreased for the six months ended June 30, 2018, as compared to the same period in 2017, due primarily to the federal corporate income tax rate reduction from 35 percent to 21 percent and lower, partially offset by higher pre-tax earnings ($135.48.1 million),. The impact of the amortization of the EDIT regulatory liability, including the tax gross up portion, that reduced revenue is $11.2 million, offset by higher state taxes ($1.7 million), decreased further by items thatcurrent tax benefit of $3.1 million and amortization of EDIT of $8.1 million for the first quarter ended March 31, 2019, which results in no impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($7.2 million).on net income.





RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

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 sixthree months ended June 30,March 31, 2019 and 2018 and 2017 included in this combined Quarterly Report on Form 10-Q:
For the Six Months Ended June 30,For the Three Months Ended March 31,
CL&P NSTAR Electric PSNHCL&P NSTAR Electric PSNH
(Millions of Dollars)2018 2017 Increase/
(Decrease)
 2018 2017 
Increase/
(Decrease)
 2018 2017 
Increase/
(Decrease)
2019 2018 Increase/
(Decrease)
 2019 2018 
Increase/
(Decrease)
 2019 2018 
Increase/
(Decrease)
Operating Revenues$1,479.9
 $1,398.9
 $81.0
 $1,460.9
 $1,438.5
 $22.4
 $502.5
 $483.5
 $19.0
$849.2
 $785.0
 $64.2
 $797.6
 $770.1
 $27.5
 $276.4
 $267.4
 $9.0
Operating Expenses: 
  
  
      
      
 
  
  
      
      
Purchased Power, Fuel and Transmission536.2
 452.1
 84.1
 598.7
 504.9
 93.8
 193.2
 122.2
 71.0
319.8
 301.9
 17.9
 330.1
 332.6
 (2.5) 113.5
 109.7
 3.8
Operations and Maintenance227.0
 237.7
 (10.7) 220.8
 227.7
 (6.9) 97.9
 130.5
 (32.6)130.6
 117.3
 13.3
 113.0
 118.7
 (5.7) 52.6
 51.4
 1.2
Depreciation136.9
 120.6
 16.3
 134.6
 135.7
 (1.1) 46.3
 63.2
 (16.9)73.3
 67.5
 5.8
 72.6
 70.5
 2.1
 22.9
 23.5
 (0.6)
Amortization of Regulatory Assets/(Liabilities), Net43.4
 24.2
 19.2
 18.3
 7.1
 11.2
 14.0
 (13.5) 27.5
Amortization of Regulatory Assets, Net35.7
 28.0
 7.7
 22.6
 6.4
 16.2
 13.7
 5.0
 8.7
Energy Efficiency Programs41.4
 68.8
 (27.4) 140.0
 145.9
 (5.9) 9.8
 7.0
 2.8
26.0
 22.8
 3.2
 76.7
 74.8
 1.9
 6.7
 5.2
 1.5
Taxes Other Than Income Taxes174.7
 144.4
 30.3
 95.9
 82.7
 13.2
 38.7
 44.0
 (5.3)92.0
 90.3
 1.7
 44.8
 48.1
 (3.3) 17.3
 16.8
 0.5
Total Operating Expenses1,159.6
 1,047.8
 111.8
 1,208.3
 1,104.0
 104.3
 399.9
 353.4
 46.5
677.4
 627.8
 49.6
 659.8
 651.1
 8.7
 226.7
 211.6
 15.1
Operating Income320.3
 351.1
 (30.8) 252.6
 334.5
 (81.9) 102.6
 130.1
 (27.5)171.8
 157.2
 14.6
 137.8
 119.0
 18.8
 49.7
 55.8
 (6.1)
Interest Expense75.5
 70.2
 5.3
 53.8
 57.9
 (4.1) 27.4
 25.8
 1.6
35.8
 36.8
 (1.0) 27.9
 26.5
 1.4
 14.4
 12.8
 1.6
Other Income, Net13.7
 7.5
 6.2
 26.9
 15.5
 11.4
 8.2
 4.7
 3.5
3.9
 6.6
 (2.7) 11.1
 12.6
 (1.5) 7.0
 4.7
 2.3
Income Before Income Tax Expense258.5
 288.4
 (29.9) 225.7
 292.1
 (66.4) 83.4
 109.0
 (25.6)139.9
 127.0
 12.9
 121.0
 105.1
 15.9
 42.3
 47.7
 (5.4)
Income Tax Expense60.2
 106.9
 (46.7) 60.6
 113.7
 (53.1) 22.5
 43.1
 (20.6)29.4
 28.4
 1.0
 27.0
 28.0
 (1.0) 9.5
 12.6
 (3.1)
Net Income$198.3
 $181.5
 $16.8
 $165.1
 $178.4
 $(13.3) $60.9
 $65.9
 $(5.0)$110.5
 $98.6
 $11.9
 $94.0
 $77.1
 $16.9
 $32.8
 $35.1
 $(2.3)

Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes was as follows:
For the Six Months Ended June 30,For the Three Months Ended March 31,
2018 2017 Increase/(Decrease) Percent2019 2018 Decrease Percentage Decrease
CL&P10,222
 10,168
 54
 0.5 %5,350
 5,376
 (26) (0.5)%
NSTAR Electric11,357
 11,352
 5
  %5,833
 5,874
 (41) (0.7)%
PSNH3,775
 3,815
 (40) (1.0)%1,968
 1,972
 (4) (0.2)%

Fluctuations in retail electric sales volumes at PSNH impact earnings.  For CL&P and NSTAR Electric, (effective February 1, 2018, as a result of the DPU-approved rate case decision), fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.

Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $64.2 million at CL&P, $27.5 million at NSTAR Electric and $9.0 million for PSNH for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017, as follows:2018.
(Millions of Dollars)CL&P NSTAR Electric PSNH
Operating Revenues$81.0
 $22.4
 $19.0

Base Distribution Revenues:

CL&P's distribution revenues increased $5.6$19.6 million due primarily to the impact of its base distribution rate increase as a result of the PURA-approved rate case settlement agreement that became effective May 1, 2018 (a portion of which did not impact earnings).

NSTAR Electric's distribution revenues decreased $51.9$0.9 million due primarily to lower base distribution rates, as per the DPU-approvedimpact of its decoupled rate case decision that becamestructure, which was effective February 1, 2018, in which rates were adjusted to reflect the new lower federal corporate income tax rate (most of which did not impact earnings). Electric distribution revenues also decreased due to the seasonal impact of a decoupled rate structure in 2018 as compared to a traditional rate structure with LBR recovery in 2017. The decrease in revenues was partially offset by an increase into base distribution rates effective January 2018 sales volumes, as compared to January 2017, primarily driven by the colder weather. Effective February 1, 2018, NSTAR Electric operated entirely under a decoupled rate structure, and changes in sales volumes no longer impact earnings.2019.

PSNH's base distribution revenues decreased $3.3$0.4 million fordue primarily to lower demand revenues in the six months ended June 30, 2018,first quarter of 2019, as compared to the same period in 2017, primarily as a result of a rate change due to the completion of the full recovery of certain costs in revenues. The majority of this decrease did not impact earnings.2018.


Distribution revenues decreased $16.6 million at CL&P, 3.7 million at NSTAR Electric and 6.2 million at PSNH due to the reserve established to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal corporate income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Effective February 1, 2018 for NSTAR Electric and May 1, 2018 for CL&P, rates charged to customers have been adjusted to reflect the new federal corporate income tax rate.

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.revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation.  In addition, tracked revenues include certain incentives earned and carrying charges that are billed in rates to customers. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties. Tracked revenues increased/(decreased) for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:
(Millions of Dollars)CL&P NSTAR Electric PSNHCL&P NSTAR Electric PSNH
Energy supply procurement$91.7
 $44.2
 $0.7
Retail Tariff Tracked Revenues     
Energy supply procurement (1)
$36.3
 $27.8
 $(8.0)
Retail transmission4.2
 25.6
 3.1
(9.5) (13.9) (8.4)
Stranded cost recovery0.9
 (9.9) 27.1
(2.9) 0.8
 25.6
Other distribution tracking mechanisms(5.6) 17.2
 3.7
5.0
 11.0
 2.3
Wholesale Market Sales Revenue3.4
 (0.5) (10.7)

(1)
The decrease at PSNH includes the absence in 2019 of the recovery of generation rate base return due to the sales of its thermal and hydroelectric generation assets in 2018.

