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ES-20201231_G1.JPG
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended
December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

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


EVERSOURCE ENERGY
(a Massachusetts voluntary association)
300 Cadwell Drive, Springfield, Massachusetts 01104
Telephone: (800) 286-5000
Commission File Number: 1-5324
I.R.S. Employer Identification No. 04-2147929


THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street, Berlin, Connecticut 06037-1616
Telephone: (800) 286-5000
Commission File Number: 0-00404
I.R.S. Employer Identification No. 06-0303850


NSTAR ELECTRIC COMPANY
(a Massachusetts corporation)
800 Boylston Street, Boston, Massachusetts 02199
Telephone: (800) 286-5000
Commission File Number: 1-02301
I.R.S. Employer Identification No. 04-1278810


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
Commission File Number: 1-6392
I.R.S. Employer Identification No. 02-0181050
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Shares, $5.00 par value per share ES New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Class
   
The Connecticut Light and Power Company Preferred Stock, par value $50.00 per share, issuable in series, of which the following series are outstanding:
$1.90
$2.00
$2.04
$2.20
3.90%
$2.06
$2.09
4.50%
4.96%
4.50%
5.28%
$3.24
6.56%
Series 
Series
Series
Series
Series
Series E
Series F
Series
Series
Series
Series
Series G
Series
of 1947
of 1947
of 1949
of 1949
of 1949
of 1954
of 1955
of 1956
of 1958
of 1963
of 1967
of 1968
of 1968
NSTAR Electric Company Preferred Stock, par value $100.00 per share, issuable in series, of which the following series are outstanding:
4.25%
4.78%
Series
Series
of 1956
of 1958

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
  Yes No
 

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
  Yes No
 

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
  Yes No
 

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files).
  Yes No
 



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
Eversource Energy Large accelerated filer Accelerated
filer
Non-accelerated
filer
Smaller reporting company Emerging growth company
The Connecticut Light and Power Company Large accelerated filer Accelerated
filer
Non-accelerated filer Smaller reporting company Emerging growth company
NSTAR Electric Company Large accelerated filer Accelerated
filer
Non-accelerated filer Smaller reporting company Emerging growth company
Public Service Company of New Hampshire Large accelerated filer Accelerated
filer
Non-accelerated filer Smaller reporting company Emerging growth company

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 registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act):
  Yes No
Eversource Energy
The Connecticut Light and Power Company
NSTAR Electric Company
Public Service Company of New Hampshire

The aggregate market value of Eversource Energy's Common Shares, $5.00 par value, held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of Eversource Energy's most recently completed second fiscal quarter (June 30, 2020) was $28,496,151,703 based on a closing market price of $83.27 per share for the 342,213,903 common shares outstanding held by non-affiliates on June 30, 2020. 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
Company - Class of Stock
Outstanding as of January 31, 2021
Eversource Energy
Common Shares, $5.00 par value
343,003,366  shares
The Connecticut Light and Power Company
Common Stock, $10.00 par value
6,035,205  shares
NSTAR Electric Company
Common Stock, $1.00 par value
200  shares
   
Public Service Company of New Hampshire
Common Stock, $1.00 par value
301  shares

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

Documents Incorporated by Reference

Portions of the Eversource Energy and Subsidiaries 2019 combined Annual Report on Form 10-K and portions of the Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 5, 2021, are incorporated by reference into Parts II and III of this Report.

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

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



GLOSSARY OF TERMS

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

Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the Company Eversource Energy and subsidiaries
Eversource parent or ES parent Eversource Energy, a public utility holding company
ES parent and other companies ES parent and other companies are comprised of Eversource parent, Eversource Service, 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), the consolidated operations of CYAPC and YAEC, and Eversource parent's equity ownership interests that are not consolidated
CL&P The Connecticut Light and Power Company
NSTAR Electric NSTAR Electric Company
PSNH Public Service Company of New Hampshire
PSNH Funding PSNH Funding LLC 3, a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH
NSTAR Gas NSTAR Gas Company
EGMA Eversource Gas Company of Massachusetts
Yankee Gas Yankee Gas Services Company
Aquarion Eversource Aquarion Holdings, Inc. and its subsidiaries
NPT Northern Pass Transmission LLC
Northern Pass The HVDC and associated alternating-current transmission line project from Canada into New Hampshire
HEEC Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric
Eversource Service Eversource Energy Service Company
Bay State Wind Bay State Wind LLC, an offshore wind business being developed jointly by Eversource and Denmark-based Ørsted, which holds the Sunrise Wind project
North East Offshore North East Offshore, LLC, an offshore wind business holding company being developed jointly by Eversource and Denmark-based Ørsted, which holds the Revolution Wind and South Fork Wind projects
CYAPC Connecticut Yankee Atomic Power Company
MYAPC Maine Yankee Atomic Power Company
YAEC Yankee Atomic Electric Company
Yankee Companies CYAPC, YAEC and MYAPC
Regulated companies The 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, NSTAR Gas and EGMA, NPT, Aquarion, and the solar power facilities of NSTAR Electric
Regulators and Government Agencies:
BOEM
U.S. Bureau of Ocean Energy Management
DEEP Connecticut Department of Energy and Environmental Protection
DOE U.S. Department of Energy
DOER Massachusetts Department of Energy Resources
DPU Massachusetts Department of Public Utilities
EPA U.S. Environmental Protection Agency
FERC Federal Energy Regulatory Commission
ISO-NE ISO New England, Inc., the New England Independent System Operator
MA DEP Massachusetts Department of Environmental Protection
NHPUC New Hampshire Public Utilities Commission
PURA Connecticut Public Utilities Regulatory Authority
SEC U.S. Securities and Exchange Commission
SJC Supreme Judicial Court of Massachusetts
Other Terms and Abbreviations:
ADIT Accumulated Deferred Income Taxes
AFUDC Allowance For Funds Used During Construction
AOCI Accumulated Other Comprehensive Income
ARO Asset Retirement Obligation
Bcf Billion cubic feet
C&LM Conservation and Load Management
CfD Contract for Differences
CTA Competitive Transition Assessment
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CWIP Construction Work in Progress
EDC Electric distribution company
EDIT Excess Deferred Income Taxes
EPS Earnings Per Share
ERISA Employee Retirement Income Security Act of 1974
ESOP Employee Stock Ownership Plan
Eversource 2019 Form 10-K The Eversource Energy and Subsidiaries 2019 combined Annual Report on Form 10-K as filed with the SEC
Fitch Fitch Ratings
FMCC Federally Mandated Congestion Charge
FTR Financial Transmission Rights
GAAP Accounting principles generally accepted in the United States of America
GSC Generation Service Charge
GWh Gigawatt-Hours
HQ Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDC High-voltage direct current
Hydro Renewable Energy Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP Independent Power Producers
ISO-NE Tariff ISO-NE FERC Transmission, Markets and Services Tariff
kV Kilovolt
kVa Kilovolt-ampere
kW Kilowatt (equal to one thousand watts)
LNG Liquefied natural gas
LRS Supplier of last resort service
MG Million gallons
MGP Manufactured Gas Plant
MMBtu One million British thermal units
MMcf Million cubic feet
Moody's Moody's Investors Services, Inc.
MW Megawatt
MWh Megawatt-Hours
NETOs New England Transmission Owners (including Eversource, National Grid and Avangrid)
OCI Other Comprehensive Income/(Loss)
PAM Pension and PBOP Rate Adjustment Mechanism
PBOP Postretirement Benefits Other Than Pension
PBOP Plan Postretirement Benefits Other Than Pension Plan
Pension Plan Single uniform noncontributory defined benefit retirement plan
PPA Power purchase agreement
RECs Renewable Energy Certificates
Regulatory ROE The average cost of capital method for calculating the return on equity related to the distribution business segment excluding the wholesale transmission segment
ROE Return on Equity
RRBs Rate Reduction Bonds or Rate Reduction Certificates
RSUs Restricted share units
S&P Standard & Poor's Financial Services LLC
SBC Systems Benefits Charge
SCRC Stranded Cost Recovery Charge
SERP Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SS Standard service
TCAM Transmission Cost Adjustment Mechanism
UI The United Illuminating Company
VIE Variable Interest Entity

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

2020 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS
  Page
PART I  
Item 1.
2
Item 1A.
16
Item 1B.
21
Item 2.
21
Item 3.
24
Item 4.
24
     
PART II  
Item 5.
24
Item 6.
25
Item 7.
26
Item 7A.
55
Item 8.
56
Item 9.
138
Item 9A.
138
Item 9B.
138
     
PART III  
Item 10.
139
Item 11.
140
Item 12.
171
Item 13.
172
Item 14.
173
     
PART IV  
Item 15.
174
Item 16.
174
E-9


iii


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


SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

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

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,
disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
the negative impacts of the novel coronavirus (COVID-19) pandemic on our customers, vendors, employees, regulators, and operations,
changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
ability or inability to commence and complete our major strategic development projects and opportunities,
acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems,
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 or development of alternative energy sources related to our current or future business model,
contamination of, or disruption in, our water supplies,
changes in levels or timing of capital expenditures,
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 Annual Report on Form 10-K. This Annual Report on Form 10-K also describes material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements.  We encourage you to review these items.  

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

PART I

Item 1.    Business

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

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

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

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

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

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

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

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

Eversource Aquarion Holdings, Inc. (Aquarion), a utility holding company that owns three separate regulated water utility subsidiaries and collectively serves residential, commercial, industrial, and municipal and fire protection customers in parts of Connecticut, Massachusetts and New Hampshire.

CL&P, NSTAR Electric and PSNH also serve New England customers through Eversource Energy's electric transmission business. Along with NSTAR Gas, EGMA and Yankee Gas, each is doing business as Eversource Energy in its respective service territory.

On October 9, 2020, Eversource acquired certain assets and liabilities that comprised NiSource Inc.’s natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA). The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp.

Eversource Energy, CL&P, NSTAR Electric and PSNH each report their financial results separately. We also include information in this report on a segment basis for Eversource Energy. Eversource Energy has four reportable segments: electric distribution, electric transmission, natural gas distribution and water distribution. These segments represent substantially all of Eversource Energy's total consolidated revenues. CL&P, NSTAR Electric and PSNH do not report separate business segments.

ELECTRIC DISTRIBUTION SEGMENT

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

ELECTRIC DISTRIBUTION – CONNECTICUT – THE CONNECTICUT LIGHT AND POWER COMPANY

CL&P's distribution business consists primarily of the purchase, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2020, CL&P furnished retail franchise electric service to approximately 1.27 million customers in 149 cities and towns in Connecticut, covering an area of approximately 4,400 square miles. CL&P does not own any electric generation facilities.


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Rates

CL&P is subject to regulation by the PURA, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities.  CL&P's present general rate structure consists of various rate and service classifications covering residential, commercial and industrial services.  CL&P's retail rates include a delivery service component, which includes distribution, transmission, conservation, renewable energy programs and other charges that are assessed on all customers.

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

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

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

A revenue decoupling adjustment that reconciles annual base distribution rate recovery amounts recovered from customers to the pre-established level of baseline distribution delivery service revenue requirement approved by the PURA of $1.099 billion effective May 1, 2018, $1.127 billion effective May 1, 2019, and $1.158 billion effective May 1, 2020. These pre-established levels of baseline distribution delivery service revenue requirements are also subject to adjustment at each of these dates in accordance with provisions of the April 2018 rate case settlement agreement.

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

An Electric System Improvements (ESI) charge, which collects the costs of building and expanding the infrastructure to deliver electricity to customers above the level recovered through the distribution charge. The ESI also recovers costs associated with CL&P’s system resiliency program, which was implemented as part of CL&P's rate case settlement agreement that was approved by PURA in April 2018. The ESI is adjusted periodically and reconciled annually in accordance with the policies and procedures of the PURA, with any differences refunded to, or recovered from, customers.

An FMCC, which recovers any costs imposed by the FERC as part of the New England Standard Market Design, including locational marginal pricing, locational installed capacity payments, any costs approved by the PURA to reduce these charges, as well as other costs approved by PURA.  The FMCC has both a bypassable component and a non-bypassable component, and is adjusted periodically and reconciled annually in accordance with the policies and procedures of the PURA, with any differences refunded to, or recovered from, customers.

A transmission charge that recovers the cost of transporting electricity over high-voltage lines from generating plants to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. The transmission charge is adjusted periodically and reconciled annually to actual costs incurred, and reviewed by the PURA, with any difference refunded to, or recovered from, customers.

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

An SBC, established to fund expenses associated with various hardship and low-income programs. The SBC is reconciled annually to actual costs incurred and reviewed by the PURA, with any difference refunded to, or recovered from, customers.  

A Renewable Energy Investment Charge, which is used to promote investment in renewable energy sources.  Amounts collected by this charge are deposited into the Connecticut Clean Energy Fund and administered by the Connecticut Green Bank.  

A Conservation Adjustment Mechanism (CAM) charge established to implement cost-effective energy conservation programs and market transformation initiatives. The CAM charge is reconciled annually to actual costs incurred, and reviewed by the PURA, with any difference refunded to, or recovered from, customers through an approved adjustment to the following year’s energy conservation spending plan budget.

As required by regulation, CL&P has entered into long-term contracts for the purchase of (i) products from renewable energy facilities, which may include energy, renewable energy certificates, or capacity, (ii) capacity-related contracts with generation facilities, and (iii) contracts for peaking capacity.  Some of these contracts are subject to sharing agreements with UI, whereby CL&P is responsible for 80 percent and UI for 20 percent of the net costs or benefits.  CL&P's portion of the costs and benefits of these contracts will be paid by, or refunded to, CL&P's customers.

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Distribution Rate Case: CL&P's distribution rates were established in an April 2018 PURA-approved rate case settlement agreement with rates effective May 1, 2018, and incremental step adjustments effective May 1, 2019 and May 1, 2020.

Sources and Availability of Electric Power Supply

As noted above, CL&P does not own any generation assets and purchases energy supply to serve its SS and LRS loads from a variety of competitive sources through requests for proposals. During 2020, CL&P supplied approximately 51 percent of its customer load at SS or LRS rates while the other 49 percent of its customer load had migrated to competitive energy suppliers.  In terms of the total number of CL&P customers, this equates to 23 percent being on competitive supply, while 77 percent remain with SS or LRS. Because this customer migration is only for energy supply service, it has no impact on CL&P's electric distribution business or its operating income.

CL&P periodically enters into full requirements contracts for SS loads for periods of up to one year. CL&P typically enters into full requirements contracts for LRS loads every three months. Currently, CL&P has full requirements contracts in place for 100 percent of its SS loads for the first half of 2021. For the second half of 2021, CL&P has 40 percent of its SS load under full requirements contracts and intends to purchase an additional 60 percent of full requirements. None of the SS load for 2022 has been procured. CL&P has full requirements contracts in place for its LRS loads through March 2021 and intends to purchase 100 percent of full requirements for the remainder of 2021.

ELECTRIC DISTRIBUTION – MASSACHUSETTS – NSTAR ELECTRIC COMPANY

NSTAR Electric's distribution business consists primarily of the purchase, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2020, NSTAR Electric furnished retail franchise electric service to approximately 1.45 million customers in Boston and 139 cities and towns in eastern and western Massachusetts, including Cape Cod, Martha's Vineyard and the greater Springfield metropolitan area, covering an aggregate area of approximately 3,200 square miles.

NSTAR Electric does not own any generating facilities that are used to supply customers, and purchases its energy requirements from competitive energy suppliers.

NSTAR Electric owns, operates and maintains a total of 70 MW of solar power facilities on twenty-two sites in Massachusetts.  NSTAR Electric will sell energy from these facilities into the ISO-NE market, with proceeds credited to customers.

Rates

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

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

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

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

A basic service charge that represents the collection of energy costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers, including costs related to charge-offs of uncollectible energy costs from customers.  Basic service rates are reset every six months (every three months for large commercial and industrial customers). Additionally, the DPU has authorized NSTAR Electric to recover the cost of its NSTAR Green wind contracts through the basic service charge. Basic service costs are reconciled annually, with any differences refunded to, or recovered from, customers.

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

A revenue decoupling adjustment that reconciles annual base distribution rate recovery amounts recovered from customers to the pre-established level of baseline distribution delivery service revenue requirement approved by the DPU of $956 million on an annualized basis for 2018, $988 million for 2019, and $1.022 billion for 2020. Annual base distribution amounts are adjusted for inflation and filed for approval by the DPU on an annual basis, until the next rate case.


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A transmission charge that recovers the cost of transporting electricity over high-voltage lines from generating plants to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. The transmission charge is reconciled annually to actual costs incurred and reviewed by the DPU, with any difference refunded to, or recovered from, customers.

A transition charge that represents costs to be collected primarily from previously held investments in generating plants, costs related to existing above-market power contracts, and contract costs related to long-term power contract buy-outs. The transition charge is reconciled annually to actual costs incurred and reviewed by the DPU, with any difference refunded to, or recovered from, customers.

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

An energy efficiency charge that represents a legislatively-mandated charge to collect costs for energy efficiency programs. The energy efficiency charge is reconciled annually to actual costs incurred and reviewed by the DPU, with any difference refunded to, or recovered from, customers.

Reconciling adjustment charges that recover certain DPU-approved costs, including pension and PBOP benefits, low income customer discounts, credits issued to net-metering facilities installed by customers, payments to solar facilities qualified under the state solar renewable energy target program, attorney general consultant expenses, long-term renewable contracts, company-owned solar facilities, vegetation management costs, credits related to the Tax Cuts and Jobs Act of 2017, grid modernization costs, and storm restoration. These charges are reconciled annually to actual costs incurred and reviewed by the DPU, with any difference refunded to, or recovered from, customers.

NSTAR Electric has signed long-term commitments for the purchase of energy from renewable energy facilities.

Distribution Rate Case: NSTAR Electric's distribution rates were established in a 2017 DPU-approved rate case with rates effective February 1, 2018. DPU-approved inflation-based adjustments to annual base distribution amounts were effective January 1, 2019, 2020 and 2021.

Service Quality Metrics: NSTAR Electric is subject to service quality (SQ) metrics that measure safety, reliability and customer service, and could be required to pay to customers a SQ charge of up to 2.5 percent of annual transmission and distribution revenues for failing to meet such metrics. NSTAR Electric will not be required to pay a SQ charge for its 2020 performance as the company achieved results at or above target for all of its SQ metrics in 2020.

Sources and Availability of Electric Power Supply

As noted above, NSTAR Electric does not own any generation assets (other than 70 MW of solar power facilities that produce energy that is sold into the ISO-NE market) and purchases its energy requirements from a variety of competitive sources through requests for proposals issued periodically, consistent with DPU regulations. NSTAR Electric enters into supply contracts for basic service for approximately 45 percent of its residential and small commercial and industrial (C&I) customers twice per year for twelve-month terms. NSTAR Electric enters into supply contracts for basic service for 18 percent of large C&I customers every three months.

During 2020, NSTAR Electric supplied approximately 42 percent of its residential customer load, 29 percent of its small C&I customer load, and 6 percent of its large C&I customer load at basic service rates. The remainder of its customer load was distributed between municipal aggregation and competitive supply. Because customer migration is limited to energy supply service, it has no impact on NSTAR Electric’s electric distribution business or operating income of NSTAR Electric.

ELECTRIC DISTRIBUTION – NEW HAMPSHIRE – PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

PSNH's distribution business consists primarily of the purchase, delivery and sale of electricity to its residential, commercial and industrial customers. As of December 31, 2020, PSNH furnished retail franchise electric service to approximately 528,000 retail customers in 211 cities and towns in New Hampshire, covering an area of approximately 5,630 square miles.

On January 10, 2018, PSNH completed the sale of its thermal generation assets pursuant to a 2017 purchase and sale agreement. The thermal generation facilities included approximately 1,100 MW of coal, natural gas, biomass and oil-fired electricity generation facilities. On August 26, 2018, PSNH completed the sale of its hydroelectric generation assets pursuant to a separate 2017 purchase and sale agreement. For further information, see "Generation Divestiture" below. As of December 31, 2020, PSNH does not own any electric generation facilities.

Rates

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

Under New Hampshire law, all of PSNH's customers are entitled to choose competitive energy suppliers. During 2020, approximately 21 percent of all of PSNH's customers (approximately 53 percent of load) were taking service from competitive energy suppliers.

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

A default energy service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers.

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

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

An SCRC, which allows PSNH to recover its stranded costs, including above-market expenses incurred under mandated power purchase obligations, other long-term investments and obligations, and the remaining costs associated with the 2018 sales of its generation facilities.

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

A new Regulatory Reconciliation Adjustment (RRA) that reconciles the difference between certain estimated and actual costs included in base distribution rates, including costs related to regulatory assessments, vegetation management program expenses, property tax expenses, storm cost amortization updated for the actual cost of long-term debt and lost base revenues related to net metering.

PSNH has signed long-term commitments for the purchase of energy from renewable energy facilities.

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

Distribution Rate Case: On June 27, 2019, the NHPUC approved a settlement agreement that was reached by PSNH, the NHPUC Staff, the Office of the Consumer Advocate, and another settling party, to implement a temporary annual base distribution rate increase of $28.3 million. Although new rates were implemented on August 1, 2019 to customers, the provisions of the temporary base distribution rate increase were effective July 1, 2019. The settlement agreement also permitted PSNH to recover approximately $68.5 million in unrecovered storm costs over a five-year period beginning August 1, 2019, with debt carrying charges, which is included in the temporary rate increase.

On May 28, 2019, PSNH filed an application with the NHPUC for a permanent increase in base distribution rates of approximately $70 million, effective July 1, 2020, which included the temporary rate increase request. Temporary rates remained in effect with a reconciliation of permanent rates retroactive to July 1, 2019 once permanent rates were set.

On December 15, 2020, the NHPUC approved an October 9, 2020 settlement agreement on permanent rates between PSNH and all parties to the proceeding. The NHPUC approved a permanent rate increase of $45.0 million effective January 1, 2021, inclusive of the temporary rate increase referenced above. PSNH was also permitted three step increases, effective January 1, 2021, August 1, 2021, and August 1, 2022, to reflect plant additions in calendar years 2019, 2020 and 2021, respectively. On December 23, 2020, the NHPUC approved the first step adjustment for 2019 plant in service to recover a revenue requirement of $10.6 million, subject to reconciliation after completion of an audit, effective January 1, 2021. The settlement agreement also established an authorized regulatory ROE of 9.3 percent with a 54.4 percent common equity ratio in PSNH’s capital structure and provided for a new tracker to recover regulatory assessments, vegetation management costs, property tax costs, and lost distribution revenue attributable to net metering.