Transmission Revenues: Transmission revenues decreased $8.8 million and $10.9increased $17.3 million at CL&P, and$8.8 million at NSTAR Electric, and $9.4 million at PSNH, respectively, due to lower revenue requirements primarily related to the lower federal corporate income tax rate that was reflected in 2018 transmission revenues, partially offset by an increase related to ongoing investments in our transmission infrastructure.

Eliminations: Intercompany eliminations are primarily related to the Eversource electric transmission revenues that are derived
from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the
wholesale transmission business. The impact of eliminations decreased revenues by $7.7 million at CL&P, $5.4 million at NSTAR Electric and $0.7 million at PSNH.

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) for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:
(Millions of Dollars)CL&P NSTAR Electric PSNHCL&P NSTAR Electric PSNH
Purchased Power Costs$64.2
 $59.9
 $68.4
$34.1
 $16.0
 $10.3
Transmission Costs12.9
 25.5
 4.4
(8.5) (13.2) (5.7)
Eliminations7.0
 8.4
 (1.8)(7.7) (5.3) (0.8)
Total Purchased Power, Fuel and Transmission$84.1
 $93.8
 $71.0
$17.9
 $(2.5) $3.8

Purchased Power Costs: Included in purchased power costs are the costs associated with 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 also 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 in purchased power costs for the six months ended June 30, 2018, as compared to same period in 2017, was due primarily to the following:

The increase at CL&P was due primarily to an increase in the price and volume of power procured on behalf of our customers.
The increase at NSTAR Electric was due primarily to higher prices associated withan increase in the procurementprice of energy supply, partially offset by slightly lower purchased volumes.power procured on behalf of our customers.
The increase at PSNH was due primarily to higher purchased power energy expenses that are recovered as a component of the Energy Service tracking mechanism. As a result of the sale of its thermal generation assets on January 10, 2018, PSNH purchased power in place of its self-generation output in the first half of 2018.

Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generating plantsgeneration facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.

The increasedecrease in transmission costs for the six months ended June 30, 2018, as compared to the same period in 2017, at CL&P, NSTAR Electric and PSNH was primarily thea result of an increase in costs billed by ISO-NE that support regional grid investment and an increasea decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.customers, and a decrease in costs billed by ISO-NE that support regional grid investments. This was partially offset by a decreasean increase in Local Network Service charges, which reflect the cost of transmission service.service provided by Eversource over our local transmission network.



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) for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:
(Millions of Dollars)CL&P NSTAR Electric PSNHCL&P NSTAR Electric PSNH
Base Electric Distribution (Non-Tracked Costs):          
Bad debt expense$5.7
 $5.4
 $(0.1)
Shared corporate costs (including computer software depreciation at Eversource Service)3.7
 5.1
 1.1
Employee-related expenses, including labor and benefits4.5
 (3.2) (1.2)$(1.8) $(9.8) $(0.8)
Storm restoration costs(4.2) (0.5) (1.8)(4.4) 2.2
 1.0
Operations-related expenses, including vegetation management, vehicles, and outside services (excluding storm restoration costs)(10.4) 1.8
 (4.1)5.1
 
 5.1
Other non-tracked operations and maintenance(3.2) 6.8
 1.2
3.4
 (1.9) 
Total Base Electric Distribution (Non-Tracked Costs)(3.9) 15.4
 (4.9)2.3
 (9.5) 5.3
Tracked Costs:          
Decrease of PSNH generation operations expenses due to the January 10, 2018 sale of thermal generation assets
 
 (24.4)
Absence in 2019 of PSNH generation operations expenses due to the 2018 sales of thermal and hydroelectric generation assets
 
 (6.8)
Transmission expenses(9.5) (8.2) (0.7)9.7
 1.1
 2.7
Other tracked operations and maintenance2.7
 (14.1) (2.6)1.3
 2.7
 
Total Tracked Costs(6.8) (22.3) (27.7)11.0
 3.8
 (4.1)
Total Operations and Maintenance$(10.7) $(6.9) $(32.6)$13.3
 $(5.7) $1.2

Depreciation increased/(decreased) for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:

The increase at CL&P iswas due primarily to higher net plant in service balances and the implementation of new depreciation rates effective with the CL&P distribution rate case settlement agreement.  
The decreaseincrease at NSTAR Electric iswas due primarily to lowerhigher depreciation composite rates effective with the NSTAR Electric rate case decision,on certain distribution property, partially offset by higher net plant in service.overall lower depreciation rates on remaining property.
The decrease at PSNH iswas due primarily to lower net plant in service balances as a result of the sale of the thermal and hydroelectric generation assets on January 10,in 2018.

Amortization of Regulatory Assets/(Liabilities),Assets, Net expense includes the deferral of energy supply and energy-related costs included in certain regulatory-approved cost tracking mechanisms, and the amortization of certain costs. This deferral adjusts expense to match the corresponding revenues. Amortization of Regulatory Assets/(Liabilities),Assets, Net increased at CL&P, NSTAR Electric and PSNH for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, 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. 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. In addition, the increase at PSNH includes amortization of its securitized regulatory asset of $10.6 million related to the 2018 RRB issuance.

Energy Efficiency Programs expense includes costs for various state energy policy initiatives and expanded energy efficiency programs, and the majority isof which are recovered from customers in rates and hashave no impact on earnings. Energy Efficiency Programs expense decreasedincreased for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:

The decrease athigher spending for CL&P is due primarily to a State of Connecticut policy change requiring CL&P to remit 2018&P's, NSTAR Electric's and PSNH's energy efficiency funds to the State of Connecticut. In the first half of 2018, this amount totaled $25.4 million. These costs were collected from CL&P's customers and remitted to the State of Connecticut; as such we have classified this amount as 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 incurred to match energy efficiency revenue billed to customers.programs.

Taxes Other Than Income Taxes increased/increased/(decreased) for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the following:

The increase at CL&P iswas due primarily to higher property taxes as a Stateresult of Connecticut policy change requiringhigher utility plant balances and higher gross earnings taxes (the costs of which are tracked), partially offset by a decrease related to CL&P to remit 2018&P's future remittance of energy efficiency funds to the State of Connecticut (which totaled $25.4$10.7 million forin the first halfthree months of 2018),2019, as well as higher property taxes duecompared to higher utility plant balances.
The increase at NSTAR Electric is due primarily to higher property taxes due to higher utility plant balances.$12.7 million in the first three months of 2018).
The decrease at PSNH isNSTAR Electric was due primarily to the absence oflower property taxes as a result of the sale of thermal generation assets on January 10, 2018 and a 2018 refund of disputed property taxes for prior years from the Town of Bow, New Hampshire, partially offset by higher property taxes due to higher utility plant balances.


decrease in tax rates.

Interest Expense increased/(decreased)increased at PSNH for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017, due primarily to the following:

The increase at CL&P is due primarily to higher interest on long-term debt as a result of new debt issuances ($4.8 million).
The decrease at NSTAR Electric isdue primarily to a decrease in regulatory deferrals, which decreased interest expense ($3.3 million).
The increase at PSNH is2018, due primarily to interest on RRBsthe 2018 RRB issuance ($2.8 million) and higher interest on short-term borrowings ($1.45.4 million), partially offset by lower interest on long-term debt ($2.62.1 million) and lower interest on notes payable ($1.0 million).

Other Income, Net (decreased)/increased for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017, due primarily to the following:

The increase at CL&P is due to an increase related to pension, SERP and PBOP non-service income components ($4.4 million) and higher AFUDC related to equity funds ($1.3 million).
The increase at NSTAR Electric is due to an increase related to pension, SERP and PBOP non-service income components ($8.1 million) and higher AFUDC related to equity funds ($3.2 million).
The increase at PSNH is due to interest income primarily related to a 2018, refund of disputed property taxes for prior years ($2.6 million) and an increase related to pension, SERP and PBOP non-service income components ($1.3 million).