Generation Divestiture

On January 10, 2018, PSNH completed the sale of its thermal generation assets. 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. As a result of these adjustments, net proceeds from the sale of the thermal assets totaled $116.8 million. On August 26, 2018, PSNH completed the sale of its hydroelectric generation assets. The original purchase price of $83 million was adjusted to reflect contractual adjustments, resulting in net proceeds of $77.2 million. The difference between the carrying value of the hydroelectric generation assets and the sale proceeds resulted in a gain of $17.3 million. An estimated gain from the sale of these assets was included as an offset to the total remaining costs associated with the sale of generation assets that were securitized on May 8, 2018.

On May 8, 2018, PSNH Funding issued $635.7 million of securitized RRBs pursuant to a finance order issued by the NHPUC on January 30, 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets, which included the deferred costs resulting from the sale of the thermal generation assets. These RRBs are secured by a non-bypassable charge recoverable from PSNH customers. PSNH recorded regulatory assets and other deferred costs in connection with the generation asset divestiture and the securitization of remaining costs, which are probable of recovery through collection of the non-bypassable charge.

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On May 15, 2020, the NHPUC Audit Staff issued a final report on the audit of PSNH’s generation asset divestiture-related costs and resulting securitized and stranded costs. The findings in the audit report as well as other aspects of the divestiture process were further investigated by NHPUC Staff through the discovery phase, which was completed in July 2020. On September 30, 2020, PSNH filed a settlement agreement on the generation asset divestiture-related costs with the NHPUC Audit Staff. The settlement agreement resolved all issues with respect to PSNH’s divestiture of its generating assets and the recovery of $12.0 million of divestiture-related costs incurred above the $635.7 million amount previously securitized. On December 17, 2020, the NHPUC approved the additional $12.0 million proposed in the settlement agreement to be recovered over a one-year period through the SCRC rate beginning February 1, 2021.

Sources and Availability of Electric Power Supply

PSNH does not own any generation assets and purchases energy supply from a variety of competitive suppliers for its energy service customers through requests for proposals issued twice per year, for six-month terms, for approximately 80 percent of its residential and small C&I customers and for 15 percent of its large C&I customers.

During 2020, PSNH supplied approximately 46 percent of its customer load at default energy service rates while the other 54 percent of its customer load had migrated to competitive energy suppliers.  Because this customer migration is only for energy supply service, it has no impact on PSNH’s electric distribution business or its operating income.

ELECTRIC TRANSMISSION SEGMENT

Each of CL&P, NSTAR Electric and PSNH owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England.  Each of CL&P, NSTAR Electric and PSNH, and most other New England utilities, are parties to a series of agreements that provide for coordinated planning and operation of the region's transmission facilities and the rules by which they acquire transmission services.  Under these arrangements, ISO-NE, a non-profit corporation whose board of directors and staff are independent of all market participants, serves as the regional transmission organization of the New England transmission system.  

Wholesale Transmission Rates

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

FERC ROE Complaints

Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively the "Complainants"). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

In response to appeals of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the Court) issued a decision on April 14, 2017 vacating and remanding the FERC's decision. On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE.

On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. Various parties appealed the MISO transmission owners' opinion. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases.

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

For further information, see "FERC Regulatory Matters - FERC ROE Complaints" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
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Transmission Projects

During 2020, we were involved in the planning, development and construction of a series of electric transmission projects that enhance system reliability and improve capacity. For more information on transmission projects, see "Business Development and Capital Expenditures – Electric Transmission Business" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Northern Pass was Eversource's planned 1,090 MW HVDC transmission line that would have interconnected from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. As a result of a final decision received on July 19, 2019 from the New Hampshire Supreme Court, whereby the court denied Northern Pass’ appeal and affirmed the NHSEC’s denial of Northern Pass’ siting application on NPT, Eversource concluded that construction of NPT was no longer probable and that there was no constructive path forward for the project. In 2019, Eversource terminated the project and permanently abandoned any further development.  As a result, substantially all of the capitalized project costs, which totaled $318 million, certain of which were subject to cost reimbursement agreements, were impaired. In total, this resulted in a pre-tax impairment charge of $239.6 million within Operating Income on the statement of income for the year ended December 31, 2019, and was reflected in the Electric Transmission segment. For further information, see "Critical Accounting Policies - Impairment of Northern Pass Transmission" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Transmission Rate Base

Transmission rate base under our FERC-approved tariff primarily consists of our investment in transmission net utility plant less accumulated deferred income taxes. Under our FERC-approved tariff, and with the exception of transmission projects that received specific FERC approval to include CWIP in rate base, transmission projects generally enter rate base after they are placed in commercial operation. At the end of 2020, our estimated transmission rate base was approximately $8.0 billion, including approximately $3.6 billion at CL&P, $3.1 billion at NSTAR Electric, and $1.3 billion at PSNH.

NATURAL GAS DISTRIBUTION SEGMENT

On October 9, 2020, Eversource acquired certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, which was previously doing business as CMA, pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource Inc. (NiSource). The cash purchase price was $1.1 billion, plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date that has not yet been finalized. Eversource financed the asset acquisition through a combination of debt and equity issuances in a ratio that was consistent with our consolidated capital structure. The natural gas distribution assets acquired from CMA were assigned to Eversource Gas Company of Massachusetts (EGMA), an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp.

NSTAR Gas distributes natural gas to approximately 303,000 customers in 51 communities in central and eastern Massachusetts covering 1,067 square miles. EGMA distributes natural gas to approximately 332,000 customers in 65 communities throughout Massachusetts covering 1,206 square miles. Yankee Gas distributes natural gas to approximately 246,000 customers in 74 cities and towns in Connecticut covering 2,632 square miles. Total throughput (sales and transportation) in 2020 was approximately 66.9 Bcf for NSTAR Gas, 54.9 Bcf for EGMA, and 54.6 Bcf for Yankee Gas. Our natural gas businesses provide firm natural gas sales and transportation service to eligible retail customers who require a continuous natural gas supply throughout the year, such as residential customers who rely on natural gas for heating, hot water and cooking needs, as well as commercial and industrial customers that rely on natural gas for space heating, hot water, cooking and commercial and industrial applications.

A portion of the storage of natural gas supply for NSTAR Gas and EGMA during the winter heating season is provided by Hopkinton LNG Corp., an indirect, wholly-owned subsidiary of Eversource Energy. NSTAR Gas has access to facilities consisting of a LNG liquefaction and vaporization plant and three above-ground cryogenic storage tanks having an aggregate capacity of 3.0 Bcf of liquefied natural gas and facilities that include additional storage capacity of 0.5 Bcf. Total vaporization capacity of these facilities is 0.21 Bcf per day. EGMA has access to approximately 1.8 Bcf of LNG and 0.2 Bcf of Liquefied Petroleum Gas (LPG) storage, with a total vaporization capacity of 0.17 Bcf per day. Yankee Gas owns a 1.2 Bcf LNG facility, which also has the ability to liquefy and vaporize up to 0.1 Bcf per day. This facility is used primarily to assist Yankee Gas in meeting its supplier-of-last-resort obligations and also enables it to provide economic supply and make economic refill of natural gas, typically during periods of low demand.

NSTAR Gas, EGMA and Yankee Gas generate revenues primarily through the sale and/or transportation of natural gas.  All NSTAR Gas and EGMA retail customers have the ability to choose to purchase gas from third party marketers under the Massachusetts Retail Choice program. In the past year in Massachusetts, Retail Choice represented only approximately one percent of the total residential load, while Retail Choice represented approximately 59 percent of the total commercial and industrial load. Retail natural gas service in Connecticut is partially unbundled: residential customers in Yankee Gas' service territory buy natural gas supply and delivery only from Yankee Gas while commercial and industrial customers may choose their natural gas suppliers. Firm transportation service is offered to customers who purchase natural gas from sources other than NSTAR Gas, EGMA or Yankee Gas.  NSTAR Gas and EGMA have the ability to offer interruptible transportation and interruptible natural gas sales service to high volume commercial and industrial customers. Yankee Gas offers interruptible transportation and interruptible natural gas sales service to commercial and industrial customers that have the ability to switch from natural gas to an alternate fuel on short notice. NSTAR Gas, EGMA and Yankee Gas can interrupt service to these customers during peak demand periods or at any other time to maintain distribution system integrity.

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Rates

NSTAR Gas and EGMA are subject to regulation by the DPU and Yankee Gas is subject to regulation by PURA, which, among other things, have jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities.

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

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

A seasonal cost of gas adjustment clause (CGAC) at NSTAR Gas and EGMA that collects natural gas supply costs, pipeline and storage capacity costs, costs related to charge-offs of uncollected energy costs and working capital related costs.  The CGAC is reset semi-annually with any difference being recovered from, or refunded to, customers during the following corresponding season. In addition, NSTAR Gas and EGMA file interim changes to the CGAC factor when the actual costs of natural gas supply vary from projections by more than five percent.

A Purchased Gas Adjustment (PGA) clause, which is evaluated monthly and allows Yankee Gas to recover the costs of the procurement of natural gas for its firm and seasonal customers.  Differences between actual natural gas costs and collection amounts from September 1st through August 31st of each PGA year are deferred and then recovered from, or refunded to, customers during the following PGA year.  Carrying charges on outstanding balances are calculated using Yankee Gas' weighted average cost of capital in accordance with the directives of the PURA.

A local distribution adjustment clause (LDAC) at NSTAR Gas and EGMA that collects all energy efficiency and related program costs, environmental costs, pension and PBOP related costs, attorney general consultant costs, credits related to the Tax Cuts and Jobs Act of 2017, gas system enhancement program (GSEP) costs and costs associated with low income customers.  The LDAC is reset annually with any difference being recovered from, or refunded to, customers during the following period and provides for the recovery of certain costs applicable to both sales and transportation customers.

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

A Gas System Improvement (GSI) reconciliation mechanism at Yankee Gas, which collects the costs of certain Distribution Integrity Management Program (DIMP) and core capital plant in service above and beyond the level that is recovered through the distribution charge. The GSI is adjusted and reconciled annually, with any differences refunded to, or recovered from, customers.

A System Expansion Rate (SER) Reconciliation Mechanism at Yankee Gas, which compares distribution system expansion investment costs and revenues for new customers, with the level projected in current distribution customer rates.  This reconciliation is performed annually and customer rates are adjusted accordingly.

A Revenue Decoupling Mechanism (RDM) at NSTAR Gas and EGMA that reconciles annual base distribution rate recovery amounts recovered from customers to the pre-established level of baseline distribution delivery service revenue requirement approved by the DPU in 2020. The pre-established level of baseline distribution delivery service revenue requirement is also subject to adjustment in accordance with provisions of the November 2020 NSTAR Gas distribution rate case and the October 2020 EGMA rate settlement agreement.

A RDM at Yankee Gas that reconciles annual base distribution rate recovery amounts recovered from customers to the pre-established level of baseline distribution delivery service revenue requirement approved by the PURA effective January 1, 2019, January 1, 2020 and March 1, 2021. The pre-established level of baseline distribution delivery service revenue requirement is also subject to adjustment at each of these dates in accordance with provisions of the 2018 rate case settlement agreement.

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

NSTAR Gas is subject to SQ metrics that measure safety, reliability and customer service and could be required to pay to customers a SQ charge of up to 2.5 percent of annual distribution revenues for failing to meet such metrics.  NSTAR Gas will not be required to pay a SQ charge for its 2020 performance as it achieved results at or above target for all of its SQ metrics in 2020.

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Distribution Rate Cases:
NSTAR Gas: On October 30, 2020, the DPU approved a base distribution rate increase of $23.0 million effective November 1, 2020, compared to the original request of $38.0 million. NSTAR Gas' 2019 plant additions are allowed recovery beginning on November 1, 2021.  Thus, the reduced revenue requirement reflects the removal of this recovery, among other adjustments. The DPU also approved NSTAR Gas' proposal to continue its ongoing Gas System Enhancement Program (GSEP), the inclusion of GSEP investments since 2015 into base rates, and the implementation of a 10-year performance-based ratemaking plan, which includes an inflation-based adjustment mechanism to annual base distribution rates. The decision allows an authorized regulatory ROE of 9.9 percent on a capital structure including 54.77 percent equity. The decision also approves a geothermal pilot program.

Yankee Gas: Yankee Gas distribution rates were set in a December 2018 PURA approved rate case settlement agreement, with rates effective November 15, 2018. The 2018 Yankee Gas settlement agreement required Yankee Gas to implement a GSI cost recovery mechanism to further invest capital to replace aging infrastructure. The GSI mechanism allows for recovery of costs associated with capital additions of approximately $26 million to $37 million annually, which is incremental to the $150 million included in base distribution rate base per year. The settlement agreement also provides Yankee Gas the opportunity to seek recovery of additional capital spending above these levels with PURA approval. PURA ordered an accelerated replacement program for Yankee Gas to fully replace its cast iron and bare steel facilities in 11 years and fully replace copper services and certain steel mains and services in 14 years from the date of the rate case. Yankee Gas was also authorized to continue its ongoing natural gas system expansion program, implement a revenue decoupling rate mechanism, and recover merger costs. The settlement agreement included a regulatory ROE of 9.3 percent. In addition, the distribution rates charged to customers were adjusted to reflect the prospective impacts of the lower federal corporate income tax rate, the overcollection of the lower income tax rate from January 1, 2018, and the EDIT from the Tax Cuts and Jobs Act of 2017. Although new rates were effective January 1, 2019, the provisions of the settlement agreement took effect November 15, 2018. PURA also approved step adjustments effective January 1, 2019, January 1, 2020 and March 1, 2021.

EGMA: On October 7, 2020, the DPU approved a rate settlement agreement with Eversource, EGMA, NiSource, Bay State, the Massachusetts Attorney General's Office, the DOER and the Low-Income Weatherization and Fuel Assistance Program Network, which requested approval of the February 26, 2020 asset purchase agreement between Eversource and NiSource, as well as a rate stabilization plan, among other items. The settlement agreement included an authorized regulatory ROE of 9.70 percent as of January 1, 2021, a 53.25 percent equity component of its capital structure, and established rate base equal to $995 million as of the closing on October 9, 2020.

The approved rate stabilization plan includes base distribution rate increases of $13 million on November 1, 2021 and $10 million on November 1, 2022. The settlement agreement includes two rate base resets during an eight-year rate plan, occurring on November 1, 2024 and November 1, 2027. The two rate base resets adjust distribution rates to account for capital additions (including the roll-in of GSEP capital additions), depreciation expense, property taxes, and return on rate base for capital additions placed into service through December 31, 2023, for the first rate base reset occurring on November 1, 2024, and through December 31, 2026, for the second rate base reset occurring on November 1, 2027. Notwithstanding the two distribution rate increases, the two rate base reset provisions, and potential adjustments for qualifying exogenous events, EGMA agreed not to file for an increase or redesign of distribution base rates effective prior to November 1, 2028.

The settlement agreement also permits EGMA to seek recovery of both transaction and integration costs as a result of the asset acquisition after December 31, 2026, subject to DPU review and approval, and subject to certain conditions, such as demonstrating savings resulting from the acquisition.

Natural Gas Replacement and Expansion

Massachusetts: Pursuant to Massachusetts legislation, in October of each year, NSTAR Gas and EGMA file GSEP Plans with the DPU for the following construction year. The GSEP Program is designed to accelerate the replacement of certain natural gas distribution facilities in the system to less than 25 years.  The GSEP includes a tariff that provides NSTAR Gas and EGMA an opportunity to collect the costs for the program on an annual basis through a reconciling factor.  On April 30th each year, the DPU approves the GSEP rate recovery factor that goes into effect on May 1st.

NSTAR Gas' distribution rate case application filed on November 8, 2019 included a proposal to include GSEP additions through 2018 into base distribution rates and to continue the operation of the GSEP mechanism for GSEP investments made after 2018. In addition, the filing included a proposal for a customer connection surcharge, which would be used to reduce up-front contribution in aid of construction (CIAC) costs for customers seeking to connect to the company’s distribution system. On October 30, 2020, the DPU approved the Company’s customer connection surcharge proposal, allowing the surcharge to be implemented beginning November 1, 2021.

Connecticut: Yankee Gas' December 2018 PURA approved rate case settlement agreement included an accelerated pipeline replacement cost recovery program. The Gas System Improvement (GSI) rate recovers accelerated pipeline replacement as well as other capital investment through an annual reconciliation. The Company filed its first GSI reconciliation on March 1, 2019 for rates effective April 1, 2019 and will continue to file annually on March 1 for rates effective April 1.

In 2013, in accordance with Connecticut law and regulations, the PURA approved a comprehensive joint natural gas infrastructure expansion plan (the "Expansion Plan") filed by Yankee Gas and other Connecticut natural gas distribution companies.  In January 2015, the PURA approved a joint settlement agreement proposed by Yankee Gas and other Connecticut natural gas distribution companies and regulatory agencies that clarified the procedures and oversight criteria applicable to the Expansion Plan.  Yankee Gas received approval from PURA for its 2014 through 2019 System Expansion Reconciliations. The Company intends to file its 2020 System Expansion Reconciliation in March 2021 as required by PURA.
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Sources and Availability of Natural Gas Supply

NSTAR Gas maintains a flexible resource portfolio consisting of natural gas supply contracts, transportation contracts on interstate pipelines, market area storage and peaking services. NSTAR Gas purchases transportation, storage, and balancing services from Tennessee Gas Pipeline Company and Algonquin Gas Transmission Company, as well as other upstream pipelines that transport natural gas from major natural gas producing regions in the U.S., including the Gulf Coast, Mid-continent region, and Appalachian Shale supplies to the final delivery points in the NSTAR Gas service area. NSTAR Gas purchases all of its natural gas supply under a firm, competitively bid annual portfolio management contract. In addition to the firm transportation and natural gas storage supplies discussed above, NSTAR Gas utilizes on-system LNG facilities to meet its winter peaking demands. These LNG facilities are located within NSTAR Gas' distribution system and are used to liquefy and store pipeline natural gas during the warmer months for vaporization and use during the heating season. During the summer injection season, excess pipeline capacity and supplies are used to deliver and store natural gas in market area underground storage facilities located in Maryland and Pennsylvania. Stored natural gas is withdrawn during the winter season to supplement flowing pipeline supplies in order to meet firm heating demand. NSTAR Gas has firm underground storage contracts and total storage capacity entitlements of approximately 6.6 Bcf, of which 3.5 Bcf LNG storage is provided by Hopkinton LNG Corp. in facilities located in two different locations in Massachusetts.

EGMA maintains a flexible resource portfolio consisting of natural gas supply contracts, transportation contracts on interstate pipelines, market area storage and peaking services. EGMA purchases transportation, storage, and balancing services from Tennessee Gas Pipeline Company and Algonquin Gas Transmission Company, as well as other upstream pipelines that transport natural gas from major natural gas producing regions in the U.S. as well as Canada, including the Gulf Coast, Mid-continent region, Appalachian Shale, and Dawn, Ontario supplies to the final delivery points in the EGMA service area. EGMA purchases the majority of its natural gas supply under a number of firm, competitively bid annual portfolio management contracts and manages a portion of its portfolio itself. In addition to the firm transportation and natural gas storage supplies discussed above, EGMA utilizes on-system LNG and LPG facilities to meet its winter peaking demands. These LNG and LPG facilities are located within EGMA’s distribution system and are used to liquefy pipeline natural gas and/or receive liquefied natural gas or liquefied petroleum gas to be stored during the warmer months for vaporization and use during the heating season. During the summer injection season, excess pipeline capacity and supplies are used to deliver and store natural gas in market area underground storage facilities located in Maryland and Pennsylvania. Stored natural gas is withdrawn during the winter season to supplement flowing pipeline supplies in order to meet firm heating demand. EGMA has firm underground storage contracts and total storage capacity entitlements of approximately 6.6 Bcf, and 2.0 Bcf LNG and LPG storage located at eight different locations in Massachusetts.

The PURA requires Yankee Gas to meet the needs of its firm customers under all weather conditions. Specifically, Yankee Gas must structure its supply portfolio to meet firm customer needs under a design day scenario (defined as the coldest day in 30 years) and under a design year scenario (defined as the average of the four coldest years in the last 30 years). Yankee Gas also maintains a flexible resource portfolio consisting of natural gas supply contracts, transportation contracts on interstate pipelines, off-system storage and its on-system 1.2 Bcf LNG storage facility in Connecticut to meet consumption needs during the coldest days of winter. Yankee Gas obtains its interstate capacity from the three interstate pipelines that directly serve Connecticut: the Algonquin, Tennessee and Iroquois Pipelines, which connect to other upstream pipelines that transport natural gas from major natural gas producing regions, including the Gulf Coast, Mid-continent, Canadian regions and Appalachian Shale supplies.

Based on information currently available regarding projected growth in demand and estimates of availability of future supplies of pipeline natural gas, each of NSTAR Gas, EGMA and Yankee Gas believes that in order to meet the long-term firm customer requirements in a reliable manner will necessitate a combination of pipeline, storage, and non-pipeline solutions.

WATER DISTRIBUTION SEGMENT
Eversource Water Ventures, Inc., a Connecticut corporation, through its wholly-owned subsidiary, Eversource Aquarion Holdings, Inc. (Aquarion), operates three separate regulated water utilities in Connecticut (Aquarion Water Company of Connecticut, or AWC-CT), Massachusetts (Aquarion Water Company of Massachusetts, or AWC-MA) and New Hampshire (Aquarion Water Company of New Hampshire, or AWC-NH). These regulated companies provide water services to approximately 216,000 residential, commercial, industrial, municipal and fire protection and other customers, in 57 towns and cities in Connecticut, Massachusetts and New Hampshire. As of December 31, 2020, approximately 93 percent of Aquarion’s customers were based in Connecticut.
Rates
Aquarion's water utilities are subject to regulation by the PURA, the DPU and the NHPUC in Connecticut, Massachusetts and New Hampshire, respectively. These regulatory agencies have jurisdiction over, among other things, rates, certain dispositions of property and plant, mergers and consolidations, issuances of long-term securities, standards of service and construction and operation of facilities.
Aquarion’s general rate structure consists of various rate and service classifications covering residential, commercial, industrial, and municipal and fire protection services.
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The rates established by the PURA, DPU and NHPUC are comprised of the following:
A base rate, which is comprised of fixed charges based on meter/fire connection sizes, as well as volumetric charges based on the amount of water sold. Together these charges are designed to recover the full cost of service resulting from a general rate proceeding.