Income Tax Expense decreased for the six months ended June 30, 2018, as compared to same period in 2017, due primarily to the following:

The decrease at CL&P was due primarily to the new federal tax law enacted December 22, 2017, the Tax Cutsa decrease related to pension, SERP and Jobs Act, reducing the federal corporate tax rate from 35 percent to 21 percent and lower pre-tax earningsPBOP non-service income components ($46.73.6 million).
The increase at PSNH was due to the recognition in the first quarter of 2019 of $5.2 million of the equity return component of the carrying charges related to storms incurred from December 2013 through April 2016 recorded in interest income, partially offset by a decrease related to pension, SERP and PBOP non-service income components ($1.8 million).



Income Tax Expense increased/(decreased) for the three months ended March 31, 2019, as compared to the same period in 2018, due primarily to the following:

The increase at NSTAR ElectricCL&P was due primarily to the federal corporate income tax rate reduction from 35 percent to 21 percent and lowerhigher pre-tax earnings ($54.82.8 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.71.8 million).
The decrease at NSTAR Electric was due primarily to amortization of EDIT ($4.9 million), partially offset by higher pre-tax earnings ($3.5 million) and by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.4 million). The impact of the amortization of the EDIT regulatory liability, including the tax gross up portion, that reduced revenue is $6.8 million, offset by current tax benefit of $1.9 million and amortization of EDIT of $4.9 million for the first quarter ended March 31, 2019, which results in no impact on net income.
The decrease at PSNH was due primarily to the federal corporate income tax rate reduction from 35 percent to 21 percent and lower pre-tax earnings ($20.61.4 million), amortization of EDIT ($1.3 million), and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.4 million). The impact of the amortization of the EDIT regulatory liability, including the tax gross up portion, that reduced revenue is $1.8 million, offset by current tax benefit of $0.5 million and amortization of EDIT of $1.3 million for the first quarter ended March 31, 2019, which results in no impact on net income.

EARNINGS SUMMARY

CL&P's earnings increased $16.8$11.9 million for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to the impact of the CL&P base distribution rate increase effective May 1, 2018 and an increase in transmission earnings driven by a higher transmission rate base. The earnings increase was partially offset by lower non-service income from our benefit plans, higher depreciation expense and higher property and other tax expense.

NSTAR Electric's earnings increased $16.9 million for the three months ended March 31, 2019, as compared to the same period in 2018, due primarily to lower operations and maintenance expense, an increase in transmission earnings driven by a higher transmission rate base, a net earnings benefit fromand lower incomeproperty and other tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act, lower employee benefit plan costs, lower non-tracked operations and maintenance expense, and the impact of the CL&P base distribution rate increase effective May 1, 2018. The earnings increase was partially offset by higher depreciation expense, higher property tax expense, and higher interest expense.

NSTAR Electric'sPSNH's earnings decreased $13.3$2.3 million for the sixthree months ended June 30, 2018,March 31, 2019, as compared to the same period in 2017,2018, due primarily to lower electric distribution margin (which includes the seasonal impactabsence in 2019 of generation earnings as a decoupled rate structure at NSTAR Electricresult of thermal and hydroelectric generation asset sales in 2018, as compared to a traditional rate structure with LBR recovery in 2017, partially offset by a net earnings benefit from lower income tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act), higher non-tracked operations and maintenance expense, and higher property and other tax expense. The earnings decrease was partially offset by the recognition in 2019 of carrying charges on storm costs approved for recovery and an increase in transmission earnings driven by a higher transmission rate base, lower interest expense, and lower depreciation expense.base.

PSNH's earnings decreased $5.0 million for the six months ended June 30, 2018, as compared to the same period in 2017, due primarily to lower generation earnings due to the sale of thermal generation assets on January 10, 2018. The earnings decrease was partially offset by a net earnings benefit from lower income tax expense as compared to lower distribution revenues resulting from the Tax Cuts and Jobs Act, an increase in transmission earnings driven by a higher transmission rate base, lower non-tracked operations and maintenance expense, and lower property tax expense due to the 2018 refund of disputed property taxes for prior tax years.

LIQUIDITY

Cash Flows: CL&P had cash flows provided by operating activities of $268.1$198.3 million for the sixthree months ended June 30, 2018,March 31, 2019, as compared to $355.7$64.7 million in the same period of 2017.2018.  The decreaseincrease in operating cash flows was due primarily to the timing of accounts payable cash payments, the absence in 2019 of cash payments of $82.3 million in pension contributions, and approximately $21 million of storm restoration cost payments made in the first six monthsquarter of 2018 for storm restoration costs of approximately $71 million and an increase in pension contributions of $39.9 million.2018. Partially offsetting these decreasesincreases were the timing of collections for regulatory tracking mechanisms and payments related tothe timing of cash collections on our accounts receivable and other working capital items, including accounts payable.items.

NSTAR Electric had cash flows provided by operating activities of $202.7$137.0 million for the sixthree months ended June 30, 2018,March 31, 2019, as compared to $215.5$136.5 million in the same period of 2017.2018.  The decreaseincrease in operating cash flows was due primarily to $46 million of cash payments made in 2018 for storm restoration costs, of approximately $85 million and income tax payments maderefunds received in 2018the first quarter of $57.92019 of $27.8 million, compared to income tax refunds received in 2017payments of $14.5 million, and an increase of $43.8$8.8 million in Pension and PBOP contributions made inthe first quarter of 2018, as compared to 2017. Partially offsetting these decreases were increases in certain regulatory overrecoveries and the timing of cash collections on our accounts receivables. Partially offsetting these increases were the timing of accounts payable cash payments related to our working capital items, including accounts payable.


and the timing of collections for regulatory tracking mechanisms.

PSNH had cash flows provided by operating activities of $112.8$132.6 million for the sixthree months ended June 30, 2018,March 31, 2019, as compared to $142.1$96.2 million in the same period of 2017.2018.  The decreaseincrease in operating cash flows was due primarily to the timing of accounts payable cash payments and income tax refunds of $20.3 million in the first quarter of 2019, as compared to income tax refunds of $4.4 million in the same period in 2018. Partially offsetting these increases were the timing of collections for regulatory tracking mechanisms and collections and payments of our other working capital items, including accounts receivable and accounts payable and increases in regulatory underrecoveries. Partially offsetting these decreases were $17.5 million in lower income tax payments made in 2018, compared to 2017.items.

For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.


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 three months ended June 30, 2018 and 2017 included in this combined Quarterly Report on Form 10-Q:
 For the Three Months Ended June 30,
(Millions of Dollars)2018 2017 Increase/
(Decrease)
Operating Revenues$694.9
 $666.6
 $28.3
Operating Expenses: 
  
  
Purchased Power and Transmission234.3
 207.2
 27.1
Operations and Maintenance109.7
 108.9
 0.8
Depreciation69.4
 60.8
 8.6
Amortization of Regulatory Assets, Net15.4
 11.4
 4.0
Energy Efficiency Programs18.6
 32.2
 (13.6)
Taxes Other Than Income Taxes84.4
 70.5
 13.9
Total Operating Expenses531.8
 491.0
 40.8
Operating Income163.1
 175.6
 (12.5)
Interest Expense38.7
 35.3
 3.4
Other Income, Net7.1
 4.2
 2.9
Income Before Income Tax Expense131.5
 144.5
 (13.0)
Income Tax Expense31.8
 53.2
 (21.4)
Net Income$99.7
 $91.3
 $8.4

Operating Revenues
Sales Volumes: A summary of CL&P's retail electric GWh sales volumes was as follows:
 For the Three Months Ended June 30,
 2018 2017 Increase Percent
CL&P4,846
 4,838
 8
 0.2%

Fluctuations in retail electric sales volumes do not impact earnings due to its PURA-approved distribution revenue decoupling mechanism.

Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $28.3 million for the three months ended June 30, 2018, as compared to the same period in 2017.