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

In Connecticut and New Hampshire, a water infrastructure conservation adjustment (WICA) charge, and in Massachusetts, an annual main replacement adjustment mechanism (MRAM) charge, which is applied between rate case proceedings and seeks recovery of allowed costs associated with eligible infrastructure improvement projects placed in-service. The WICA is updated semi-annually in Connecticut and annually in New Hampshire. In Connecticut, an annual WICA reconciliation mechanism reconciles earned WICA revenue to the approved WICA revenue with any differences refunded to, or recovered from, customers.

In Massachusetts, treatment plant surcharges, which are a series of three surcharges (one fixed and two volumetric in nature) that are designed to recover certain operating costs and the costs of the lease of the treatment plant located in Hingham.  These surcharges were applicable only to customers in Hingham, Hull and Cohasset. On July 31, 2020, we sold our water system and treatment plant that supplies water to the towns of Hingham, Hull and North Cohasset to the town of Hingham, Massachusetts. For further information, see "Regulatory Developments and Rate Matters - Massachusetts - Sale of Water System" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Sources and Availability of Water Supply
Our water utilities obtain their water supplies from owned surface water sources (reservoirs) and groundwater supplies (wells) with a total supply yield of approximately 118 million gallons per day, as well as water purchased from other water suppliers. Approximately 99 percent of our annual production is self-supplied and processed at nine surface water treatment plants and numerous well stations, which are all located in Connecticut, Massachusetts, and New Hampshire.
The capacities of Aquarion’s sources of supply, and water treatment, pumping and distribution facilities, are considered sufficient to meet the present requirements of Aquarion’s customers under normal conditions. On occasion, drought declarations are issued for portions of Aquarion’s service territories in response to extended periods of dry weather conditions.

OFFSHORE WIND PROJECTS

Eversource's offshore wind business includes ownership interests in North East Offshore and Bay State Wind, which together hold power purchase agreements (PPAs) and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases through BOEM. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This partnership also participates in new procurement opportunities for offshore wind energy in the Northeast U.S.

Eversource has a 50 percent ownership interest in North East Offshore, which holds the Revolution Wind and South Fork Wind projects, as well as a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island. Eversource also has a 50 percent ownership interest in Bay State Wind, which holds the Sunrise Wind project. Bay State Wind's separate 300-square-mile ocean lease is located approximately 25 miles south of the coast of Massachusetts adjacent to the North East Offshore area. In aggregate, the Bay State Wind and the North East Offshore ocean lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy.

Revolution Wind is a 704 MW offshore wind power project located approximately 15 miles south of the Rhode Island coast, and South Fork Wind is a 130 MW offshore wind power project located approximately 35 miles east of Long Island. Sunrise Wind is an 880 MW offshore wind facility, which will be developed 35 miles east of Montauk Point, Long Island. The completion dates for these projects are subject to federal permitting through BOEM, and engineering, state siting and permitting in New York and Rhode Island. For more information on these projects, see "Business Development and Capital Expenditures – Offshore Wind Business" in the accompanying Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

PROJECTED CAPITAL EXPENDITURES

We project to make capital expenditures of $17.03 billion from 2021 through 2025, of which we expect $10.90 billion to be in our electric and natural gas distribution segments, $4.31 billion to be in our electric transmission segment and $0.78 billion to be in our water distribution segment. We also project to invest $1.05 billion in information technology and facilities upgrades and enhancements. These projections do not include any expected investments related to our offshore wind partnership.

FINANCING

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

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As of December 31, 2020, $1.02 billion of Eversource's long-term debt, including $450.0 million, $250.0 million, $282.0 million, and $40.2 million for Eversource parent, NSTAR Electric, PSNH, and Aquarion, respectively, will mature within the next 12 months.

NUCLEAR FUEL STORAGE

CL&P, NSTAR Electric, PSNH, and several other New England electric utilities are stockholders in three inactive regional nuclear generation companies, CYAPC, MYAPC and YAEC (collectively, the Yankee Companies).  The Yankee Companies have completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent nuclear fuel.  The Yankee Companies fund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies collect amounts that we believe are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. We believe 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.

We consolidate the assets and obligations of CYAPC and YAEC on our consolidated balance sheet because our ownership and voting interests are greater than 50 percent of each of these companies.  

OTHER REGULATORY AND ENVIRONMENTAL MATTERS

General

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

Environmental Regulation

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

Renewable Portfolio Standards

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

Connecticut's RPS statute requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable sources. In 2020, the total RPS obligation was 29 percent and will ultimately reach 48 percent in 2030. CL&P is permitted to recover any costs incurred in complying with RPS from its customers through its GSC rate.

Massachusetts' RPS program requires electricity suppliers to meet renewable energy standards. For 2020, the requirement was 27.71 percent, and will ultimately reach 39.31 percent in 2025. NSTAR Electric is permitted to recover any costs incurred in complying with RPS from its customers through rates. NSTAR Electric also owns renewable solar power facilities. The RECs generated from NSTAR Electric's solar power facilities are sold to other energy suppliers, and the proceeds from these sales are credited back to customers.

New Hampshire's RPS provision requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable sources. In 2020, the total RPS obligation was 21.7 percent and it will ultimately reach 25.2 percent in 2025. The costs of the RECs are recovered by PSNH through rates charged to customers.

Hazardous Materials Regulations

We have recorded a liability for what we believe, based upon currently available information, is our reasonably estimable environmental investigation, remediation, and/or Natural Resource Damages costs for waste disposal sites for which we have probable liability. Under federal and state law, government agencies and private parties can attempt to impose liability on us for recovery of investigation and remediation costs at hazardous waste sites. As of December 31, 2020, the liability recorded for our reasonably estimable and probable environmental remediation costs for known sites needing investigation and/or remediation, exclusive of recoveries from insurance or from third parties, was $102.4 million, representing 63 sites. These costs could be significantly higher if additional remediation becomes necessary or when additional information as to the extent of contamination becomes available.

The most significant liabilities currently relate to future clean-up costs at former MGP facilities. These facilities were owned and operated by our predecessor companies from the mid-1800's to mid-1900's. By-products from the manufacture of natural gas using coal resulted in fuel oils, hydrocarbons, coal tar, purifier wastes, metals and other waste products that may pose a potential risk to human health and the environment. We currently have partial or full ownership responsibilities at former MGP sites that have a reserve balance of $92.2 million of the total $102.4 million as of December 31, 2020. MGP costs are recoverable through rates charged to our customers.
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Electric and Magnetic Fields  

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

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

Global Climate Change and Greenhouse Gas Emission Issues

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

We are continually evaluating the regulatory risks and regulatory uncertainty presented by climate change concerns.  Such concerns could potentially lead to additional rules and regulations that impact how we operate our general utility business.  These could include federal "cap and trade" laws, carbon taxes, and fuel and energy taxes.  We expect that any costs of these rules and regulations would be recovered from customers.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

For information about Eversource Energy's executive officers, see Item 10, Directors, Executive Officers and Corporate Governance, included in this Annual Report on Form 10-K.

HUMAN CAPITAL

Eversource is committed to delivering reliable energy and superior customer service; expanding energy options for our region; environmental stewardship; a safe, diverse and fairly-compensated workforce; and community service and leadership. Our employees are critical to achieving this mission and we recognize the importance of retention, growth and development of our employees. Leaders at all levels strive to create a workplace where our employees are engaged, advocate for the customer, work collaboratively, raise ideas for improvement and focus on delivering a superior customer experience. We build employee engagement through continuous communication, developing talent, fostering teamwork and creating a diverse, inclusive workplace.

As of December 31, 2020, Eversource Energy employed a total of 9,299 employees, excluding temporary employees, of which 1,381 were employed by CL&P, 1,611 were employed by NSTAR Electric, and 745 were employed by PSNH. In addition, 3,373 were employed by Eversource Service, Eversource's service company, that provides support services to all Eversource operating companies. Approximately 50 percent of our employees are members of the International Brotherhood of Electrical Workers, the Utility Workers Union of America or The United Steelworkers, and are covered by 14 collective bargaining agreements.

Safety. At Eversource, our commitment to “Safety First and Always” is a principle and a mindset present in every job and every task, whether in the field, office or at home. A priority at Eversource is continuous improvement and safety is at the forefront as we continue to build a strong safety culture, embrace new technologies, and learn with our industry and community partners to improve safety performance. We use metrics such as Eversource Corporate Days Away Restricted Time (DART) and Preventable Motor Vehicle events, among others, to monitor safety performance. Our DART safety performance was 0.7 in 2020, measured by days away, restricted or transferred per 100 workers.

In response to the COVID-19 pandemic, we implemented our company-wide pandemic plan, which resulted in no employees losing their jobs due to the pandemic, and significant changes put in place that were in the best interest of our employees, customers, and communities. This included having nearly half of our employees working remotely, while implementing additional significant safety measures for employees continuing critical on-site work. For our employees performing essential functions that are required onsite, such as field crews and system operations, we have taken significant safety measures, including establishing social distancing measures, the use of personal protective equipment, increasing facility sanitization efforts, and enabling critical operations to be shifted to different control center locations if necessary. We continue to prepare for the re-entry of our employees working remotely. The plan is informed by public health guidance with the safety of our employees and customers as our highest priority. We are in the early phase of our re-entry plan and have returned fewer than 100 remote employees to the workplace. We have had increased short duration return to work for critical business needs, such as storm response and essential training. State and federal guidelines, external conditions, and critical business priorities continue to inform the pace of our re-entry plan. Significant health and safety measures and pandemic protocols will remain in place, including social distancing requirements, the use of personal protective equipment, sanitization efforts and employee training, for all employees currently working onsite and specific plans have been developed for our eventual re-entry to the workplace.

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Diversity & Inclusion. Our commitment to Diversity & Inclusion (D&I) is critical to building a diverse, empowered and engaged team that delivers great service safely to our customers. A diverse workforce and inclusive culture contribute to our success and sustainability by driving innovation and creating trusted relationships with our employees, customers, suppliers and community partners. Our hiring practices emphasize diversity and we encourage employees to embrace different people, perspectives and experiences in our workplace and within our communities. Additionally, our leadership behaviors underscore the importance of creating inclusive teams, where employees’ voices and contributions are essential to delivering superior customer service.

Eversource’s executive leadership team promotes and supports D&I by building diverse, inclusive work teams with high engagement, growing a pipeline of diverse talent, leveraging multiple perspectives to improve customer service, using diverse suppliers, engaging with multicultural organizations in our communities and supporting the work of the D&I council and business resource groups. Eversource continues to work toward a diverse workforce with a focus on women and minorities in leadership and has D&I goals and initiatives for diversity in leadership promotions and new hires, diverse external hires, diverse candidate slate, key talent, workforce representation, community and suppliers. Eversource drives accountability for D&I progress throughout the company and executive compensation is linked to meeting our D&I goals. In 2020, 47.6 percent of new hires and promotions into leadership roles were women or people of color.

Eversource's Board of Trustees is committed to diversity and inclusion and receives regular monthly progress updates. The Corporate Governance Committee and the Board of Trustees seek diversity in gender, ethnicity and personal background when considering Trustee candidates. Our Board of Trustees has been recognized as one of the most diverse in our industry.

Compensation, Health and Wellness Benefits. We are committed to the health, safety and wellness of our employees. We provide competitive compensation and comprehensive benefit packages, including healthcare, life insurance, long-term disability insurance, death benefits, retirement plans (defined benefit pension plans or 401k Plan), an Employee Stock Purchase Plan, health savings and flexible spending accounts, paid time off, employee assistance programs, and tuition assistance, among many others. Eversource also provides wellness programs and benefits to encourage employees and their families to adopt and maintain healthy lifestyle habits.

Talent Development, Training Programs and Education Opportunities. Eversource supports and develops its employees through training and development programs that build and strengthen employees’ leadership and skill set. In response to the COVID-19 pandemic, we have pivoted, and are providing employees with a variety of virtual classroom training opportunities. Continuous professional development is important to support our employees’ ongoing success. These professional development programs include leadership effectiveness programs designed to develop new and current supervisors; a talent management process to identify high potential and emerging talent and ensure their development; a rotational associate engineering program; educational and professional development opportunities for employees who are recent college graduates; tuition assistance program; and paid internships and co-ops.

Strategic workforce plans are developed every year as part of the annual business planning process to identify long-range needs to ensure that we acquire, develop and retain diverse, capable talent. This includes leveraging educational partnerships in critical craft and technical areas and developing proactive sourcing strategies to attract experienced professionals in highly technical roles in engineering, electric and gas operations, and energy efficiency. As part of this process, we identify critical roles and develop succession plans to ensure we have a capable supply of talent for the future.

Over 800 new Eversource Gas Company of Massachusetts employees (formerly Columbia Gas of Massachusetts employees) were welcomed and successfully onboarded in 2020. All Columbia Gas of Massachusetts employees who wanted to continue employment with Eversource were offered jobs.

Community & Social Impact. Eversource and our employees support many programs, agencies, and not-for-profit organizations that support economic and community development, the environment, and initiatives that address local, high-priority concerns and needs. Eversource provides donations and other support to community agencies, including significant volunteer hours of our employees.

See Item 11, Executive Compensation, included in this Annual Report on Form 10-K, as well as the “Our People” section of our 2019 Sustainability Report located on our website, for more detailed information regarding our human capital programs and initiatives. Nothing on our website, including our Sustainability Report or sections thereof, shall be deemed incorporated by reference into this Annual Report.

INTERNET INFORMATION

Our website address is www.eversource.com.  We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource'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 Annual Report on Form 10-K.  Printed copies of these reports may be obtained free of charge by writing to our Investor Relations Department at Eversource Energy, 107 Selden Street, Berlin, CT 06037.  

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Item 1A. Risk Factors

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

Cybersecurity and Data Privacy Risks:

Cyberattacks, including acts of war or terrorism, targeted directly on or indirectly affecting our systems or the systems of third parties on which we rely, could severely impair operations, negatively impact our business, lead to the disclosure of confidential information and adversely affect our reputation.

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

We have instituted safeguards to protect our information technology systems and assets. We deployed substantial technologies to system and application security, encryption and other measures to protect our computer systems and infrastructure from unauthorized access or misuse. We also interface with numerous external entities to improve our cybersecurity situational awareness. The FERC, through the North American Electric Reliability Corporation (NERC), requires certain safeguards to be implemented to deter cyberattacks. These safeguards may not always be effective due to the evolving nature of cyberattacks. We maintain cyber insurance to cover damages and defense costs related to breaches of networks or operational technology, but it may be insufficient to cover all losses.

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

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

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

Pandemic Risks, including COVID-19 Related Risks:

As evidenced by the global pandemic of the 2019 novel coronavirus (COVID-19), global pandemics result in widespread disruption to the overall economic market and outlook, which could cause various unfavorable impacts to our customers, vendors, employees, regulators, and operations and could adversely affect our financial position, results of operations and cash flows.

We continue to respond to COVID-19 by taking steps to mitigate the potential risks to Eversource posed by its spread. We provide a critical service to our customers, which means it is paramount that we keep our employees who operate our businesses safe, and minimize unnecessary risk of exposure to COVID-19. We have updated and implemented our company-wide pandemic plan to address specific aspects of the COVID-19 pandemic. This plan guides our emergency response, business continuity, and the precautionary measures we are taking on behalf of employees and our customers.

Cybersecurity attacks: We, as well as others in the power and utility industry, have continued to experience significant events where outside parties, utilizing sophisticated methods, have attempted to compromise both our vendors and employees to try to gain access to our email systems, as well as attempting to access our other systems or networks. Eversource was not affected by the SolarWinds event. We continue to implement strong cybersecurity measures and have increased the education of our employees and contractors to ensure that our systems remain functional in order to both serve our operational needs with a remote workforce and to ensure uninterrupted service to our customers. Our incident response team works with compromised vendors to assist them in improving their security posture. We also continuously review and update our response plans to include responding to an event while in a remote work environment.

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Access to, or cost of, capital resources: We utilize the commercial paper market extensively for our short-term borrowing needs. At the onset of the pandemic in the United States, liquidity in the commercial paper credit market began to deteriorate rapidly. However, federal legislative actions, including actions taken by the Federal Reserve, have provided sufficient liquidity and stabilization of the credit markets. We continue to monitor the ability for us to access the global capital and credit markets; however, if we are unable to access these markets, then our financial condition may be adversely affected. We have had open, full access to the capital markets throughout the COVID-19 pandemic.

Actions of regulators: We continue to work closely with our state regulatory commissions and consumer advocates on customer assistance measures, including payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We developed these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience. We believe that we have in place, or are developing, successful mechanisms with our state regulatory commissions to recover our incremental costs associated with COVID-19, while balancing the impact on our customers’ bills and our operating cash flows, however our financial condition may be adversely affected depending on the outcome of planned proceedings before our state regulatory commissions.

Timing of strategic development opportunities: The successful execution of our timeline for developing our offshore wind projects is based on several factors, including state and federal siting and permitting approvals. We implemented, and continue to update, mitigation plans that addressed permitting delays due to COVID-19 work restrictions between March and June 2020 that resulted in a moderate impact to our offshore wind projects siting and permit filing timelines. However, we are unable to assess the potential impact that a reintroduction of work restrictions in response to a future resurgence in COVID-19 infections would have on our projects’ timelines.

Suppliers and Vendors: We have instituted measures to ensure our supply chain remains open to us; however, there could be global shortages that will impact our maintenance, capital programs, and storm response that we currently cannot anticipate.

Loss of key personnel: We continue to adjust our pandemic plan to address various scenarios including reduced workforce levels and limited mutual aid in the event of a significant storm event. We have implemented remote work arrangements for our workforce by enabling nearly half of our employees to work from home and taking extra precautions for our field-based employees. We have taken significant safety measures to ensure adequate social distancing for our field crews to safely provide essential services to our customers. We have also adopted protocols to ensure the safety and health of those employees who work onsite in critical facilities. We continue to monitor COVID-19 developments affecting our workforce and will take additional precautions that we determine are necessary in order to mitigate the impacts. Although to date our workforce continues to be able to safely and reliably deliver our critical services to customers, we are unable to predict the extent of the impact of COVID-19 on our employees.

The extent of the impact to us in the future will vary and depend in large part on the duration, scope and severity of the pandemic and the timing and extent of COVID-19 relief legislation, and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of planned proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses. As a result, we are currently unable to estimate the potential impact of COVID-19 to our financial position, results of operations and cash flows.

Business Risks:

Strategic development opportunities associated with offshore wind or investment opportunities in electric transmission or clean-energy opportunities may not be successful, and projects may not commence operation as scheduled or be completed, which could have a material adverse effect on our business prospects.

We are pursuing broader strategic development investment opportunities that will benefit the Northeast region related to the construction of offshore wind electric generation facilities, and investment opportunities in electric transmission facilities and other clean-energy infrastructure. The development of these activities involves numerous significant risks around schedule, cost, capacity factors, tax strategies and permitting (both on and offshore). Various external factors could result in increased costs or result in delays or cancellation of these projects. Risks include federal, state and local regulatory approval processes, new legislation impacting the industry, changes to federal income tax laws, economic events or factors, environmental and community concerns, design and siting issues, difficulties in obtaining required rights of way, competition from incumbent utilities and other entities, and actions of our strategic partners. Should any of these factors result in significant delays or cancellations, our financial position, results of operations, and cash flows could be materially adversely affected, or our future growth opportunities may not be realized as anticipated.

Eversource has a joint and equal partnership with Ørsted for the development and operation of three offshore wind projects. Offshore wind is currently an emerging industry in the U.S., but it has a very robust operational and construction history in Europe. As such, siting, permitting, tax legislation, and supply chain are currently being addressed for the first time in the U.S. The projects currently being developed by our partnership may not achieve the results we anticipate. The partnership’s ability to generate revenue from offshore wind projects depends on meeting our construction schedules, controlling cost overruns, maintaining continuing interconnection arrangements, power purchase agreements, or other market mechanisms as well as interconnecting utility and Regional Transmission Organizations rules, policies, procedures and FERC tariffs that permit future offshore wind project operations. After projects are placed in operation, capacity factors will directly affect revenues generated from these investments. Other factors that may have an adverse impact on our anticipated project returns include significant schedule delays resulting from federal, state or local permitting processes. Specifically, the approval from the BOEM is a critical path item in the projects' timeline. Any changes to tax laws or to Eversource’s ability to monetize tax attributes associated with these projects could also have a material adverse effect on cash flows and project returns.

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

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

We outsource certain services to third parties in areas including information technology, transaction processing, human resources, payroll and payroll processing and certain operational areas. As a result of our acquisition of the Columbia Gas of Massachusetts (CMA) assets from NiSource on October 9, 2020, we have entered into a Transition Services Agreement with NiSource whereby NiSource is performing certain services on behalf of our newly formed Eversource Gas Company of Massachusetts in the areas of information technology, transaction processing, human resources, payroll and payroll processing and certain operational areas for periods ranging from 1 to 24 months. Outsourcing of services to third parties could expose us to substandard quality of service delivery or substandard deliverables, which may result in missed deadlines or other timeliness issues, non-compliance (including with applicable legal requirements and industry standards) or reputational harm, which could negatively impact our results of operations. We also continue to pursue enhancements to standardize our systems and processes. If any difficulties in the operation of these systems were to occur, they could adversely affect our results of operations, or adversely affect our ability to work with regulators, unions, customers or employees.

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

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

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

Advances in technology that reduce the costs of alternative methods of producing electric energy to a level that is competitive with that of current electric production methods, could result in loss of market share and customers, and may require us to make significant expenditures to remain competitive. These changes in technology could also alter the channels through which electric customers buy or utilize energy, which could reduce our revenues or increase our expenses. Economic downturns or periods of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency and self-generation by customers.

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

Our operations depend on the continued efforts of our employees. Retaining key employees and maintaining the ability to attract new employees are important to both our operational and financial performance. We cannot guarantee that any member of our management or any key employee at the Eversource parent or subsidiary level will continue to serve in any capacity for any particular period of time. In addition, a significant portion of our workforce in our subsidiaries, including many workers with specialized skills maintaining and servicing the electric, natural gas and water infrastructure, will be eligible to retire over the next five to ten years. Such highly skilled individuals cannot be quickly replaced due to the technically complex work they perform. We have developed strategic workforce plans to identify key functions and proactively implement plans to assure a ready and qualified workforce, but we cannot predict the impact of these plans on our ability to hire and retain key employees. Labor disputes, work stoppages or an inability to negotiate future collective bargaining agreements on commercially reasonable terms, as well as the intentional misconduct of employees or contractors, may also have an adverse effect on our business, financial position and results of operations.

Risks Related to the Environment and Catastrophic Events:

The effects of climate change, including severe storms, could cause significant damage to any of our facilities requiring extensive expenditures, the recovery for which is subject to approval by regulators.

Climate change creates physical and financial risks to our operations. Physical risks from climate change may include an increase in sea levels and changes in weather conditions, such as changes in precipitation and extreme weather events including drought. Customers’ energy needs vary with weather conditions, primarily temperature and humidity. For residential customers, heating and cooling represent their largest energy use. For water customers, conservation measures imposed by the communities we serve could impact water usage. To the extent weather conditions are affected by climate change, customers’ energy and water usage could increase or decrease depending on the duration and magnitude of the changes.
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Severe weather, such as ice and snow storms, hurricanes, droughts, and other natural disasters, may cause outages and property damage, which may require us to incur additional costs that may not be recoverable from customers. The cost of repairing damage to our operating subsidiaries' facilities and the potential disruption of their operations due to storms, natural disasters or other catastrophic events could be substantial, particularly as regulators and customers demand better and quicker response times to outages. If, upon review, any of our state regulatory authorities finds that our actions were imprudent, some of those restoration costs may not be recoverable from customers. The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations and cash flows. We maintain property insurance, but it may be insufficient to cover all losses.

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

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

Our water systems include impounding dams and reservoirs of various sizes. Although we believe our dams are structurally sound and well-maintained, significant damage to these facilities, or a significant decrease in the water in our reservoirs, could adversely affect our ability to provide water to our customers until the facilities and a sufficient amount of water in our reservoirs can be restored. A failure of a dam could result in personal injuries and downstream property damage for which we may be liable. The failure of a dam would also adversely affect our ability to supply water in sufficient quantities to our customers. Any losses or liabilities incurred due to a failure of one of our dams may not be recoverable in rates and may have a material adverse effect on our financial position, results of operations and cash flows. We maintain liability insurance, but it may be insufficient to cover all losses.

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

Physical attacks, including acts of war or terrorism, both threatened and actual, that damage our transmission and distribution systems or other assets could negatively impact our ability to transmit or distribute energy, water, natural gas, or operate our systems efficiently or at all. Because our electric transmission systems are part of an interconnected regional grid, we face the risk of widespread blackouts due to grid disturbances or disruptions on a neighboring interconnected system. Similarly, our natural gas distribution system is connected to transmission pipelines, not owned by Eversource. If there was an attack on the transmission pipelines, it could impact our ability to deliver natural gas. If our assets were physically damaged and were not recovered in a timely manner, it could result in a loss of service to customers, a significant decrease in revenues, significant expense to repair system damage, costs associated with governmental actions in response to such attacks, and liability claims, all of which could have a material adverse impact on our financial position, results of operations and cash flows. We maintain property and liability insurance, but it may be insufficient to cover all losses.

Regulatory, Legislative and Compliance Risks:

The actions of regulators and legislators could significantly impact our ability to recover costs in a timely manner and can affect our earnings and liquidity.

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

Under state and federal law, our electric, natural gas and water companies are entitled to charge rates that are sufficient to allow them an opportunity to recover their prudently incurred operating and capital costs and a reasonable rate of return on invested capital, to attract needed capital and maintain their financial integrity, while also protecting relevant public interests. Each of these companies prepares and submits periodic rate filings with their respective regulatory commissions for review and approval, which allows for various entities to challenge our current or future rates, structures or mechanisms and could alter or limit the rates we are allowed to charge our customers and may not match the timing of when costs are incurred. Additionally, catastrophic events at other utilities could result in our regulators and legislators imposing additional requirements that may lead to additional costs for the Company.

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

The FERC has jurisdiction over our transmission costs recovery and our allowed ROEs. Certain outside parties have filed four complaints against all electric companies under the jurisdiction of ISO-NE alleging that our allowed ROEs are unjust and unreasonable. An adverse decision in any of these four complaints could adversely affect our financial position, results of operations and cash flows.

FERC's policy has encouraged competition for transmission projects, even within existing service territories of electric companies. Implementation of FERC's goals, including within our service territories, may expose us to competition for construction of transmission projects, additional regulatory considerations, and potential delay with respect to future transmission projects, which may adversely affect our results of operations and lower rate base growth.
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Changes in tax laws, as well as the potential tax effects of business decisions could negatively impact our business, results of operations (including our expected project returns from our planned offshore wind facilities), financial condition and cash flows.

We are exposed to significant reputational risks, which make us vulnerable to increased regulatory oversight or other sanctions.

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

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

Our subsidiaries' operations are subject to extensive federal, state and local environmental statutes, rules and regulations that govern, among other things, water quality, water discharges, the management of hazardous and solid waste, and air emissions. Compliance with these requirements requires us to incur significant costs relating to environmental monitoring, maintenance and upgrading of facilities, remediation and permitting.

The costs of compliance with existing legal requirements or legal requirements not yet adopted may increase in the future. An increase in such costs, unless promptly recovered, could have an adverse impact on our business and our financial position, results of operations and cash flows.

For further information, see Item 1, Business - Other Regulatory and Environmental Matters, included in this Annual Report on Form 10-K.

Financial, Economic, and Market Risks:

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

We have a significant amount of goodwill on our consolidated balance sheet, which, as of December 31, 2020, totaled $4.4 billion. The carrying value of goodwill represents the fair value of an acquired business in excess of the fair value of identifiable assets and liabilities as of the acquisition date. We test our goodwill balances for impairment on an annual basis or whenever events occur, or circumstances change that would indicate a potential for impairment. A determination that goodwill is deemed to be impaired would result in a non-cash charge that could materially adversely affect our financial position, results of operations and total capitalization. The annual goodwill impairment test in 2020 resulted in a conclusion that our goodwill was not impaired.

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

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

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

We use short-term debt and the long-term capital markets as a significant source of liquidity and funding for capital requirements not obtained from our operating cash flow. If access to these sources of liquidity becomes constrained, our ability to implement our business strategy could be adversely affected. In addition, higher interest rates would increase our cost of borrowing, which could adversely impact our results of operations. A downgrade of our credit ratings or events beyond our control, such as a disruption in global capital and credit markets, could increase our cost of borrowing and cost of capital or restrict our ability to access the capital markets and negatively affect our ability to maintain and to expand our businesses.

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

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

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

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

Item 1B.    Unresolved Staff Comments

We do not have any unresolved SEC staff comments.

Item 2.    Properties

Transmission and Distribution System

As of December 31, 2020, Eversource and our electric operating subsidiaries owned the following:
Electric
Distribution
Electric
Transmission
Eversource
Number of substations owned 485  78 
Transformer capacity (in kVa) 43,431,000  16,149,000 
Overhead lines (in circuit miles) 40,623  3,975 
Underground lines (in circuit miles) 17,926  418 
Capacity range of overhead transmission lines (in kV) N/A 69 to 345
Capacity range of underground transmission lines (in kV) N/A 69 to 345
  CL&P NSTAR Electric PSNH
  Distribution Transmission Distribution Transmission Distribution Transmission
Number of substations owned
182  20  169  36  134  22 
Transformer capacity (in kVa)
21,946,000  3,633,000  17,040,000  7,465,000  4,445,000  5,051,000 
Overhead lines (in circuit miles)
16,935  1,677  11,440  1,244  12,248  1,054 
Underground lines (in circuit miles)
6,812  143  9,082  272  2,032 
Capacity range of overhead transmission lines (in kV)
N/A 69 to 345 N/A 69 to 345 N/A 115 to 345
Capacity range of underground transmission lines (in kV)
N/A 69 to 345 N/A 115 to 345 N/A 115 
Eversource CL&P NSTAR Electric PSNH
Underground and overhead line transformers in service
632,114  292,030  172,134  167,950 
Aggregate capacity (in kVa) 37,838,471  16,239,772  14,595,704  7,002,995 

Electric Generating Plants

As of December 31, 2020, NSTAR Electric owned the following solar power facilities:  
Type of Plant Number
of Sites
Year
Installed
Claimed Capability**
(kilowatts)
Solar Fixed Tilt, Photovoltaic 22 2010 - 2019 70,000

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

CL&P and PSNH do not own any electric generating plants.

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Natural Gas Distribution System

As of December 31, 2020, NSTAR Gas owned 21 active gate stations, 151 district regulator stations, and approximately 3,318 miles of natural gas main pipeline. Hopkinton, another subsidiary of Eversource, owns a satellite vaporization plant and above ground storage tanks in Acushnet, Massachusetts (0.5 Bcf of natural gas). In addition, Hopkinton owns a liquefaction and vaporization plant with above ground storage tanks in Hopkinton, Massachusetts (3.0 Bcf of natural gas). Combined, the two plants' tanks have an aggregate storage capacity equivalent to 3.5 Bcf of natural gas that is provided to NSTAR Gas under contract.

As of December 31, 2020, EGMA owned 14 active gate stations, 194 district regulator stations, and approximately 5,010 miles of natural gas main pipeline. Hopkinton, another subsidiary of Eversource, owns liquefaction and vaporization plants and above ground storage tanks at four locations throughout Massachusetts with an aggregate storage capacity equivalent to 1.8 Bcf of natural gas. In addition, Hopkinton owns four propane peak shaving plants at four locations throughout Massachusetts with an aggregate storage capacity equivalent to 0.2 Bcf, or 1.8 million gallons of propane.

As of December 31, 2020, Yankee Gas owned 28 active gate stations, 209 district regulator stations, and approximately 3,501 miles of natural gas main pipeline. Yankee Gas also owns a liquefaction and vaporization plant and above ground storage tank with a storage capacity equivalent of 1.2 Bcf of natural gas in Waterbury, Connecticut.

Water Distribution System

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

As of December 31, 2020, Aquarion owned and operated sources of water supply with a combined yield of approximately 118 million gallons per day; 3,434 miles of transmission and distribution mains; 9 surface water treatment plants; 29 dams; and 110 wellfields.

Franchises

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

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

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

Massachusetts restructuring legislation defines service territories as those territories actually served on July 1, 1997 and following municipal boundaries to the extent possible.  The restructuring legislation further provides that until terminated by law or otherwise, distribution companies shall have the exclusive obligation to serve all retail customers within their service territories and no other person shall provide distribution service within such service territories without the written consent of such distribution companies.

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

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

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

Eversource Gas Company of Massachusetts Eversource acquired the natural gas distribution and LNG business of Bay State Gas Company, doing business as Columbia Gas of Massachusetts, in an asset purchase transaction that closed on October 9, 2020. The natural gas distribution assets were transferred to Eversource Gas Company of Massachusetts, a Massachusetts corporation formed in May 2020, and an indirect subsidiary of Eversource parent. Eversource Gas Company of Massachusetts holds valid franchises to sell natural gas in the areas in which it supplies natural gas service, which it acquired either directly or from Bay State Gas Company. Generally, Eversource Gas Company of Massachusetts holds franchises to serve customers in areas designated by those franchises as well as in most other areas throughout Massachusetts so long as those areas are not occupied and served by another natural gas utility under a valid franchise of its own or are not subject to an exclusive franchise of another natural gas utility or by consent.

Yankee Gas  Yankee Gas holds valid franchises to sell natural gas in the areas in which Yankee Gas supplies natural gas service, which it acquired either directly or from its predecessors in interest.  Generally, Yankee Gas holds franchises to serve customers in areas designated by those franchises as well as in most other areas throughout Connecticut so long as those areas are not occupied and served by another natural gas utility under a valid franchise of its own or are not subject to an exclusive franchise of another natural gas utility or by consent.  Yankee Gas' franchises are perpetual but remain subject to the power of alteration, amendment or repeal by the General Assembly of the State of Connecticut, the power of revocation by the PURA and certain approvals, permits and consents of public authorities and others prescribed by statute.  Generally, Yankee Gas' franchises include, among other rights and powers, the right and power to manufacture, generate, purchase, transmit and distribute natural gas and to erect and maintain certain facilities on public highways and grounds, and the right of eminent domain, all subject to such consents and approvals of public authorities and others as may be required by law.

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

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

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

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

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

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

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Item 3.    Legal Proceedings

We are involved in legal, tax and regulatory proceedings regarding matters arising in the ordinary course of business. For information regarding material lawsuits and proceedings, see Note 13, Commitments and Contingencies, of the Combined Notes to Financial Statements.

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

Item 4.    Mine Safety Disclosures

Not applicable.

PART II

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

(a)    Market Information

Our common shares are listed on the New York Stock Exchange.  The ticker symbol is "ES."  There is no established public trading market for the common stock of CL&P, NSTAR Electric and PSNH.  All of the common stock of CL&P, NSTAR Electric and PSNH is held solely by Eversource.

(b)    Holders

As of January 31, 2021, there were 32,340 registered common shareholders of our company on record.  As of the same date, there were a total of 343,003,366 shares outstanding.

(c)     Dividends

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

(d)    Securities Authorized for Issuance Under Equity Compensation Plans

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

(e)    Performance Graph

The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in 2015 in Eversource Energy common stock, as compared with the S&P 500 Stock Index and the EEI Index for the period 2015 through 2020, assuming all dividends are reinvested.

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ES-20201231_G2.JPG

December 31,
2015 2016 2017 2018 2019 2020
Eversource Energy $100 $112 $132 $140 $188 $197
EEI Index $100 $117 $131 $136 $171 $169
S&P 500 $100 $112 $136 $130 $172 $203


Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below.  The common shares purchased consist of open market purchases made by the Company or an independent agent.  These share transactions related to matching contributions under the Eversource 401k Plan.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as
Part of Publicly Announced Plans or Programs
Approximate Dollar
Value of Shares that
May Yet Be Purchased Under the Plans and Programs (at month end)
October 1 - October 31, 2020 —  $ —  —  — 
November 1 - November 30, 2020 —  —  —  — 
December 1 - December 31, 2020 2,218  85.26  —  — 
Total 2,218  $ 85.26  —  — 

Recent Sales of Unregistered Securities

In January 2020, we determined that during 2019 and early 2020, the Savings Plan for Employees of Aquarion Water Company, a 401(k) retirement plan (Plan), offered Eversource common shares (Shares) as an investment alternative for participants. The Plan trustee purchased Shares in the open market and allocated the Shares to participants’ Plan accounts at the election of participants.  During this period, the Plan sold 5,990 Shares to 35 participants, which Shares were not registered on Form S-8.  The investment alternative to purchase Shares under the Plan has been terminated, and we did not receive any proceeds from such sales, which were funded with participants' contributions to the Plan.

Item 6.    Removed and Reserved


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

EVERSOURCE ENERGY AND SUBSIDIARIES

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related combined notes included in this combined Annual Report on Form 10-K.  References in this combined Annual Report on Form 10-K to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries.  All per-share amounts are reported on a diluted basis.  The consolidated financial statements of Eversource, NSTAR Electric and PSNH and the financial statements of CL&P are herein collectively referred to as the "financial statements."  Our discussion of fiscal year 2020 compared to fiscal year 2019 is included herein. Unless expressly stated otherwise, for discussion and analysis of fiscal year 2018 items and fiscal year 2019 compared to fiscal year 2018, please refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our combined 2019 Annual Report on Form 10-K, which is incorporated herein by reference.

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

The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business but rather represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under GAAP, 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. Our earnings discussion also includes non-GAAP financial measures referencing our 2020 earnings and EPS excluding certain acquisition costs related to our purchase of the assets of Columbia Gas of Massachusetts and our 2019 earnings and EPS excluding the impairment charge for the NPT project.

We use these non-GAAP financial measures to evaluate and provide details of earnings results by business and to more fully compare and explain our 2020 and 2019 results without including these items. We believe the acquisition costs and the NPT impairment charge are not indicative of our ongoing costs and performance. Due to the nature and significance of these items on Net Income Attributable to Common Shareholders, we believe that the non-GAAP presentation is a more meaningful representation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance of our business. These non-GAAP financial measures should not be considered as alternatives to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as indicators of operating performance.

Financial Condition and Business Analysis

Executive Summary

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

Earnings Overview and Future Outlook:

We earned $1.21 billion, or $3.55 per share, in 2020, compared with $909.1 million, or $2.81 per share, in 2019. Our 2020 results include after-tax acquisition costs related to our purchase of the assets of Columbia Gas of Massachusetts (CMA) of $32.1 million, or $0.09 per share. Excluding those acquisition costs, we earned $1.24 billion, or $3.64 per share, in 2020. Our 2019 results include an after-tax impairment charge of $204.4 million, or $0.64 per share, related to our former investment in the NPT project. Excluding the NPT impairment charge, we earned $1.11 billion, or $3.45 per share, in 2019.

Our electric distribution segment earned $544.0 million, or $1.60 per share, in 2020, compared with $513.3 million, or $1.59 per share, in 2019.  Our natural gas distribution segment earned $134.1 million, or $0.40 per share, in 2020, compared with $96.2 million, or $0.30 per share, in 2019. Our water distribution segment earned $41.2 million, or $0.12 per share, in 2020, compared with $34.9 million, or $0.11 per share, in 2019.

Our electric transmission segment earned $502.5 million, or $1.48 per share, in 2020, compared with $256.5 million, or $0.79 per share, in 2019.  Excluding the after-tax NPT impairment charge of $204.4 million, or $0.64 per share, our electric transmission segment earned $460.9 million, or $1.43 per share, in 2019.

Eversource parent and other companies had a net loss of $16.6 million, or $0.05 per share, in 2020, compared with earnings of $8.2 million, or $0.02 per share, in 2019. Excluding acquisition costs, Eversource parent and other companies earned $14.0 million, or $0.04 per share, in 2020.

We currently project 2021 non-GAAP earning guidance of between $3.81 per share and $3.93 per share, which excludes the impact of integration costs related to our purchase of the natural gas distribution assets of CMA. We also project that our long-term EPS growth rate through 2025 from our regulated utility businesses will be in the upper half of the 5 to 7 percent range.

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The outbreak of COVID-19 has not resulted in significant operational or earnings impacts. We believe that we have in place, or are developing, successful mechanisms with our state regulatory commissions that allow, or will allow, us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses. We are continuing to closely monitor the COVID-19 pandemic, and we continue to operate under our pandemic response plan.
Liquidity:

Cash flows provided by operating activities totaled $1.68 billion in 2020, compared with $2.01 billion in 2019.  Investments in property, plant and equipment totaled $2.94 billion in 2020 and $2.91 billion in 2019.  Cash totaled $106.6 million as of December 31, 2020, compared with $15.4 million as of December 31, 2019.  Our available borrowing capacity under our commercial paper programs totaled $1.40 billion as of December 31, 2020.

In 2020, we issued 11,960,000 common shares, which resulted in proceeds of $929.0 million, net of issuance costs.

In 2020, we issued $2.76 billion of new long-term debt, consisting of $1.55 billion by Eversource parent, $400 million by CL&P, $400 million by NSTAR Electric, $150 million by PSNH, $190 million by NSTAR Gas, and $70 million by Yankee Gas.  Proceeds from these new issuances were used primarily to fund a portion of the purchase price for the CMA asset acquisition and to pay short-term borrowings at Eversource parent, refinance investments in eligible green expenditures at NSTAR Electric, and to refinance existing indebtedness, fund capital expenditures and for general corporate purposes at CL&P, PSNH, NSTAR Gas and Yankee Gas.

In 2020, we issued dividends totaling $2.27 per common share, compared with dividends of $2.14 per common share in 2019.  On February 9, 2021, our Board of Trustees approved a common share dividend payment of $0.6025 per share, payable on March 31, 2021 to shareholders of record as of March 4, 2021.  The 2021 dividend represents an increase of 6.2 percent over the dividend paid in December 2020.
 
We project to make capital expenditures of $17.03 billion from 2021 through 2025, of which we expect $10.90 billion to be in our electric and natural gas distribution segments, $4.31 billion to be in our electric transmission segment and $0.78 billion to be in our water distribution segment.  We also project to invest $1.05 billion in information technology and facilities upgrades and enhancements. These projections do not include any expected investments related to offshore wind projects. 

Strategic and Regulatory Items:

On October 9, 2020, Eversource completed the acquisition of certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, CMA, for a cash purchase price of $1.1 billion, plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date. On October 7, 2020, the DPU approved the rate plan related to the acquisition. The approved rate stabilization plan includes base distribution rate increases of $13 million on November 1, 2021 and $10 million on November 1, 2022. The settlement agreement includes two rate base resets during an eight-year rate plan, occurring on November 1, 2024 and November 1, 2027.

On December 15, 2020, the NHPUC approved an October 9, 2020 settlement agreement that included a permanent rate increase of $45.0 million effective January 1, 2021 at PSNH. PSNH was also permitted three step increases, effective January 1, 2021, August 1, 2021, and August 1, 2022, to reflect plant additions in calendar years 2019, 2020 and 2021, respectively. The settlement agreement allowed for the effect of the permanent rate increase to be extended back to the temporary rate period. In lieu of a customer rate increase for this recoupment of revenue, the NHPUC directed a portion of the total EDIT regulatory liability to offset bill impacts to customers.

On October 30, 2020, the DPU approved an NSTAR Gas base distribution rate increase of $23.0 million effective November 1, 2020. NSTAR Gas' 2019 plant additions are allowed recovery beginning on November 1, 2021. 

In January 2021, BOEM released its Draft Environmental Impact Statement (EIS) for the South Fork Wind project, which assessed the environmental, social, and economic impacts of constructing the project.

Impact of COVID-19
 
COVID-19 has adversely affected workers and the economy and caused volatility in the financial markets. Due to the inherent uncertainty of the unprecedented and evolving situation, we continue to closely monitor how COVID-19 related developments affect Eversource. Based on available information, we have not experienced significant impacts directly related to the pandemic that have adversely affected our current operations or results of operations. The extent of the impact to us in the future will vary and depend in large part on the duration, scope and severity of the pandemic and the timing and extent of COVID-19 relief legislation, and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of planned proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses.

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Operational: We provide a critical service to our customers and have taken extensive measures to maintain its safety and reliability. We have implemented our company-wide pandemic plan, which guides our emergency response, business continuity, and the precautionary measures we are taking to ensure the safety, health, and well-being of our employees, our customers, and our communities. We continue to adjust our company-wide pandemic plan to address various scenarios, including reduced workforce levels and limited mutual aid in the event of a significant storm event, and have implemented protective measures to mitigate the impact of COVID-19 on our workforce. We have implemented work from home policies where appropriate, resulting in nearly half of our employees working remotely. For our employees performing essential functions that are required onsite, such as field crews and system operations, we have taken significant safety measures, including establishing social distancing measures, the use of personal protective equipment, increasing facility sanitization efforts, and enabling critical operations to be shifted to different control center locations if necessary. At this time, our workforce staffing levels continue to enable us to safely and reliably deliver our critical services to customers.