Base Distribution Revenues:

CL&P's distribution revenues increased $5.9 million due primarily to the impact of its base distribution rate increase as a result of the PURA-approved rate case settlement that became effective May 1, 2018 (a portion of which did not impact earnings).
Distribution revenues decreased $4.2 million due to the reserve established to reflect the difference between the 35 percent federal corporate income tax rate included in rates charged to customers and the 21 percent federal corporate income tax rate, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. Effective May 1, 2018, rates charged to customers have been adjusted to reflect the new federal corporate income tax rate.

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 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 that are billed in rates to customers. Tracked revenues increased/(decreased) for the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to the following:
(Millions of Dollars) 
Energy supply procurement$33.9
Retail transmission(3.7)
Other distribution tracking mechanisms(5.1)

Transmission Revenues: Transmission revenues decreased $2.2 million due to lower revenue requirements primarily related to the lower federal corporate income tax rate that was reflected in 2018 transmission revenues, partially offset by an increase related to 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 expense increased for the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to the following:
(Millions of Dollars) 
Purchased Power Costs$24.1
Transmission Costs0.8
Eliminations2.2
Total Purchased Power and Transmission$27.1

Purchased Power Costs: The increase in purchased power costs was due primarily to an increase in the price of power procured on behalf of our customers.

Transmission Costs: The increase in transmission costs was due primarily to the result of an increase in costs billed by ISO-NE that support regional grid investment and an increase in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers. This was partially offset by a decrease in Local Network Service charges, which reflect the cost of transmission service.

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) for the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to the following:
(Millions of Dollars) 
Base Electric Distribution (Non-Tracked Costs): 
Bad debt expense$4.6
Storm restoration costs(5.0)
Other non-tracked operations and maintenance0.6
Total Base Electric Distribution (Non-Tracked Costs)0.2
Total Tracked Costs0.6
Total Operations and Maintenance$0.8

Depreciation expense increased for the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to higher net plant in service balances and the implementation of new depreciation rates effective with the CL&P distribution rate case settlement agreement. 

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. This deferral adjusts expense to match the corresponding revenues. Amortization of Regulatory Assets, Net increased at CL&P for the three months ended June 30, 2018, as compared to the same period in 2017, 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. 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 state energy policy initiatives and expanded energy efficiency programs and the majority is recovered from customers in rates and has no impact on earnings. Energy Efficiency Programs expensedecreased for the three months ended June 30, 2018, as compared to same period in 2017, due primarily to a State of Connecticut policy change requiring CL&P to remit 2018 energy efficiency funds to the State of Connecticut. For the three months ended June 30, 2018, this amount totaled $12.7 million. These costs were collected from CL&P's customers and remitted to the State of Connecticut; as such we have classified this amount as Taxes Other than Income Taxes.

Taxes Other Than Income Taxes increasedfor the three months ended June 30, 2018, as compared to same period in 2017, due primarily to a State of Connecticut policy change requiring CL&P to remit 2018 energy efficiency funds to the State of Connecticut (which totaled $12.7 million for the three months ended June 30, 2018), as well as higher property taxes due to higher utility plant balances.

Income Tax Expense decreased for the three months ended June 30, 2018, as compared to same period in 2017, due primarily to the lower federal tax rate and lower pre-tax earnings ($23.0 million) and lower 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 ($2.7 million).

EARNINGS SUMMARY

CL&P's earnings increased $8.4 millionfor the three months ended June 30, 2018, as compared to the same period in 2017, due primarily to an increase in transmission earnings driven by a higher transmission rate base, the impact of the CL&P base distribution rate increase effective May 1, 2018, and lower employee benefit plan costs. The earnings increase was partially offset by higher depreciation expense, higher interest expense, and higher property tax expense.



ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Information

Commodity Price Risk Management:  Our Regulatedregulated companies enter into energy contracts to serve our customers and the economic impacts of those contracts are passed on to our customers. Accordingly, the Regulatedregulated 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 scalelarge-scale energy related transactions entered into by its Regulatedregulated companies.

Other Risk Management Activities

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.  procedures.