We continue to prepare for the re-entry of our employees working remotely. Our re-entry plan includes a multi-phase approach that is measured and gradual. The plan is informed by public health guidance with the safety of our employees and customers as our highest priority. We are in the early phase of our re-entry plan and have returned fewer than 100 remote employees to the workplace. We have had increased short duration return to work for critical business needs, such as storm response and essential training. State and federal guidelines, external conditions, and critical business priorities continue to inform the pace of our re-entry plan. Significant health and safety measures and pandemic protocols will remain in place, including social distancing requirements, the use of personal protective equipment, sanitization efforts and employee training, for all employees currently working onsite and specific plans have been developed for our eventual re-entry to the workplace.

In mid-March, we suspended non-critical work inside customer premises, which included energy audits inside our customers’ homes and businesses. These activities resumed in early July with the implementation of new health and safety guidelines for the restart of energy efficiency services to customers. This delay did not have a significant impact on our 2020 spending levels or incentives earned. As of the date of our filing, we do not expect a significant impact on our 2021 energy efficiency program spending and efforts, which assumes the continuation of energy efficiency programs throughout 2021. Actual energy efficiency spending levels will depend on the extent and duration of the pandemic.

Among the states we serve, COVID-19 had initially spread in a rapid manner in Connecticut and Massachusetts during the outbreak that began in mid-March. During the summer, these states had seen a decrease in the infection rate and daily confirmed cases, as well as more capacity in hospitals, and improved testing availability and contact tracing, as compared to the initial outbreak. Beginning in October, the spread of COVID-19 began to increase at a significant pace, surpassing infection levels from the initial outbreak, peaking in December 2020 and January 2021 in each of the states we serve. Since those peak levels, there has been a downward trend in the daily confirmed cases, infection rates and positive test rates.

Financial: Overall, our future financial position, results of operations, and cash flows could be negatively impacted by COVID-19 as it relates to the collectability of customer receivables and customer payment plans, elimination of late payment revenues, lower sales volumes primarily from PSNH's commercial and industrial customers, energy efficiency spending levels and incentives earned, and increased expenses for cleaning and supplies for personal protective equipment. Other potential negative financial impacts relate to market volatility on our equity and debt securities, access to, as well as cost of, capital resources, and the ability of various third-party vendors and suppliers to fulfill their obligations.

As of December 31, 2020, our allowance for uncollectible customer receivable balance of $358.9 million, of which $194.8 million relates to hardship accounts that are specifically recovered in rates charged to customers, adequately reflected the collection risk and net realizable value for our receivables.  We continue to evaluate the adequacy of the uncollectible allowance based on an ongoing assessment of accounts receivable collections and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and some lower cash collections from customers because of the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic.

Based upon the evaluation performed, in 2020, we increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $31.5 million for Eversource ($2.8 million for CL&P, $11.0 million for NSTAR Electric, $2.3 million for PSNH and $15.4 million at our natural gas businesses). These COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as we believe it is probable that these costs will ultimately be recovered from customers in rates. We believe that we have in place, or are developing, successful mechanisms with our state regulatory commissions that allow, or will allow, us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. 

In March 2020, Connecticut, Massachusetts and New Hampshire each established moratoria on disconnections of residential and commercial customers for non-payment for utility service.  In all three states, a moratorium for lower income hardship residential customers will remain in place through the normal state regulated winter moratorium that ends in the spring of 2021.  In Connecticut and New Hampshire, the moratorium for all remaining customers has expired.  In Massachusetts, the moratorium on commercial utility disconnections ended on September 1, 2020 and the moratorium on residential non-hardship disconnections was extended to April 1, 2021.

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We continue to work closely with our state regulatory commissions and consumer advocates on customer assistance measures, including payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We developed these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience. Our operating companies also eliminated late payment charges beginning in March 2020, with New Hampshire being the only state with a defined restart date of April 1, 2021. In 2020, we have waived $6.1 million of late payment charges that would have otherwise been recognized within revenues as a benefit to pre-tax earnings.

For the year ended December 31, 2020, net incremental costs incurred as a result of COVID-19 totaled $35.2 million and related to uncollectible expense that impacts earnings, facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment, net of cost savings. We have deferred $24.0 million of these net incremental COVID-19 costs on the balance sheet, of which $15.8 million of that deferral related to uncollectible expense that impacts earnings and $8.2 million related to cleaning and supplies for personal protective equipment. Incremental COVID-19 expenses that reduced pre-tax earnings totaled $11.1 million on the statement of income. For further information on Connecticut, Massachusetts and New Hampshire COVID-19-related regulatory developments, see "Regulatory Developments and Rate Matters - COVID-19 Regulatory Dockets" included in this Management’s Discussion and Analysis.

An extended economic slowdown has resulted in lower demand for electricity, natural gas and/or water by our commercial and industrial customers. However, fluctuations in retail sales volumes for CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas, EGMA, and our Connecticut water distribution business do not materially impact earnings due to their respective state regulatory commission-approved distribution revenue decoupling mechanisms. Overall, our risk of exposure to lower demand and resulting lost sales revenues is limited as our regulated utilities are under cost-of-service rates with revenue decoupling mechanisms (with the exception of PSNH) and a significant portion of uncollectible expenses are tracked for ultimate recovery. Our revenue decoupling mechanisms allow us to recover an annual revenue stream that is decoupled from actual customer usage, and each is reconciled each year as part of our annual decoupling filing in each respective jurisdiction.

We continue to monitor Eversource parent’s and our operating companies’ ability to access the global capital and credit markets. At the onset of the pandemic in the United States, liquidity in the commercial paper credit market began to deteriorate rapidly. However, federal legislative actions, including actions taken by the Federal Reserve, have provided sufficient liquidity and stabilization of the credit markets. An extended economic slowdown could result in Eversource parent and our operating companies finding difficulty in accessing necessary capital resources and incurring higher costs for those capital resources. At this time, based on available information and the current market trends, we believe we will continue to have access to needed liquidity and capital resources to successfully execute our projected capital expenditures and strategies. We expect our existing borrowing availability under our commercial paper programs, our existing revolving credit facilities that serve to backstop those commercial paper programs, in addition to access to the debt and equity markets, will be sufficient to meet our future liquidity and capital resource needs.

Earnings Overview

Consolidated:  Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measures of consolidated non-GAAP earnings and EPS, as well as EPS by business, to the most directly comparable GAAP measures of consolidated Net Income Attributable to Common Shareholders and diluted EPS.
  For the Years Ended December 31,
2020 2019 2018
(Millions of Dollars, Except Per Share Amounts) Amount Per Share Amount Per Share Amount Per Share
Net Income Attributable to Common Shareholders (GAAP) $ 1,205.2  $ 3.55  $ 909.1  $ 2.81  $ 1,033.0  $ 3.25 
Regulated Companies (non-GAAP) $ 1,223.3  $ 3.60  $ 1,105.3  $ 3.43  $ 1,006.7  $ 3.17 
Eversource Parent and Other Companies (non-GAAP) 14.0  0.04  8.2  0.02  26.3  0.08 
Non-GAAP Earnings $ 1,237.3  $ 3.64  $ 1,113.5  $ 3.45  $ 1,033.0  $ 3.25 
Acquisition-Related Costs (after-tax) (1)
(32.1) (0.09) —  —  —  — 
Impairment of Northern Pass Transmission (after-tax) —  —  (204.4) (0.64) —  — 
Net Income Attributable to Common Shareholders (GAAP) $ 1,205.2  $ 3.55  $ 909.1  $ 2.81  $ 1,033.0  $ 3.25 
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Regulated Companies:  Our regulated companies comprise the electric distribution, electric transmission, natural gas distribution and water distribution segments. A summary of our segment earnings and EPS is as follows:
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars, Except Per Share Amounts) Amount Per Share Amount Per Share Amount Per Share
Net Income - Regulated Companies (GAAP) $ 1,221.8  $ 3.60  $ 900.9  $ 2.79  $ 1,006.7  $ 3.17 
Electric Distribution $ 544.0  $ 1.60  $ 513.3  $ 1.59  $ 455.4  $ 1.44 
Electric Transmission, excluding Northern Pass Transmission impairment (Non-GAAP) 502.5  1.48  460.9  1.43  427.2  1.34 
Natural Gas Distribution, excluding Acquisition-Related Costs (non-GAAP) 135.6  0.40  96.2  0.30  93.2  0.29 
Water Distribution 41.2  0.12  34.9  0.11  30.9  0.10 
Net Income - Regulated Companies (Non-GAAP) $ 1,223.3  $ 3.60  $ 1,105.3  $ 3.43  $ 1,006.7  $ 3.17 
Acquisition-Related Costs (after-tax) (1)
(1.5) —  —  —  —  — 
Impairment of Northern Pass Transmission (after-tax) —  —  (204.4) (0.64) —  — 
Net Income - Regulated Companies (GAAP) $ 1,221.8  $ 3.60  $ 900.9  $ 2.79  $ 1,006.7  $ 3.17 

(1) These costs are associated with our acquisition and integration of the assets of Columbia Gas of Massachusetts. Additional integration costs related primarily to the integration and transition of systems, are expected in 2021.

Our electric distribution segment earnings increased $30.7 million in 2020, as compared to 2019, due primarily to base distribution rate increases at CL&P effective May 1, 2020 and May 1, 2019, at NSTAR Electric effective January 1, 2020, and at PSNH effective July 1, 2019, higher earnings from CL&P's capital tracker mechanism due to increased electric system improvements, and the impact of the PSNH rate settlement agreement approved in December 2020. The earnings increase was partially offset by higher operations and maintenance expense (primarily attributable to higher storm restoration costs), higher depreciation expense, higher property tax expense, higher interest expense, and the absence of the 2019 recognition of carrying charges on PSNH's 2013 through 2016 storm costs approved for recovery.
 
Our electric transmission segment earnings increased $246.0 million in 2020, as compared to 2019, due primarily to the absence in 2020 of the 2019 impairment of NPT, which resulted in an after-tax charge of $204.4 million, or $0.64 per share. Excluding the NPT impairment charge, earnings increased $41.6 million in 2020, as compared to 2019, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and a higher benefit from the annual billing and cost reconciliation filing with FERC.

Our natural gas distribution segment earnings increased $37.9 million in 2020, as compared to 2019, due primarily to base distribution rate increases at Yankee Gas effective January 1, 2020 and at NSTAR Gas effective November 1, 2020, the addition of Eversource Gas Company of Massachusetts (EGMA), higher earnings from capital tracker mechanisms due to continued investments in natural gas infrastructure, and lower interest expense due to a property tax settlement. EGMA's natural gas distribution business earned $13.9 million from October 9, 2020 through December 31, 2020. The earnings increase was partially offset by higher operations and maintenance expense and higher depreciation expense.

Our water distribution segment earnings increased $6.3 million in 2020, as compared to 2019, due primarily to an after-tax gain of $3.5 million on the sale of the water system and treatment plant of the Hingham, Massachusetts business, higher revenues from our Connecticut business' capital tracker mechanism due to increased infrastructure improvements, and a gain on the sale of land, partially offset by higher property tax expense and a higher effective tax rate.

Eversource Parent and Other Companies:  Eversource parent and other companies earnings decreased $24.8 million in 2020, as compared to 2019, due primarily to the costs of the CMA asset acquisition recorded at Eversource parent of $30.6 million in 2020. Excluding the CMA asset acquisition costs, earnings increased $5.8 million due primarily to a higher return at Eversource Service as a result of increased investments in property, plant and equipment, and lower employee-related costs, partially offset by lower unrealized gains associated with our equity method investment in a renewable energy fund.

Liquidity

Cash totaled $106.6 million as of December 31, 2020, compared with $15.4 million as of December 31, 2019.

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas and Aquarion Water Company of Connecticut are parties to a five-year $1.45 billion revolving credit facility, which terminates on December 6, 2024. On October 21, 2020, Eversource parent and EGMA entered into a short-term $550 million revolving credit facility, which terminates on October 20, 2021. These revolving credit facilities serve to backstop Eversource parent's $2.00 billion commercial paper program.

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $650 million commercial paper program.

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The amount of borrowings outstanding and available under the commercial paper programs were as follows:
Borrowings Outstanding
as of December 31,
Available Borrowing Capacity as of December 31, Weighted-Average Interest Rate as of December 31,
(Millions of Dollars) 2020 2019 2020 2019 2020 2019
Eversource Parent Commercial Paper Program $ 1,054.3  $ 1,224.9  $ 945.7  $ 225.1  0.25  % 1.98  %
NSTAR Electric Commercial Paper Program 195.0  10.5  455.0  639.5  0.16  % 1.63  %

There were no borrowings outstanding on the revolving credit facilities as of December 31, 2020 or 2019.

On May 15, 2020, CL&P and PSNH entered into uncommitted line of credit agreements, which will expire by May 14, 2021. The CL&P agreements total $450 million and the PSNH agreements total $300 million. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of December 31, 2020.

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

Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. As of December 31, 2019, there were intercompany loans from Eversource parent to CL&P of $63.8 million, to PSNH of $27.0 million, and to a subsidiary of NSTAR Electric of $30.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.

Long-Term Debt Issuance Authorizations: On January 27, 2020, the DPU approved NSTAR Gas' request for authorization to issue up to $270 million in long-term debt through December 31, 2021. On July 31, 2020, the NHPUC approved PSNH's request for authorization to issue up to $200 million in long-term debt through December 31, 2020. On December 14, 2020, NSTAR Electric filed a petition with the DPU for authorization to issue $1.6 billion in long-term debt through December 31, 2023. On December 16, 2020, Aquarion Water Company of Connecticut filed an application with PURA for authorization to issue $100 million in long-term debt through December 31, 2021.

Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars) Issuance/(Repayment) Issue Date or Repayment Date Maturity Date Use of Proceeds for Issuance/
Repayment Information
CL&P:
0.75% Series A First Mortgage Bonds $ 400.0  December 2020 December 2025 Refinanced short-term borrowings, funded capital expenditures and working capital
NSTAR Electric:
3.95% 2020 Debentures 400.0  March 2020 April 2030 Refinanced investments in eligible green expenditures, which were previously financed in 2018 and 2019
5.10% Series E Senior Notes (95.0) March 2020 March 2020 Paid at maturity
PSNH:
2.40% Series U First Mortgage Bonds 150.0  August 2020 September 2050 Refinanced short-term borrowings, funded capital expenditures and working capital
Other:
Eversource Parent 3.45% Series P Senior Notes 350.0  January 2020 January 2050 Paid short-term borrowings
Eversource Parent 3.45% Series P Senior Notes (1)
300.0  August 2020 January 2050
 (2)
Eversource Parent 0.80% Series Q Senior Notes 300.0  August 2020 August 2025
 (2)
Eversource Parent 1.65% Series R Senior Notes 600.0  August 2020 August 2030
 (2)
Eversource Parent 2.50% Series I Senior Notes (450.0) February 2021 March 2021
Paid on par call date in advance of maturity date
NSTAR Gas 4.46% Series N First Mortgage Bonds (125.0) January 2020 January 2020 Paid at maturity
NSTAR Gas 2.33% Series R First Mortgage Bonds 75.0  May 2020 May 2025 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
NSTAR Gas 3.15% Series S First Mortgage Bonds 115.0  May 2020 May 2050 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
NSTAR Gas 9.95% Series J First Mortgage Bonds (25.0) December 2020 December 2020 Paid at maturity
Yankee Gas 4.87% Series K First Mortgage Bonds (50.0) April 2020 April 2020 Paid at maturity
Yankee Gas 2.90% Series R First Mortgage Bonds 70.0  September 2020 September 2050 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
Aquarion Water Company of Massachusetts, Inc. and Aquarion Water Capital of Massachusetts, Inc. various term loans and general mortgage bonds (32.2) July 2020 Various Redeemed long-term debt in conjunction with the sale of assets to the Town of Hingham, Massachusetts

(1) These senior notes are part of the same series issued by Eversource parent in January 2020. The aggregate outstanding principal amount of these senior notes is now $650 million.
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(2) The proceeds from these Eversource parent issuances funded a portion of the purchase price for the CMA asset acquisition and refinanced short-term borrowings.

In January 2021, PSNH provided a redemption notice to the holders of the PSNH 4.050% Series Q First Mortgage Bonds that PSNH will redeem the $122 million of bonds on March 1, 2021, the par call date, in advance of the June 1, 2021 maturity date.

Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $43.2 million of RRB principal payments and $20.2 million of interest payments in 2020, and $52.3 million of RRB principal payments and $26.8 million of interest payments in 2019.

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

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

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

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

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

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

Cash Flows:  Cash flows provided by operating activities totaled $1.68 billion in 2020, compared with $2.01 billion in 2019. Operating cash flows were unfavorably impacted by the timing of cash collections on our accounts receivable, the timing of collections for regulatory tracking mechanisms primarily related to transmission costs and the impact of the CL&P temporary rate suspension, and cash payments made in 2020 for storm restoration costs of approximately $196 million related to Tropical Storm Isaias. Also contributing to the unfavorable impact was the absence of $68.8 million in DOE Phase IV proceeds received by CYAPC and YAEC in 2019. Partially offsetting these unfavorable impacts were the favorable timing of cash payments made on our accounts payable, the absence of a $29.0 million payment made in 2019 to the DOE by CYAPC to partially settle its pre-1983 spent nuclear fuel obligation, and a decrease of $10.3 million in Pension and PBOP contributions made in 2020, as compared to 2019.

Our receivables, net of reserves, on the balance sheet have increased $206.5 million ($58.3 million at CL&P, $56.3 million at NSTAR Electric, and $20.0 million at PSNH) in 2020, as compared to 2019, due primarily to an increase in delinquent receivables from customers attributable to the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic. Receivables, net of reserves, also increased due to the addition of EGMA of $65.8 million as of December 31, 2020.
 
Cash flows provided by operating activities totaled $2.01 billion in 2019, compared with $1.83 billion in 2018.  The increase in operating cash flows was due primarily to a decrease in 2019 of approximately $148 million of major storm restoration cost payments, $116 million in lower payments made in 2019 to the DOE by CYAPC to partially settle its pre-1983 spent nuclear fuel obligation, and a $73.2 million decrease in pension and PBOP cash contributions made in 2019, as compared to 2018. Also contributing to the increase were $102.8 million of lower income tax payments made in 2019, as compared to 2018, $68.8 million in DOE Phase IV litigation proceeds received by CYAPC and YAEC in 2019, and the timing of cash collections on our accounts receivables. Partially offsetting these favorable impacts were the timing of collections for regulatory tracking mechanisms, which were significantly impacted by the timing of collections of purchased power and transmission costs at NSTAR Electric, and the timing of accounts payable cash payments and other working capital items.

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In 2020, we paid cash dividends of $744.7 million and issued non-cash dividends of $22.8 million in the form of treasury shares, totaling dividends of $767.5 million, or $2.27 per common share. In 2019, we paid cash dividends of $663.2 million and issued non-cash dividends of $22.8 million in the form of treasury shares, totaling dividends of $686.0 million, or $2.14 per common share. Our quarterly common share dividend payment was $0.5675 per share in 2020, as compared to $0.535 per share in 2019.  On February 9, 2021, our Board of Trustees approved a common share dividend payment of $0.6025 per share, payable on March 31, 2021 to shareholders of record as of March 4, 2021.  The 2021 dividend represents an increase of 6.2 percent over the dividend paid in December 2020.

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

In 2020, CL&P, NSTAR Electric and PSNH paid $69.5 million, $262.0 million and $22.3 million, respectively, in common stock dividends to Eversource parent.  

Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP expense.  In 2020, investments for Eversource, CL&P, NSTAR Electric and PSNH were $2.94 billion, $834.0 million, $907.0 million and $342.6 million, respectively.  

On October 9, 2020, Eversource completed the CMA asset acquisition for a cash purchase price of $1.1 billion plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date. The purchase price included in investing cash outflows on the statement of cash flows of $1.11 billion reflects the payment to NiSource, which excludes restricted cash accounts Eversource funded of $56.8 million. For further information, see "Business Development and Capital Expenditures - Acquisition of Assets of Columbia Gas of Massachusetts" included in this Management’s Discussion and Analysis.

Eversource, CL&P, NSTAR Electric and PSNH each uses its available capital resources to fund its respective construction expenditures, meet debt requirements, pay operating costs, including storm-related costs, pay dividends, and fund other corporate obligations, such as pension contributions.  Eversource's regulated companies recover their electric, natural gas and water distribution construction expenditures as the related project costs are depreciated over the life of the assets.  This impacts the timing of the revenue stream designed to fully recover the total investment plus a return on the equity and debt used to finance the investments.  The current growth in Eversource's construction expenditures utilizes a significant amount of cash for projects that have a long-term return on investment and recovery period, totaling approximately $2.94 billion in cash capital spend in 2020.  In addition, Eversource's investments in its offshore wind business totaled $237.8 million in 2020, which are recognized as long-term assets. These factors have resulted in current liabilities exceeding current assets by $1.78 billion, $316.3 million, and $271.3 million at Eversource, NSTAR Electric and PSNH, respectively, as of December 31, 2020.

As of December 31, 2020, $1.02 billion of Eversource's long-term debt, including $450.0 million, $250.0 million, $282.0 million, and $40.2 million for Eversource parent, NSTAR Electric, PSNH, and Aquarion, respectively, will mature within the next 12 months. The current portion of long-term debt on the Eversource balance sheet also includes $31.0 million related to fair value adjustments from our various business combinations that will be amortized within the next 12 months and have no cash flow impact. Eversource, with its strong credit ratings, has several options available in the financial markets to repay or refinance these maturities with the issuance of new long-term debt.  Eversource, CL&P, NSTAR Electric and PSNH will reduce their short-term borrowings with operating cash flows or with the issuance of new long-term debt, determined by considering capital requirements and maintenance of Eversource's credit rating and profile.  

We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric 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:  A summary of our corporate credit ratings and outlooks by S&P, Moody's, and Fitch is as follows:
  S&P Moody's Fitch
  Current Outlook Current Outlook Current Outlook
Eversource Parent A- Stable Baa1 Stable BBB+ Stable
CL&P A Stable A3 Stable A-  Stable
NSTAR Electric A Stable A1 Stable A   Stable
PSNH A Stable A3 Stable A- Stable

A summary of the current credit ratings and outlooks by S&P, Moody's, and Fitch for senior unsecured debt of Eversource parent and NSTAR Electric, and senior secured debt of CL&P and PSNH is as follows:
  S&P Moody's Fitch
  Current Outlook Current Outlook Current Outlook
Eversource Parent BBB+ Stable Baa1 Stable BBB+  Stable
CL&P A+ Stable A1 Stable A+ Stable
NSTAR Electric A Stable A1 Stable A+ Stable
PSNH A+ Stable A1 Stable A+  Stable

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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 $3.06 billion in 2020, $3.06 billion in 2019, and $2.86 billion in 2018.  These amounts included $239.1 million in 2020, $239.0 million in 2019, and $184.6 million in 2018 related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.

Electric Transmission Business: Our consolidated electric transmission business capital expenditures decreased by $75.8 million in 2020, as compared to 2019.  A summary of electric transmission capital expenditures by company is as follows:  
  For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
CL&P $ 402.9  $ 459.5  $ 465.5 
NSTAR Electric 366.8  379.7  334.3 
PSNH 193.9  190.4  194.2 
NPT —  9.8  29.4 
Total Electric Transmission Segment $ 963.6  $ 1,039.4  $ 1,023.4 

Eastern Massachusetts Transmission Projects: These projects consist of a portfolio of electric transmission upgrades in southern New Hampshire, northern Massachusetts and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory (two in New Hampshire and 26 in Massachusetts). The two New Hampshire upgrades, including the Merrimack Valley Reliability Project, have been placed in service, and 23 Massachusetts upgrades have been placed in service. On December 17, 2019, the Massachusetts Siting Board issued a favorable decision on the Sudbury-Hudson Reliability Project, the last project requiring such approval. On January 17, 2020, the Town of Sudbury and Protect Sudbury, a community group, appealed the decision to the Massachusetts Supreme Judicial Court. Oral arguments are scheduled for March 1, 2021. The majority of remaining upgrades are under construction and are expected to be placed in service in 2022. We estimate our portion of the investment will be approximately $750 million, of which $525 million has been spent and capitalized through December 31, 2020.

Southeastern Massachusetts Transmission Projects: These projects consist of a portfolio of electric transmission and substation upgrades in southeastern Massachusetts, including Cape Cod, required to reinforce the Southeastern Massachusetts transmission system and bring the system into compliance with applicable national and regional reliability standards. ISO-NE reassessed the need for projects that had yet to be constructed and reconfirmed the need for the majority of the originally identified reinforcements in July 2020. Twelve upgrades in Eversource's service territory were reconfirmed, and a single upgrade was deemed to no longer be required. Of the twelve upgrades, four require siting approvals from the Massachusetts regulatory agencies, of which one has received approval, two are before the agencies and one, a joint project with National Grid, has yet to be filed. Three substation projects will be permitted locally, three projects are under construction and two projects have been placed in-service. We estimate our portion of the investment will be approximately $175 million, of which $28 million has been spent and capitalized through December 31, 2020.

Hartford-Area Transmission Projects: This portfolio of projects consisted of 27 projects in the Hartford, Connecticut area. In the third quarter of 2020, the final projects were placed in service and as of December 31, 2020, CL&P has spent and capitalized $303 million in costs associated with this portfolio. Additional restoration costs in the first quarter of 2021 will bring the total investment to approximately $304 million.

Seacoast Reliability Project: The Seacoast Reliability Project consisted of a 13-mile, 115kV transmission line within several New Hampshire communities, using a combination of overhead, underground and underwater line designs that helped meet the growing demand for electricity in the Seacoast region. The project was placed in service on May 29, 2020 and resulted in an investment of approximately $124 million.

Ready Path Solution: The Ready Path Solution was chosen in 2020 by ISO-NE as part of the first competitive solicitation for reliability upgrades in New England to meet the energy shortfall that will be created with the retirement of the Mystic Generating Station in Massachusetts in 2024. Our portion of the portfolio consists of installing new equipment at Eversource’s existing North Cambridge Substation with an estimated investment of approximately $14 million. The project is advancing permitting and engineering with construction scheduled to start in 2021.

All project costs are anticipated to be fully recoverable through transmission rates.

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Distribution Business:  A summary of distribution capital expenditures is as follows:
For the Years Ended December 31,
(Millions of Dollars)  CL&P  NSTAR Electric  PSNH  Total Electric  Natural Gas Water  Total
2020
Basic Business $ 233.4  $ 195.1  $ 52.4  $ 480.9  $ 88.2  $ 10.9  $ 580.0 
Aging Infrastructure 179.9  237.1  80.2  497.2  391.3  115.5  1,004.0 
Load Growth and Other 77.8  110.8  21.3  209.9  65.6  0.8  276.3 
Total Distribution 491.1  543.0  153.9  1,188.0  545.1  127.2  1,860.3 
Solar —  1.4  —  1.4  —  —  1.4 
Total $ 491.1  $ 544.4  $ 153.9  $ 1,189.4  $ 545.1  127.2  $ 1,861.7 
2019
Basic Business $ 228.7  $ 201.0  $ 47.3  $ 477.0  $ 71.2  $ 15.0  $ 563.2 
Aging Infrastructure 224.5  255.5  90.8  570.8  315.2  93.9  979.9 
Load Growth and Other 59.6  89.4  16.8  165.8  66.8  1.5  234.1 
Total Distribution 512.8  545.9  154.9  1,213.6  453.2  110.4  1,777.2 
Solar —  7.5  —  7.5  —  —  7.5 
Total $ 512.8  $ 553.4  $ 154.9  $ 1,221.1  $ 453.2  $ 110.4  $ 1,784.7 
2018
Basic Business $ 256.3  $ 217.7  $ 69.3  $ 543.3  $ 72.9  $ 17.0  $ 633.2 
Aging Infrastructure 151.6  133.3  73.0  357.9  280.2  81.1  719.2 
Load Growth and Other 79.7  94.3  15.6  189.6  51.4  3.6  244.6 
Total Distribution 487.6  445.3  157.9  1,090.8  404.5  101.7  1,597.0 
Solar and Other —  53.4  0.9  54.3  —  —  54.3 
Total $ 487.6  $ 498.7  $ 158.8  $ 1,145.1  $ 404.5  $ 101.7  $ 1,651.3 

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 of acquisitions, installation of new services, and interconnections of systems.

Acquisition of Assets of Columbia Gas of Massachusetts: On October 9, 2020, Eversource acquired certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, which was previously doing business as CMA, pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource Inc. (NiSource). The cash purchase price was $1.1 billion, plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date that has not yet been finalized. Eversource financed the asset acquisition through a combination of debt and equity issuances in a ratio that was consistent with our consolidated capital structure. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. EGMA distributes natural gas to approximately 332,000 residential, commercial and industrial customers with over 5,000 miles of natural gas distribution pipeline across more than 60 communities in Massachusetts, adding to the approximately 303,000 natural gas customers that Eversource already serves in Massachusetts.

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

EGMA Rate Settlement Agreement: On October 7, 2020, the DPU approved a rate settlement agreement, which requested approval of the February 26, 2020 asset purchase agreement between Eversource and NiSource, as well as a rate stabilization plan, among other items. The settlement agreement included an authorized regulatory ROE of 9.70 percent as of January 1, 2021, a 53.25 percent equity component of its capital structure, and established rate base equal to $995 million as of the closing on October 9, 2020.

The approved rate stabilization plan includes base distribution rate increases of $13 million on November 1, 2021 and $10 million on November 1, 2022. The settlement agreement includes two rate base resets during an eight-year rate plan, occurring on November 1, 2024 and November 1, 2027. The two rate base resets adjust distribution rates to account for capital additions (including the roll-in of GSEP capital additions), depreciation expense, property taxes, and return on rate base for capital additions placed into service through December 31, 2023, for the first rate base reset occurring on November 1, 2024, and through December 31, 2026, for the second rate base reset occurring on November 1, 2027. Notwithstanding the two distribution rate increases, the two rate base reset provisions, and potential adjustments for qualifying exogenous events, EGMA agreed not to file for an increase or redesign of distribution base rates effective prior to November 1, 2028.

The settlement agreement also permits EGMA to seek recovery of both transaction and integration costs as a result of the asset acquisition after December 31, 2026, subject to DPU review and approval, and subject to certain conditions, such as demonstrating savings resulting from the acquisition.

Projected Capital Expenditures:  A summary of the projected capital expenditures for the regulated companies' electric transmission and for the total electric distribution, natural gas distribution and water distribution for 2021 through 2025, including information technology and facilities upgrades and enhancements on behalf of the regulated companies, is as follows:
  Years
(Millions of Dollars) 2021 2022 2023 2024 2025 2021 - 2025
Total
CL&P Transmission $ 443  $ 264  $ 204  $ 206  $ 173  $ 1,290 
NSTAR Electric Transmission 469  462  426  331  385  2,073 
PSNH Transmission 153  189  223  224  153  942 
  Total Electric Transmission
$ 1,065  $ 915  $ 853  $ 761  $ 711  $ 4,305 
Electric Distribution $ 1,269  $ 1,309  $ 1,353  $ 1,289  $ 1,229  $ 6,449 
Natural Gas Distribution 824  925  974  937  789  4,449 
  Total Electric and Natural Gas Distribution
$ 2,093  $ 2,234  $ 2,327  $ 2,226  $ 2,018  $ 10,898 
Water Distribution $ 149  $ 143  $ 154  $ 162  $ 171  $ 779 
Information Technology and All Other $ 217  $ 249  $ 211  $ 194  $ 176  $ 1,047 
Total $ 3,524  $ 3,541  $ 3,545  $ 3,343  $ 3,076  $ 17,029 

The projections do not include investments related to offshore wind projects.  Actual capital expenditures could vary from the projected amounts for the companies and years above.

Offshore Wind Business: Our offshore wind business includes ownership interests in North East Offshore and Bay State Wind, which together hold PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases issued by BOEM. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This partnership also participates in new procurement opportunities for offshore wind energy in the Northeast U.S.

Eversource has a 50 percent ownership interest in North East Offshore, which holds the Revolution Wind and South Fork Wind projects, as well as a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island. Eversource also has a 50 percent ownership interest in Bay State Wind, which holds the Sunrise Wind project. Bay State Wind's separate 300-square-mile ocean lease is located approximately 25 miles south of the coast of Massachusetts adjacent to the North East Offshore area. In aggregate, the Bay State Wind and the North East Offshore ocean lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy. As of December 31, 2020, Eversource's total equity investment balance in its offshore wind business was $887.1 million, an increase of $237.8 million, as compared to 2019.

We are preparing our final project designs and advancing the appropriate federal, state and local siting and permitting processes along with our offshore wind partner, Ørsted, all of which is competitively sensitive. We currently expect to make investments in our offshore wind business of approximately $300 million to $500 million during 2021, subject to advancing our final project designs and federal, state and local permitting processes.
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The following table provides a summary of the Eversource and Ørsted major projects with announced contracts:
Wind Project State Servicing Size (MW) Term (Years) Price per MWh Pricing Terms Contract Status
Revolution Wind Rhode Island 400 20 $98.43 Fixed price contract; no price escalation Approved
Revolution Wind Connecticut 304 20
(1)
Fixed price contracts; no price escalation Approved
South Fork Wind New York (LIPA) 90 20 $160.33 2 percent average price escalation Approved
South Fork Wind New York (LIPA) 40 20 $86.25 2 percent average price escalation
(3)
Sunrise Wind New York (NYSERDA) 880 25
$110.37 (2)
Fixed price contract; no price escalation Approved

(1)    The pricing for the Revolution Wind contracts in Connecticut has not been publicly disclosed.
(2)    Index Offshore Wind Renewable Energy Certificate (OREC) strike price.
(3)    The Long Island Power Authority (LIPA) agreed to expand the original 20-year PPA from 90 MW to 130 MW through an amendment to the original agreement. The amendment is awaiting final approval from the New York Comptroller's Office.

Our offshore wind projects are subject to receipt of federal, state and local approvals necessary to construct and operate the projects. The federal permitting process is governed by BOEM, and state approvals are required from New York, Rhode Island and Massachusetts. Significant delays in the siting and permitting process resulting from the timeline for obtaining approval from BOEM and the state and local agencies, as well as the impact of COVID-19, could adversely impact the timing of these projects' in-service dates.

Federal Siting and Permitting Process: The South Fork Wind project has commenced the federal siting and permitting process with the filing of its Construction Operations Plan (COP) application with BOEM in 2018. The first major milestone in the BOEM review process is an issuance of a Notice of Intent to complete an Environmental Impact Statement (NOI), which South Fork Wind received in 2018. In August 2020, we received the final review schedule from BOEM regarding South Fork Wind’s COP approval. In January 2021, BOEM released its Draft Environmental Impact Statement (EIS) for the South Fork Wind project, which assessed the environmental, social, and economic impacts of constructing the project. Identified impacts were negligible to major adverse impacts to marine and terrestrial archaeological resources and to historic, and non-historic visual resources from project construction and operations. The Draft EIS also analyzed four alternatives to be evaluated as part of the process. Each of the identified alternative configurations had a similar level of environmental impacts, and if an alternative configuration was selected, the South Fork Wind project would still meet the contractual output under its PPA. A Final EIS is expected in the third quarter of 2021 and a final decision is expected in January 2022.

Based on BOEM’s final review schedule and final United States Army Corps of Engineers approval, we expect to start construction on South Fork in early 2022. South Fork Wind is designated as a “Covered Project” pursuant to Title 41 of the Fixing America’s Surface Transportation Act (FAST41) and a Major Infrastructure Project under Section 3(e) of Executive Order 13807, which provides greater federal attention on meeting the project’s permitting timelines.

Revolution Wind and Sunrise Wind filed their COP applications with BOEM in March 2020 and September 2020, respectively. Both projects received FAST41 designation in 2020. We are awaiting BOEM to outline its timeline for completing the review of each of the Revolution Wind and Sunrise Wind COPs in an NOI, which we expect to receive in 2021.

State and Local Siting and Permitting Process: South Fork Wind commenced the New York state siting process in 2018. On September 17, 2020, South Fork Wind filed a Joint Proposal in the New York State Article VII siting application. Amongst other things, the Joint Proposal included proposed mitigations to certain environmental, community and construction impacts associated with constructing electrical infrastructure. South Fork Wind was initially joined by PSEG Long Island and several citizens advocacy organizations. On October 9, 2020, the Joint Proposal was signed by the New York Departments of Public Service, Environmental Conservation, Transportation and State as well as the Office of Parks, Recreation and Historic Preservation. Hearings in the state siting process concluded in December 2020 and a decision is expected in mid-2021.

On September 10, 2020, the Town of East Hampton and the East Hampton Town Trustees announced that they had reached an agreement with South Fork Wind to issue the necessary easements and other real estate rights necessary to construct the South Fork Wind project. The Town approved the easements on January 21, 2021 and Trustees approved the lease on January 25, 2021.

State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind were filed in December 2020. The Revolution Wind application was deemed complete on January 22, 2021 and the preliminary hearing is set for March 22, 2021.

Projected In-Service Dates: Based on BOEM’s confirmed permit schedule outlining when BOEM will complete its review of the South Fork Wind COP, we now expect the South Fork Wind project to be in-service by the end of 2023. For Revolution Wind and Sunrise Wind, we do not have a definitive timeline on when we will receive BOEM’s NOIs. At this time, we believe that it is unlikely that the projected in-service dates of the end of 2023 and the end of 2024 for Revolution Wind and Sunrise Wind, respectively, will be met. We are currently awaiting the receipt of BOEM’s NOIs for Revolution Wind and Sunrise Wind, which we expect to receive in 2021, in order to conclude on projected in-service dates.

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FERC Regulatory Matters

FERC ROE Complaints: Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

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

All amounts associated with the first complaint period have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both December 31, 2020 and 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 both December 31, 2020 and 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 and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.

The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.

If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.

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

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

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

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

A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods. From the date of a final FERC order, a change of 10 basis points to the base ROE would impact Eversource’s 2021 after-tax earnings by approximately $5 million, or $0.01 per share, per year, and will increase slightly over time as we continue to invest in our transmission infrastructure.

FERC Notice of Inquiry on ROE: On March 21, 2019, FERC issued a Notice of Inquiry (NOI) seeking comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. On June 26, 2019, the NETOs jointly filed comments supporting the methodology established in the FERC’s October 16, 2018 order with minor enhancements going forward. The NETOs jointly filed reply comments in the FERC ROE NOI on July 26, 2019. On May 12, 2020, the NETOs filed supplemental comments in the NOI ROE docket. At this time, Eversource cannot predict how this proceeding will affect its transmission ROEs.

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FERC Notice of Inquiry and Proposed Rulemaking on Transmission Incentives: On March 21, 2019, FERC issued an NOI seeking comments on FERC's policies for implementing electric transmission incentives. On June 26, 2019, Eversource filed comments requesting that FERC retain policies that have been effective in encouraging new transmission investment and remain flexible enough to attract investment in new and emerging transmission technologies. Eversource filed reply comments on August 26, 2019. On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and challenges framework.  On July 1, 2020, Eversource filed comments generally supporting the NOPR.  At this time, Eversource cannot predict how these proceedings will affect its transmission incentives.

FERC Transmission Transparency Settlement: On December 28, 2015, FERC initiated a proceeding to review the NETOs' regional and local transmission formula rates due to a lack of transparency, finding that the formula rates appeared to lack sufficient details to determine how costs are derived and recovered in rates. Parties engaged in further settlement negotiations and reached an agreement in principle on October 22, 2019. On June 15, 2020, the NETOs filed an uncontested Settlement Agreement with FERC, which was signed by all six New England state regulatory commissions, New England States Committee on Electricity, New England Municipals and all the NETOs. On December 28, 2020, the FERC issued an order approving the Settlement Agreement, which establishes annual formula rate transparency procedures effective June 15, 2021, implements a new regional and local rate structure effective January 1, 2022, and contains a rate moratorium through December 31, 2024.

Regulatory Developments and Rate Matters

Electric, Natural Gas and Water Utility Base Distribution Rates:  Each Eversource utility subsidiary is subject to the regulatory jurisdiction of the state in which it operates:  CL&P, Yankee Gas and Aquarion operate in Connecticut and are subject to PURA regulation; NSTAR Electric, NSTAR Gas, EGMA and Aquarion operate in Massachusetts and are subject to DPU regulation; and PSNH and Aquarion operate in New Hampshire and are subject to NHPUC regulation.  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.  

In Connecticut, electric and natural gas utilities are required to file a distribution rate case, or for PURA to initiate a rate review, within four years of the last rate case. CL&P's and Yankee Gas' distribution rates were each established in 2018 PURA-approved rate case settlement agreements. Aquarion is not required to initiate a rate review with the PURA on a set schedule. Aquarion rates were established in a 2013 PURA-approved rate case.

In Massachusetts, electric distribution companies are required to file at least one distribution rate case every five years, and natural gas local distribution companies to file at least one distribution rate case every 10 years, and those companies are limited to one settlement agreement in any 10-year period. NSTAR Electric's distribution rates were established in a 2017 DPU-approved rate case. NSTAR Gas' distribution rates were established in an October 2020 DPU-approved rate case. EGMA's distribution rates were established in an October 2020 DPU-approved rate settlement agreement. Aquarion is not required to initiate a rate review with the DPU. Aquarion rates were established in a 2018 DPU-approved rate case.

In New Hampshire, PSNH's distribution rates were established in a December 2020 NHPUC-approved rate case settlement agreement. Aquarion rates were established in a 2013 NHPUC-approved rate case, further revised in 2016. On December 18, 2020, Aquarion filed an application with the NHPUC for a permanent increase in base rates, effective February 1, 2021.

See "Regulatory Developments and Rate Matters - Massachusetts" and "- New Hampshire," as well as "Business Development and Capital Expenditures – Acquisition of Assets of Columbia Gas of Massachusetts" in this Management's Discussion and Analysis of Financial Condition and Results of Operations, for more information on the NSTAR Gas, PSNH and EGMA 2020 rate approvals.

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

The electric and natural gas distribution companies also recover certain other costs on a fully reconciling basis through regulatory commission-approved cost tracking mechanisms and, therefore, recovery of these costs has no impact on earnings.  Costs recovered through cost tracking mechanisms include, among others, energy efficiency program costs, electric retail transmission charges, electric restructuring and stranded costs (including securitized RRB charges), and additionally for our Massachusetts companies, pension and PBOP benefits and net metering for distributed generation.  The reconciliation filings compare the total actual costs allowed to revenue requirements related to these services and the difference between the costs incurred (or the rate recovery allowed) and the actual costs allowed is deferred and included, to be either recovered or refunded, in future customer rates.  These cost tracking mechanisms also include certain incentives earned, return on rate base and on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings.
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COVID-19 Regulatory Dockets: In Connecticut, PURA opened a docket to address COVID-19 developments, including issuing orders on March 18, 2020, April 29, 2020 and May 15, 2020 that authorized electric, natural gas and water utilities to establish a regulatory asset for COVID-19 uncollectible customer receivable expenses and costs associated with the related orders.  PURA’s April 29, 2020 order, as supplemented on May 15, 2020, also allowed the inclusion of working capital costs in the regulatory asset, and authorized electric, natural gas and water utilities to establish a payment plan program designed to assist any customer who requests financial assistance during the COVID-19 pandemic. On July 10, 2020, PURA denied a request from a coalition of large industrial customers to reduce or suspend certain electric and natural gas charges during the COVID-19 pandemic.

In Massachusetts, on July 31, 2020, the DPU approved and adopted a coalition of electric, natural gas and water utilities’ comprehensive Customer Assistance Plan involving extended payment plans and waiver of late fees, extended plans under available arrearage management plans (AMPs), and continuation of the Shut-Off Moratorium. On September 3, 2020, the DPU approved the 2020 small commercial arrearage forgiveness program (AFP) proposed by the electric and natural gas distribution companies. In its interim order dated December 31, 2020, the DPU established certain cost tracking and data reporting requirements for the distribution companies and will allow each company to record, defer, and track incremental cost areas, subject to the DPU’s final determination of the ratemaking treatment in D.P.U. 20-58 and D.P.U. 20-91. In D.P.U. 20-91, the DPU will adjudicate the contested cost-recovery provisions identified in the Ratemaking Proposal and consider proposals to expand alternative customer bill payment options. The distribution companies’ Ratemaking Proposal for COVID-19 financial-related impacts includes recovery requests for each of the following five cost categories: (1) cash working capital; (2) arrearage forgiveness; (3) bad debt; (4) COVID-19 O&M expenses; and (5) waived fees.