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 Regulatedregulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies.  Our Regulatedregulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contractingcontracting risks, including credit risk.  As of June 30, 2018,March 31, 2019, our Regulatedregulated companies held collateral (lettersin the form of letters of credit or cash) of $10$5.0 million from counterparties related to our standard service contracts.  As of June 30, 2018,March 31, 2019, Eversource had $24.6$24.8 million of cash postedposted with ISO-NE related to energy transactions.

We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 20172018 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 20172018 Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES

Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, evaluated the design and operation of the disclosure controls and procedures as of June 30, 2018March 31, 2019 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 Quarterly Report on Form 10-Q.  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 and 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.

There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric and PSNH during the quarter ended June 30, 2018March 31, 2019 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.




PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are parties to various legal proceedings.  We have disclosed these legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 20172018 Form 10-K.  These disclosures are incorporated herein by reference.  There

As previously disclosed, on May 22, 2017, each of the Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal Claims. The Yankee Companies sought monetary damages totaling $104.4 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (“DOE Phase IV”). On February 21, 2019, the Yankee Companies received a partial summary judgment and partial final judgment in their favor for the undisputed amount of monetary damages of $103.2 million. The court awarded CYAPC, YAEC and MYAPC damages of $40.7 million, $28.1 million and $34.4 million, respectively. The DOE did not appeal the court's judgment and the decision became final on April 23, 2019. The DOE Phase IV trial for the $1.2 million of remaining damages is expected to begin in June 2019. For a further discussion of the Yankee Companies v. U.S. Department of Energy, see Part I, Item 3, “Legal Proceedings” of our 2018 Form 10-K.

Other than as set forth above, there have been no additional material legal proceedings identified and no further material changes with regard to the legal proceedings previously disclosed in our 20172018 Form 10-K.

ITEM 1A.RISK FACTORS

We are subject to a variety of significant risks in addition to the matters set forth under our forward-looking statements section in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q.  We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 20172018 Form 10-K, which risk factors are incorporated herein by reference.  These risk factors should be considered carefully in evaluating our risk profile.  There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 20172018 Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 Plandividend 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 ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end)
April 1 - April 30, 2018103,494
$59.46


May 1 - May 31, 20183,643
58.17


June 1 - June 30, 20187,345
56.57


Total114,482
$59.23


Period
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end)
January 1 - January 31, 2019966
$64.14


February 1 - February 28, 2019



March 1 - March 31, 20192,756
70.49


Total3,722
$68.84





ITEM 6.EXHIBITS

Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
 Exhibit No. Description
    
 Listing of Exhibits (Eversource)
12
 31 
    
 31.1 
    
 32 
    
 Listing of Exhibits (CL&P)
*
124.1 

    
 31 
    
 31.1 
    
 32 
    
 Listing of Exhibits (NSTAR Electric Company)
 
12
31 
    
 31.1 
    
 32 
    
 Listing of Exhibits (PSNH)
12
 31 
    
 31.1 
    
 32 
    
 


Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH)
 101.INS XBRL Instance Document
    
 101.SCH XBRL Taxonomy Extension Schema
    
 101.CAL XBRL Taxonomy Extension Calculation
    
 101.DEF XBRL Taxonomy Extension Definition
    
 101.LAB XBRL Taxonomy Extension Labels
    
 101.PRE XBRL Taxonomy Extension Presentation



SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  EVERSOURCE ENERGY
    
August 3, 2018May 7, 2019 By:/s/ Jay S. Buth
   Jay S. Buth
   Vice President, Controller and Chief Accounting Officer

     


SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  THE CONNECTICUT LIGHT AND POWER COMPANY
    
August 3, 2018May 7, 2019 By:/s/ Jay S. Buth
   Jay S. Buth
   Vice President, Controller and Chief Accounting Officer

     


SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  NSTAR ELECTRIC COMPANY
    
August 3, 2018May 7, 2019 By:/s/ Jay S. Buth
   Jay S. Buth
   Vice President, Controller and Chief Accounting Officer

     


SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
    
August 3, 2018May 7, 2019 By:/s/ Jay S. Buth
   Jay S. Buth
   Vice President, Controller and Chief Accounting Officer

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