In New Hampshire, on October 5, 2020, the NHPUC approved an agreement governing collections and disconnection activities, deposit activities, flexible payment plans, and special arrangements for income-qualified customers for all New Hampshire utilities including Eversource’s electric and water utilities. The terms of that agreement continue through at least April 2021. Also, on August 18, 2020, the NHPUC Staff recommended that utilities in New Hampshire be permitted to create a regulatory asset for waived fees and incremental bad debt related to the COVID-19 pandemic. On November 13, 2020, the NHPUC Staff revised its recommendation arguing that waived fees should not be included in any regulatory asset related to the COVID-19 pandemic. The New Hampshire utilities disputed that recommendation on December 4, 2020, and on December 16, 2020, the NHPUC Staff renewed its November 13, 2020 recommendation. The NHPUC has yet to act on that recommendation.

For information on COVID-19-related regulatory deferrals recorded and COVID-19 charges incurred, see "Impact of COVID-19" included in this Management’s Discussion and Analysis.

Storm Event:

On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant amounts and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA has opened an investigation into CL&P's response to Tropical Storm Isaias.  PURA will also investigate the prudence of costs incurred by CL&P to restore service as part of its response.  CL&P is fully participating in PURA’s investigations and believes that these storm restoration costs were prudently incurred and meet the criteria for cost recovery.  As a result, management does not expect the storm costs to have a material impact on the results of operations of Eversource or CL&P.

Based on current estimates, the storm resulted in deferred storm restoration costs on our balance sheets of approximately $228 million at CL&P and $245 million at Eversource as of December 31, 2020. The estimated cost of restoration will change as additional cost information becomes available, final storm costs are deferred or capitalized, and post-storm restoration work is completed. The majority of incremental storm costs relate to third-party vendors that are external field crews needed to restore power and address municipal priorities. CL&P’s current estimate of total storm costs includes its projection of the cost of such vendors, but that estimate will change as CL&P receives and examines all storm related invoices.

Connecticut:

CL&P Storm Investigation: On August 7, 2020, PURA issued a notice that it had opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. Hearings were completed in January 2021 and a final decision is currently expected on April 28, 2021. If the April 28, 2021 final decision concludes that CL&P failed to comply with applicable storm performance standards, then a separate proceeding will be initiated on May 7, 2021 to examine if and what amount of any civil penalty could potentially be imposed on CL&P, with a final decision currently anticipated on July 14, 2021.

CL&P Rate Suspension: On July 31, 2020, PURA temporarily suspended its June 26, 2020 approval of certain delivery rate components effective July 1, 2020, and ordered CL&P to restore rates to those in effect as of June 30, 2020 in order to allow PURA time to reexamine the rates to ensure that CL&P is not over-collecting revenues in the short-term. Rates were adjusted effective August 1, 2020. PURA indicated that this was due to the convergence of a number of recent events, including the COVID-19 crisis and its corresponding effect on customer energy usage, as well as the warmer than normal weather in July. On December 2, 2020, PURA issued a final decision in which it adjusted the timing of the annual rate adjustments for the Revenue Decoupling Mechanism Charge, the Transmission Adjustment Clause charge, the Non-Bypassable Federally Mandated Congestion Charge, and the Electric System Improvements Tracker so that these rates take effect on May 1st of each year, as opposed to the current process of adjusting rates each January 1 and July 1. The final decision also modified the calculation of carrying charges and shifted the timing of recovery to rely on more actual versus forecasted information, among other changes.

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The temporary suspension of rates has resulted in a current period under-recovery of costs, which results in an increase to our regulatory assets, with no impact on the statement of income other than carrying charges, and a delay in the collection of our costs.

Massachusetts:

NSTAR Electric Distribution Rates: As part of an inflation-based mechanism, NSTAR Electric submitted its third annual Performance Based
Rate Adjustment filing on September 15, 2020 and the DPU approved a $29.9 million increase to base distribution rates on December 30, 2020 for effect on January 1, 2021.

NSTAR Gas Rate Case: On October 30, 2020, the DPU approved a base distribution rate increase of $23.0 million effective November 1, 2020, compared to the original request of $38.0 million. NSTAR Gas' 2019 plant additions are allowed recovery beginning on November 1, 2021.  Thus, the reduced revenue requirement reflects the removal of this recovery, among other adjustments. The DPU also approved NSTAR Gas' proposal to continue its ongoing Gas System Enhancement Program (GSEP), the inclusion of GSEP investments since 2015 into base rates, and the implementation of a 10-year performance-based ratemaking plan, which includes an inflation-based adjustment mechanism to annual base distribution rates. The decision allows an authorized regulatory ROE of 9.9 percent on a capital structure including 54.77 percent equity. The decision also approves a geothermal pilot program. The impact of the rate case decision resulted in a pre-tax charge to earnings in 2020 of $2.7 million at NSTAR Gas, primarily due to certain plant-related disallowances.

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

New Hampshire:

PSNH Distribution Rates: On June 27, 2019, the NHPUC approved a settlement agreement that was reached by PSNH, the NHPUC Staff, the Office of the Consumer Advocate, and another settling party, to implement a temporary annual base distribution rate increase of $28.3 million. Although new rates were implemented on August 1, 2019 to customers, the provisions of the temporary base distribution rate increase were effective July 1, 2019. The settlement agreement also permitted PSNH to recover approximately $68.5 million in unrecovered storm costs over a five-year period beginning August 1, 2019, with debt carrying charges, which is included in the temporary rate increase.

On May 28, 2019, PSNH filed an application with the NHPUC for a permanent increase in base distribution rates of approximately $70 million, effective July 1, 2020, which included the temporary rate increase request. Temporary rates remained in effect with a reconciliation of permanent rates retroactive to July 1, 2019 once permanent rates were set.

On December 15, 2020, the NHPUC approved an October 9, 2020 settlement agreement on permanent rates between PSNH and all parties to the proceeding. The NHPUC approved a permanent rate increase of $45.0 million effective January 1, 2021, inclusive of the temporary rate increase referenced above. PSNH was also permitted three step increases, effective January 1, 2021, August 1, 2021, and August 1, 2022, to reflect plant additions in calendar years 2019, 2020 and 2021, respectively. On December 23, 2020, the NHPUC approved the first step adjustment for 2019 plant in service to recover a revenue requirement of $10.6 million, subject to reconciliation after completion of an audit, effective January 1, 2021. The settlement agreement also established an authorized regulatory ROE of 9.3 percent with a 54.4 percent common equity ratio in PSNH’s capital structure and provided for a new tracker to recover regulatory assessments, vegetation management costs, property tax costs, and lost distribution revenue attributable to net metering. In addition, base distribution rates were adjusted to reflect the refund of EDIT from the Tax Cuts and Jobs Act of 2017.

The settlement agreement allowed for the effect of the permanent rate increase to be extended back to the temporary rate period. In lieu of a customer rate increase for this recoupment of revenue, the NHPUC directed a portion of the total EDIT regulatory liability to offset bill impacts to customers. The impact of the settlement agreement resulted in an after-tax benefit to earnings in 2020 of $11.0 million at Eversource ($7.2 million at PSNH), due primarily to the reconciliation of permanent rates back to the temporary rate period resulting in a reduction of the EDIT regulatory liability, which reduced Income Tax Expense on the statement of income, and the allowed recovery of previously expensed costs. The earnings impact was partially offset by the negative impact from the over-refunding of the change in the 2018 federal corporate income tax rate as a result of the Tax Cuts and Jobs Act of 2017 that was reflected in temporary rates, which reduced Operating Revenues on the statement of income.

PSNH Generation Asset Divestiture-Related Costs: On May 15, 2020, the NHPUC Audit Staff issued a final report on the audit of PSNH’s generation asset divestiture-related costs and resulting securitized and stranded costs. The findings in the audit report as well as other aspects of the divestiture process were further investigated by NHPUC Staff through the discovery phase, which was completed in July 2020. On September 30, 2020, PSNH filed a settlement agreement on the generation asset divestiture-related costs with the NHPUC Audit Staff. The settlement agreement resolved all issues with respect to PSNH’s divestiture of its generating assets and the recovery of $12.0 million of divestiture-related costs incurred above the $635.7 million amount previously securitized. On December 17, 2020, the NHPUC approved the additional $12.0 million proposed in the settlement agreement to be recovered over a one-year period through the SCRC rate beginning February 1, 2021.

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Legislative and Policy Matters

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

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

Massachusetts: On January 28, 2021, the Massachusetts Legislature approved legislation which permits electric or natural gas distribution companies to assist Massachusetts municipalities in responding to the risks of climate change by owning solar facilities equal to up to 10 percent of the total installed solar generating capacity in Massachusetts as of July 31, 2020. Such facilities may be paired with energy storage where feasible to do so. This legislation is anticipated to allow each of Eversource’s Massachusetts operating companies to own up to approximately 280 MWs of solar generating facilities in addition to the 70 MWs previously constructed at NSTAR Electric.

Connecticut: On October 8, 2020, Connecticut enacted Public Act 20-5 (House Bill Number 7006), September Special Session (the Act). The Act, among other things, (1) requires PURA to open a proceeding by June 1, 2021 to begin to evaluate and eventually implement performance based regulation for electric distribution companies, and permits PURA to open a proceeding to consider such regulation for natural gas and water companies; (2) extends deadlines for PURA to issue final decisions in rate cases, change of control transactions and financing proceedings to be more consistent with timeframes in many other U.S. jurisdictions; (3) increases the maximum potential penalty for noncompliance with storm performance standards from 2.5 percent to 4 percent of annual electric distribution company revenue; and (4) directed PURA to open a proceeding by January 1, 2021 to evaluate and decide when bill credits should be paid to electric customers who lose service in future storms, including when waivers of these criteria will be granted to utilities. PURA opened a docket on December 29, 2020 to evaluate when bill credits would be paid for new storms after July 1, 2021. This law has no impact on storm response, costs or impacts prior to July 1, 2021.

Critical Accounting Policies

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

Regulatory Accounting:  Our regulated 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 our regulated companies are designed to collect each company's costs to provide service, plus a return on investment.  

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

We use judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on our financial statements.  We believe it is probable that each of the regulated companies will recover its respective investments in long-lived assets and the regulatory assets that have been recorded.  If we determine that we can no longer apply the accounting guidance applicable to rate-regulated enterprises, or that we cannot conclude it is probable that costs will be recovered from customers in future rates, the applicable costs would be charged to net income in the period in which the determination is made.
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Pension, SERP and PBOP:  We sponsor Pension, SERP and PBOP Plans to provide retirement benefits to our employees.  For each of these plans, several significant assumptions are used to determine the projected benefit obligation, funded status and net periodic benefit cost.  These assumptions include the expected long-term rate of return on plan assets, discount rate, compensation/progression rate and mortality and retirement assumptions.  We evaluate these assumptions at least annually and adjust them as necessary.  Changes in these assumptions could have a material impact on our financial position, results of operations or cash flows.  

Expected Long-Term Rate of Return on Plan Assets:  In developing the expected long-term rate of return, we consider historical and expected returns, as well as input from our consultants.  Our expected long-term rate of return on assets is based on assumptions regarding target asset allocations and corresponding expected rates of return for each asset class.  We routinely review the actual asset allocations and periodically rebalance the investments to the targeted asset allocations.  For the year ended December 31, 2020, our expected long-term rate-of-return assumption used to determine our pension and PBOP expense was 8.25 percent for the Eversource Service plans and 7 percent for the Aquarion plans.  For the forecasted 2021 pension and PBOP expense, an expected long-term rate of return of 8.25 percent for the Eversource Service plans and 7 percent for the Aquarion plans will be used reflecting our target asset allocations.

Discount Rate:  Payment obligations related to the Pension, SERP and PBOP Plans are discounted at interest rates applicable to the expected timing of each plan's cash flows.  The discount rate that was utilized in determining the pension, SERP and PBOP obligations was based on a yield-curve approach.  This approach utilizes a population of bonds with an average rating of AA based on bond ratings by Moody's, S&P and Fitch, and uses bonds with above median yields within that population.  As of December 31, 2020, the discount rates used to determine the funded status were within a range of 2.4 percent to 2.7 percent for the Pension and SERP Plans, and within a range of 2.5 percent to 2.6 percent for the PBOP Plans.  As of December 31, 2019, the discount rates used were within a range of 3.0 percent to 3.4 percent for the Pension and SERP Plans, and within a range of 3.2 percent to 3.3 percent for the PBOP Plans.  The decrease in the discount rates used to calculate the funded status resulted in an increase to the Pension and PBOP Plans' liability of $603.0 million and $68.3 million, respectively, as of December 31, 2020.  

The Company uses the spot rate methodology for the service and interest cost components of Pension, SERP and PBOP expense because it provides a relatively precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve.  The discount rates used to estimate the 2020 expense were within a range of 2.6 percent to 3.5 percent for the Pension and SERP Plans, and within a range of 2.7 percent to 3.6 percent for the PBOP Plans.  

Mortality Assumptions:  Assumptions as to mortality of the participants in our Pension, SERP and PBOP Plans are a key estimate in measuring the expected payments a participant may receive over their lifetime and the corresponding plan liability we need to record. In 2020, a revised scale for the mortality table was released, and we utilized it in our measurements.

Compensation/Progression Rate:  This assumption reflects the expected long-term salary growth rate, including consideration of the levels of increases built into collective bargaining agreements, and impacts the estimated benefits that Pension and SERP Plan participants receive in the future.  As of December 31, 2020 and 2019, the compensation/progression rates used to determine the funded status were within a range of 3.5 percent to 4 percent.  

Health Care Cost: The Eversource Service PBOP Plan is not subject to health care cost trends. As of December 31, 2020, for the Aquarion PBOP Plan, the health care trend rate for pre-65 retirees is 6.3 percent, with an ultimate rate of 5 percent in 2023, and for post-65 retirees, the health care trend rate and ultimate rate is 3.5 percent.

Actuarial Determination of Expense:  Pension, SERP and PBOP expense is determined by our actuaries and consists of service cost and prior service cost, interest cost based on the discounting of the obligations, and amortization of actuarial gains and losses, offset by the expected return on plan assets. Actuarial gains and losses represent the amortization of differences between assumptions and actual information or updated assumptions. Pre-tax net periodic benefit expense for the Pension and SERP Plans was $56.9 million, $63.7 million and $39.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.  For the PBOP Plans, there was net periodic PBOP income of $51.6 million, $41.5 million and $45.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.  

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

Forecasted Expenses and Expected Contributions:  We estimate that expense in 2021 for the Pension and SERP Plans will be approximately $28 million and income in 2021 for the PBOP Plans will be approximately $58 million. Pension, SERP and PBOP expense for subsequent years will depend on future investment performance, changes in future discount rates and other assumptions, and various other factors related to the populations participating in the plans.

Our policy is to fund the Pension Plans annually in an amount at least equal to the amount that will satisfy all federal funding requirements.  We contributed $109.6 million to the Pension Plans in 2020.  We currently estimate contributing $130.0 million to the Pension Plans in 2021.  

It is our policy to fund the PBOP Plans annually through tax deductible contributions to external trusts.  We contributed $1.9 million to the PBOP Plans in 2020.  We currently estimate contributing $2.8 million to the PBOP Plans in 2021.

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Sensitivity Analysis:  The following represents the hypothetical increase to the Pension Plans' (excluding the SERP Plans) reported annual cost and a decrease to the PBOP Plans' reported annual income as a result of a change in the following assumptions by 50 basis points:
(Millions of Dollars) Increase in Pension Plan Cost Decrease in PBOP Plan Income
Assumption Change As of December 31, As of December 31,
Eversource 2020 2019 2020 2019
Lower expected long-term rate of return $ 25.0  $ 22.9  $ 4.5  $ 4.1 
Lower discount rate 25.4  21.7  1.7  1.7 
Higher compensation rate 8.8  8.7  N/A N/A

Goodwill:  We recorded goodwill on our balance sheet associated with previous mergers and acquisitions, which totaled $4.45 billion as of December 31, 2020. We have identified our reporting units for purposes of allocating and testing goodwill as Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution.  Electric Distribution and Electric Transmission reporting units include carrying values for the respective components of CL&P, NSTAR Electric and PSNH.  The Natural Gas Distribution reporting unit includes the carrying values of NSTAR Gas, Yankee Gas and EGMA. We recorded $42 million of goodwill arising from the acquisition of CMA on October 9, 2020. The Water Distribution reporting unit includes the Aquarion water utility businesses.  As of December 31, 2020, goodwill was allocated to the reporting units as follows: $2.54 billion to Electric Distribution, $577 million to Electric Transmission, $441 million to Natural Gas Distribution and $884 million to Water Distribution.

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

We performed an impairment test of goodwill as of October 1, 2020 for the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units.  This evaluation required the consideration of several factors that impact the fair value of the reporting units, including conditions and assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, and internal estimates of future cash flows and net income.  

The 2020 goodwill impairment assessment resulted in a conclusion that goodwill is not impaired and no reporting unit is at risk of a goodwill impairment. The fair value of the reporting units was substantially in excess of carrying value.

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

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

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

Equity Method Investments: Investments in affiliates where we have the ability to exercise significant influence, but not control, over an investee are initially recognized as an equity method investment at cost. Any differences between the cost of an investment and the amount of underlying equity in net assets of an investee are considered basis differences and are determined based upon the estimated fair values of the investee's identifiable assets and liabilities. For our offshore wind equity method investment, basis differences are related to intangible assets for PPAs that will be amortized over the term of the PPAs, and equity method goodwill that are not amortized. Capitalized interest associated with our offshore wind equity method investment is included in the investment balance.

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

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

In 2018, Eversource recorded an other-than-temporary impairment of $32.9 million within Other Income, Net on our statement of income, related to Access Northeast, an equity method investment. Eversource identified a September 2018 non-Eversource natural gas series of explosions in eastern Massachusetts, compounded by an adverse legislative environment, as negative evidence that indicated potential impairment of our investment in Access Northeast. In 2018, management determined that the future cash flows of the Access Northeast project were uncertain and could no longer be reasonably estimated and that the book value of our equity method investment was not recoverable. 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.

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

We also account for uncertainty in income taxes, which applies to all income tax positions previously filed in a tax return and income tax positions expected to be taken in a future tax return that have been reflected on our balance sheets.  The determination of whether a tax position meets the recognition threshold under applicable accounting guidance is based on facts and circumstances available to us.  

Pursuant to the Tax Cuts and Jobs Act of 2017, Eversource had remeasured its existing deferred federal income tax balances to reflect the decrease in the U.S. federal corporate income tax rate from 35 percent to 21 percent. The remeasurement resulted in provisional regulated excess accumulated deferred income tax (excess ADIT or EDIT) liabilities that will benefit our customers in future periods. As of December 31, 2020, these EDIT liabilities were estimated to be approximately $2.78 billion and were included in regulatory liabilities on the balance sheet. Eversource's regulated companies are in the process of, or will be, refunding the EDIT liabilities to customers based on orders issued by applicable state regulatory commissions. The refund of these regulatory liabilities to customers will generally be made over the same period as the remaining useful lives of the underlying assets that gave rise to the ADIT liabilities.

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

Fair Value Measurements:  We follow fair value measurement guidance that defines fair value as the price that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).  We have applied this guidance to our Company's derivative contracts that are not elected or designated as "normal purchases or normal sales" (normal), to marketable securities held in trusts, and to our investments in our Pension and PBOP Plans. Fair value measurements are also incorporated into the accounting for goodwill, long-lived assets, equity method investments, and AROs, and in the valuation of the acquisition of CMA in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.

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

We use quoted market prices when available to determine the fair value of financial instruments.  When quoted prices in active markets for the same or similar instruments are not available, we value derivative contracts using models that incorporate both observable and unobservable inputs.  Significant unobservable inputs utilized in the models include energy and energy-related product prices for future years for long-dated derivative contracts and market volatilities.  Discounted cash flow valuations incorporate estimates of premiums or discounts, reflecting risk-adjusted profit that would be required by a market participant to arrive at an exit price, using available historical market transaction information. Valuations of derivative contracts also reflect our estimates of nonperformance risk, including credit risk.
 
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Other Matters
Accounting Standards:  For information regarding new accounting standards, see Note 1C, "Summary of Significant Accounting Policies - Accounting Standards," to the financial statements.

Contractual Obligations and Commercial Commitments:  Information regarding our contractual obligations and commercial commitments as of December 31, 2020, is summarized annually through 2025 and thereafter as follows:
Eversource              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Long-term debt maturities (a)
$ 1,022.2  $ 1,175.2  $ 1,658.2  $ 1,049.9  $ 1,400.0  $ 9,807.9  $ 16,113.4 
Rate reduction bond maturities 43.2  43.2  43.2  43.2  43.2  324.1  540.1 
Estimated interest payments on existing debt (b)
542.8  510.6  478.4  437.3  391.0  4,541.4  6,901.5 
Operating leases (c)
11.4  9.0  6.4  4.5  3.4  36.2  70.9 
Finance leases(c)
7.2  5.7  4.9  4.8  4.7  60.7  88.0 
Funding of pension obligations (d) (e)
130.0  —  —  —  —  —  130.0 
Funding of PBOP obligations (d) (e)
2.8  —  —  —  —  —  2.8 
Estimated future annual long-term contractual costs (f)
1,328.8  1,218.6  1,096.1  1,052.3  1,023.0  5,451.8  11,170.6 
Total (g)
$ 3,088.4  $ 2,962.3  $ 3,287.2  $ 2,592.0  $ 2,865.3  $ 20,222.1  $ 35,017.3 
CL&P              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Long-term debt maturities (a)
$ —  $ —  $ 400.0  $ 139.8  $ 400.0  $ 2,975.5  $ 3,915.3 
Estimated interest payments on existing debt (b)
156.2  156.2  151.2  146.2  135.2  1,884.0  2,629.0 
Operating leases (c)
0.2  0.1  —  —  —  —  0.3 
Finance leases (c)
1.5  —  —  —  —  —  1.5 
Funding of pension obligations (d) (e)
78.9  —  —  —  —  —  78.9 
Estimated future annual long-term contractual costs (f)
588.3  661.5  684.6  674.9  647.7  2,755.8  6,012.8 
Total (g)
$ 825.1  $ 817.8  $ 1,235.8  $ 960.9  $ 1,182.9  $ 7,615.3  $ 12,637.8 

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

(b)    Estimated interest payments on fixed-rate debt are calculated by multiplying the coupon rate on the debt by its scheduled notional amount outstanding for the period of measurement.  

(c)    The operating and finance lease obligations include interest.

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

(e)    These amounts represent expected pension and PBOP contributions for 2021.  Future contributions will vary depending on many factors, including the performance of existing plan assets, valuation of the plans' liabilities and long-term discount rates.   

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

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

For further information regarding our contractual obligations and commercial commitments, see Note 7, "Asset Retirement Obligations," Note 8, "Short-Term Debt," Note 9, "Long-Term Debt," Note 10, "Rate Reduction Bonds and Variable Interest Entities," Note 11A, "Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pension," Note 13, "Commitments and Contingencies," and Note 14, "Leases," to the financial statements.


46



RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the years ended December 31, 2020 and 2019 included in this Annual Report on Form 10-K: 
For the Years Ended December 31,
(Millions of Dollars) 2020 2019 Increase/(Decrease)
Operating Revenues $ 8,904.4  $ 8,526.5  $ 377.9 
Operating Expenses:      
Purchased Power, Fuel and Transmission 2,987.8  3,040.2  (52.4)
Operations and Maintenance 1,480.3  1,363.1  117.2 
Depreciation 981.4  885.3  96.1 
Amortization 177.7  195.4  (17.7)
Energy Efficiency Programs 535.8  501.4  34.4 
Taxes Other Than Income Taxes 752.7  711.0  41.7 
Impairment of Northern Pass Transmission —  239.6  (239.6)
Total Operating Expenses 6,915.7  6,936.0  (20.3)
Operating Income 1,988.7  1,590.5  398.2 
Interest Expense 538.4  533.2  5.2 
Other Income, Net 108.6  132.8  (24.2)
Income Before Income Tax Expense 1,558.9  1,190.1  368.8 
Income Tax Expense 346.2  273.5  72.7 
Net Income 1,212.7  916.6  296.1 
Net Income Attributable to Noncontrolling Interests 7.5  7.5  — 
Net Income Attributable to Common Shareholders $ 1,205.2  $ 909.1  $ 296.1 

Operating Revenues
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, is as follows:  
Electric Firm Natural Gas Water
  Sales Volumes (GWh) Percentage
Decrease
Sales Volumes (MMcf) Percentage
Increase
Sales Volumes (MG) Percentage
(Decrease)/Increase
2020 2019 2020 2019 2020 2019
Traditional 7,675  7,685  (0.1) % —  —  —  % 2,011  2,161  (6.9) %
Decoupled and Special Contracts (1)(2)
42,531  43,934  (3.2) % 112,756  107,806  4.6  % 23,122  21,370  8.2  %
Total Sales Volumes 50,206  51,619  (2.7) % 112,756  107,806  4.6  % 25,133  23,531  6.8  %

(1)     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.

(2) The 2020 firm natural gas sales volumes include the addition of EGMA beginning October 9, 2020.

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 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 impact earnings ("Traditional" in the table above). For CL&P, NSTAR Electric, NSTAR Gas, EGMA, Yankee Gas, and our Connecticut water distribution business, fluctuations in retail sales volumes do not materially 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.

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Operating Revenues: Operating Revenues by segment increased in 2020, as compared to 2019, as follows:
(Millions of Dollars) Increase/(Decrease)
Electric Distribution $ 155.8 
Natural Gas Distribution 146.5 
Electric Transmission 147.1 
Water Distribution 0.8 
Other 207.4 
Eliminations (279.7)
Total Operating Revenues $ 377.9 

Electric and Natural Gas Distribution Revenues:
Base Distribution Revenues:
Base electric distribution revenues increased $97.5 million in 2020, as compared to 2019, due primarily to the impact of CL&P's base distribution rate increases effective May 1, 2020 and May 1, 2019, which include recovery of storm costs and certain other items that do not impact earnings, the NSTAR Electric base distribution rate increase effective January 1, 2020, and the impact of the PSNH temporary base distribution rate increase effective July 1, 2019, which includes recovery of storm costs and certain other items that do not impact earnings.

The increase in total electric distribution revenues was partially offset by the impact of the December 2020 PSNH settlement agreement driven by the negative impact from the over-refunding of the change in the 2018 federal corporate income tax rate as a result of the Tax Cuts and Jobs Act of 2017 that was reflected in temporary rates.

Base natural gas distribution revenues increased $34.3 million in 2020, as compared to 2019, due primarily to base distribution rate increases at Yankee Gas effective January 1, 2020 and at NSTAR Gas effective November 1, 2020.

Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. However, tracked revenues do include certain incentives earned, return on rate base and on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, electric retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), and additionally for the Massachusetts utilities, pension and PBOP benefits and net metering for distributed generation. 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 distribution revenues increased/(decreased) in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) Electric Distribution Natural Gas Distribution
Retail Tariff Tracked Revenues:
Energy supply procurement $ (211.8) $ (49.3)
CL&P FMCC 120.5  N/A
Other distribution tracking mechanisms 36.3  30.9 
Wholesale Market Sales Revenue 111.6  (19.5)

The decrease in energy supply procurement within electric distribution was driven primarily by lower average prices, partially offset by higher average supply-related sales volumes in 2020, as compared to 2019. The increase in the CL&P FMCC regulatory tracking mechanism revenues and the increase in wholesale market sales revenue within electric distribution was due primarily to the new Millstone PPA entered into by CL&P in 2019, as required by regulation. Beginning in the fourth quarter of 2019, CL&P sells the energy purchased from Millstone Nuclear Power Station (Millstone) into the wholesale market and uses the proceeds from the energy sales to offset a portion of the contract costs. The net costs under the contract are recovered from customers in the FMCC rate.

The addition of EGMA increased total operating revenues at the natural gas distribution segment by $154.8 million.

Electric Transmission Revenues:  Electric transmission revenues increased $147.1 million in 2020, as compared to 2019, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and a higher benefit from the annual billing and cost reconciliation filing with FERC.

Other Revenues and Eliminations: Other revenues primarily include the revenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also 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.

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Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas 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 decreased in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) Increase/(Decrease)
Purchased Power Costs $ 48.1 
Natural Gas Costs (7.9)
Transmission Costs (6.3)
Eliminations (86.3)
Total Purchased Power, Fuel and Transmission $ (52.4)

The increase in purchased power expense at the electric distribution business in 2020 as compared to 2019, was driven primarily by the impact of energy purchases from the new Millstone PPA and higher average supply-related sales volumes, partially offset by lower average prices. The decrease in natural gas supply costs at our natural gas distribution business was due primarily to lower average prices and lower average sales volumes, partially offset by the addition of EGMA natural gas supply costs as a result of the CMA asset acquisition of $58.8 million.

The decrease in transmission costs in 2020, as compared to 2019, was primarily the result of a decrease 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 an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network, and an increase in costs billed by ISO-NE that support regional grid investments.

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 in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) Increase/(Decrease)
Base Electric Distribution (Non-Tracked Costs):
Storm restoration costs $ 29.8 
Shared corporate costs (including computer software depreciation at Eversource Service) 22.6 
COVID-19 Costs 9.5 
Employee-related expenses, including labor and benefits (12.9)
Operations-related expenses, including vegetation management, vehicles, and outside services (5.7)
Other non-tracked operations and maintenance (8.3)
Total Base Electric Distribution (Non-Tracked Costs) 35.0 
Tracked Costs (Electric Distribution and Electric Transmission) - Increase due to higher transmission expenses of $26.3 million and increase of $24.0 million due to higher pension tracking mechanism deferral 55.8 
Total Electric Distribution and Electric Transmission 90.8 
Natural Gas Distribution:
Base (Non-Tracked) Costs, excluding EGMA - Increase due primarily to higher shared corporate costs of $10.1 million and $6.3 million for COVID-19 costs, partially offset by lower employee-related expenses of $7.5 million 13.3 
Tracked Costs, excluding EGMA 4.2 
EGMA Operations and Maintenance - due to CMA asset acquisition 40.1 
Total Natural Gas Distribution 57.6 
Water Distribution:
Gain on sale of Hingham water system (16.0)
Other 0.9 
Total Water Distribution (15.1)
Parent and Other Companies and Eliminations:
Eversource Parent and Other Companies - other operations and maintenance 83.9 
Acquisition costs related to CMA 42.1 
   Eliminations (142.1)
Total Operations and Maintenance $ 117.2 

Depreciation expense increased in 2020, as compared to 2019, due to higher utility plant in service balances, and due to the addition of EGMA utility plant balances as a result of the CMA asset acquisition of $10.9 million.

Amortization expense includes the deferrals of energy supply, energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms, and the amortization of certain costs as those costs are collected in rates.  These deferrals adjust expense to match the corresponding revenues. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization decreased in 2020, as compared to 2019, due to the deferrals for the under recovery of energy purchases related to the Millstone PPA at CL&P and due to the deferral of other energy supply and energy-related costs.

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Energy Efficiency Programs expense increased in 2020, as compared to 2019, due primarily to the deferral adjustment at CL&P, PSNH and NSTAR Gas, which reflects the actual costs of energy efficiency programs compared to the amounts billed to customers and the timing of the recovery of energy efficiency costs. The increase was also due to the addition of EGMA energy efficiency program costs as a result of the CMA asset acquisition of $14.4 million. The increase was partially offset by a decrease in spending on certain large energy efficiency projects in 2020, compared to 2019 at NSTAR Electric, due to timing. 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 in 2020, as compared to 2019, due primarily to an increase in property taxes as a result of higher utility plant balances and higher Connecticut gross earnings taxes at CL&P, and due to the addition of EGMA property taxes as a result of the CMA asset acquisition of $9.7 million. The increase was partially offset by a decrease of $21.4 million related to CL&P's remittance of energy efficiency funds to the State of Connecticut. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. The increase was also partially offset by a decrease in property tax at NSTAR Gas relating to the resolution of disputed property taxes for prior years.

Impairment of Northern Pass Transmission reflects an impairment charge of $239.6 million that was recorded in the second quarter of 2019 as a result of the July 19, 2019 New Hampshire Supreme Court decision. The after-tax impact of this impairment charge was $204.4 million.

Interest Expense increased in 2020, as compared to 2019, due primarily to an increase in interest on long-term debt as a result of new debt issuances ($27.3 million) and higher amortization of debt discounts and premiums, net ($4.6 million), partially offset by a decrease in interest on notes payable ($16.9 million), a decrease in interest expense at NSTAR Gas relating to the resolution of disputed property taxes for prior years ($5.7 million), and an increase in capitalized AFUDC related to debt funds and other capitalized interest ($3.6 million).

Other Income, Net decreased in 2020, as compared to 2019, due primarily to a decrease in equity in earnings related to Eversource's equity method investments ($28.0 million), the absence in 2020 of the recognition of the equity component of the carrying charges related to PSNH storm costs recorded in interest income in the first quarter of 2019 ($5.2 million) and lower AFUDC related to equity funds ($3.0 million), partially offset by an increase related to pension, SERP and PBOP non-service income components ($13.1 million).

Income Tax Expense increased in 2020, as compared to 2019, due primarily to higher pre-tax earnings ($23.5 million), higher state taxes ($12.6 million), by the absence in 2020 of the impairment of NPT ($35.2 million), by a decrease in tax planning benefits ($9.5 million), the sale of Hingham water system ($12.5 million), return to provision adjustments ($3.3 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($4.1 million), partially offset by an increase in share-based payment excess tax benefits ($5.1 million), an increase in amortization of EDIT ($11.3 million), and a decrease in valuation allowance ($11.6 million).

50


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 years ended December 31, 2020 and 2019 included in this Annual Report on Form 10-K:
  For the Years Ended December 31,
CL&P NSTAR Electric PSNH
(Millions of Dollars) 2020 2019 Increase 2020 2019 Increase/(Decrease) 2020 2019 Increase/(Decrease)
Operating Revenues $ 3,547.5  $ 3,232.6  $ 314.9  $ 2,941.1  $ 3,044.6  $ (103.5) $ 1,079.1  $ 1,065.9  $ 13.2 
Operating Expenses:                  
Purchased Power and Transmission 1,369.2  1,188.2  181.0  879.2  1,064.3  (185.1) 364.1  398.4  (34.3)
Operations and Maintenance 572.9  549.2  23.7  534.1  468.4  65.7  219.3  211.0  8.3 
Depreciation 320.7  301.2  19.5  319.5  296.5  23.0  100.4  93.7  6.7 
Amortization of Regulatory Assets, Net 58.4  51.6  6.8  83.2  103.7  (20.5) 52.8  57.7  (4.9)
Energy Efficiency Programs 141.5  118.2  23.3  264.0  289.2  (25.2) 37.6  26.0  11.6 
Taxes Other Than Income Taxes 344.4  342.5  1.9  206.8  195.6  11.2  81.6  62.6  19.0 
Total Operating Expenses 2,807.1  2,550.9  256.2  2,286.8  2,417.7  (130.9) 855.8  849.4  6.4 
Operating Income 740.4  681.7  58.7  654.3  626.9  27.4  223.3  216.5  6.8 
Interest Expense 153.6  151.4  2.2  130.5  114.2  16.3  58.1  60.7  (2.6)
Other Income, Net 20.8  17.6  3.2  52.0  44.6  7.4  13.8  19.2  (5.4)
Income Before Income Tax Expense 607.6  547.9  59.7  575.8  557.3  18.5  179.0  175.0  4.0 
Income Tax Expense 149.7  137.0  12.7  130.8  125.3  5.5  31.7  41.0  (9.3)
Net Income $ 457.9  $ 410.9  $ 47.0  $ 445.0  $ 432.0  $ 13.0  $ 147.3  $ 134.0  $ 13.3 

Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
  For the Years Ended December 31,
  2020 2019 Decrease Percent
CL&P 20,113  20,719  (606) (2.9) %
NSTAR Electric 22,418  23,215  (797) (3.4) %
PSNH 7,675  7,685  (10) (0.1) %

Fluctuations in retail electric sales volumes at PSNH impact earnings.  For CL&P and NSTAR Electric, 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 $314.9 million at CL&P and $13.2 million at PSNH, and decreased $103.5 million at NSTAR Electric in 2020, as compared to 2019.

Base Distribution Revenues:
CL&P's distribution revenues increased $40.0 million due primarily to the impact of its base distribution rate increases effective May 1, 2020 and May 1, 2019, which include recovery of storm costs and certain other items that do not impact earnings.
NSTAR Electric's distribution revenues increased $32.6 million due primarily to the impact of its base distribution rate increase effective January 1, 2020.
PSNH's distribution revenues increased $24.9 million due primarily to the impact of its temporary base distribution rate increase effective July 1, 2019, which includes recovery of storm costs and certain other items that do not impact earnings.
The increase in PSNH’s total distribution revenues was partially offset by the impact of the December 2020 settlement agreement driven by the negative impact from the over-refunding of the change in the 2018 federal corporate income tax rate as a result of the Tax Cuts and Jobs Act of 2017 that was reflected in temporary rates.

Tracked Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. However, tracked revenues do include certain incentives earned, return on rate base and on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation. 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.

51


Tracked revenues increased/(decreased) in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) CL&P NSTAR Electric PSNH
Retail Tariff Tracked Revenues:
Energy supply procurement $ (58.7) $ (116.7) $ (36.4)
CL&P FMCC 120.5  —  — 
Other distribution tracking mechanisms 38.2  (17.6) 15.7 
Wholesale Market Sales Revenue 125.0  (14.7) 1.3 

The decrease in energy supply procurement at CL&P and PSNH reflects lower average prices, partially offset by higher average supply-related sales volumes in 2020, as compared to 2019. The decrease in energy supply procurement at NSTAR Electric reflects both lower average prices and lower average supply-related sales volumes for 2020, as compared to 2019.

The increase in the CL&P FMCC regulatory tracking mechanism revenues and the increase in wholesale market sales revenue was due primarily to the new Millstone PPA entered into by CL&P in 2019, as required by regulation. Beginning in the fourth quarter of 2019, CL&P sells the energy purchased from Millstone into the wholesale market and uses the proceeds from the energy sales to offset a portion of the contract costs. The net costs under the contract are recovered from customers in the FMCC rate.

Transmission Revenues: Transmission revenues increased $61.7 million at CL&P, $54.2 million at NSTAR Electric and $31.2 million at PSNH in 2020, as compared to 2019, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and a higher benefit from the annual billing and cost reconciliation filing with FERC.

Eliminations: 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 $13.1 million at CL&P, $44.0 million at NSTAR Electric and $20.7 million at PSNH in 2020, as compared to 2019.

Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH's customers.  These energy supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense increased/(decreased) in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) CL&P NSTAR Electric PSNH
Purchased Power Costs $ 233.0  $ (141.9) $ (43.0)
Transmission Costs (36.6) 0.8  29.5 
Eliminations (15.4) (44.0) (20.8)
Total Purchased Power and Transmission $ 181.0  $ (185.1) $ (34.3)

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 and the cost of energy purchase contracts, as required by regulation.

The increase at CL&P was due primarily to the new Millstone PPA energy purchases and higher average supply-related sales volumes, partially offset by lower average prices.
The decrease at NSTAR Electric was due primarily to lower expense related to the procurement of energy supply resulting from lower average prices and lower average supply-related sales volumes.
The decrease at PSNH was due primarily to lower expense related to the procurement of energy supply resulting from lower average prices, partially offset by higher average supply-related sales volumes.

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

The decrease in transmission costs at CL&P was due primarily to a reduction to 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 an increase in Local Network Service charges, which reflects the cost of transmission service provided by Eversource over our local transmission network, and an increase in costs billed by ISO-NE that support regional grid investments.
The increase in transmission costs at PSNH was primarily the result of an increase in Local Network Service charges, an increase in costs billed by ISO-NE that support regional grid investments, and an increase in the retail transmission cost deferral.


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Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs).  Operations and Maintenance expense increased in 2020, as compared to 2019, due primarily to the following:
(Millions of Dollars) CL&P NSTAR Electric PSNH
Base Electric Distribution (Non-Tracked Costs):  
Storm restoration costs $ 11.4  $ 9.0  $ 9.4 
Shared corporate costs (including computer software depreciation at Eversource Service) 8.3  11.6  2.7 
COVID-19 Costs 3.9  3.8  1.8 
Employee-related expenses, including labor and benefits (5.1) (6.0) (1.8)
Operations-related expenses, including vegetation management, vehicles, and outside services (5.2) 0.2  (0.7)
Other non-tracked operations and maintenance (11.9) 6.7  1.9 
Total Base Electric Distribution (Non-Tracked Costs) 1.4  25.3  13.3 
Tracked Costs:
Transmission expenses 10.3  15.6  0.4 
Other tracked operations and maintenance 12.0  24.8  (5.4)
Total Tracked Costs 22.3  40.4  (5.0)
Total Operations and Maintenance $ 23.7  $ 65.7  $ 8.3 

Depreciation expense increased in 2020, as compared to 2019, for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.

Amortization of Regulatory Assets, Net expense includes the deferrals of energy supply, energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms, and the amortization of certain costs as those costs are collected in rates. These deferrals adjust expense to match the corresponding revenues. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization of Regulatory Assets, Net increased at CL&P and decreased at NSTAR Electric and PSNH in 2020, as compared to 2019, due primarily to the deferrals 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 Efficiency Programs expense includes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense increased/decreased in 2020, as compared to 2019, due primarily to the following:

The increase at CL&P and PSNH was due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.
The decrease at NSTAR Electric was due to the timing of spending on certain large energy efficiency projects in 2020, as compared to 2019.

Taxes Other Than Income Taxes increased in 2020, as compared to 2019, due primarily to the following:

The increase at CL&P was related to higher property taxes as a result of a higher utility plant balance, higher gross earnings taxes, and the absence in 2020 of a use tax refund received in 2019, partially offset by a decrease of $21.4 million relating to the remittance of energy efficiency funds to the State of Connecticut. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut.
The increases at NSTAR Electric and PSNH were due to higher property taxes as a result of higher utility plant balances offset against some favorable property tax resolutions with a number of communities.

Interest Expense increased/decreased in 2020, as compared to 2019, due primarily to the following:

The increase at CL&P was due to higher interest on long-term debt ($6.6 million), partially offset by a decrease in interest expense on regulatory deferrals ($2.0 million), a decrease in interest on short-term notes payable ($1.2 million), and lower amortization of debt discounts and premiums, net ($0.9 million).
The increase at NSTAR Electric was due to higher interest on long-term debt ($12.9 million), an increase in interest expense on regulatory deferrals ($7.4 million), and a decrease in capitalized AFUDC related to debt funds ($1.4 million), partially offset by a decrease in interest on short-term notes payable ($3.6 million).
The decrease at PSNH was due to a decrease in interest expense on regulatory deferrals ($2.3 million) and a decrease in RRB interest expense ($1.4 million), partially offset by higher amortization of debt discounts and premiums, net ($0.8 million) and a decrease in capitalized AFUDC related to debt funds ($0.6 million).

53


Other Income, Net increased/decreased in 2020, as compared to 2019, due primarily to the following:

The increase at CL&P was due to an increase related to pension, SERP and PBOP non-service income components ($3.3 million), an increase in AFUDC related to equity funds ($0.6 million), and higher interest income ($0.5 million), partially offset by a decrease in investment income ($1.2 million).
The increase at NSTAR Electric was due primarily to an increase related to pension, SERP and PBOP non-service income components ($5.8 million) and an increase in AFUDC related to equity funds ($1.7 million).
The decrease at PSNH was due primarily to lower interest income ($8.1 million), which includes the absence in 2020 of the recognition of the equity component of the carrying charges related to storm costs recorded in interest income in 2019 ($5.2 million), partially offset by an increase related to pension, SERP and PBOP non-service income components ($2.1 million) and an increase in AFUDC related to equity funds ($0.8 million).

Income Tax Expense increased/decreased in 2020, as compared to 2019, due primarily to the following:

The increase at CL&P was due primarily to higher pre-tax earnings ($12.6 million), higher state taxes ($2.8 million), and return to provision adjustments ($1.2 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.5 million), an increase in share-based payment excess tax benefits ($1.8 million), and a decrease in a valuation allowance ($1.6 million).
The increase at NSTAR Electric was due primarily to higher pre-tax earnings ($3.9 million), higher state taxes ($0.7 million), a decrease in amortization of EDIT ($2.5 million), and return to provision adjustments ($0.5 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.3 million), and an increase in share-based payment excess tax benefits ($1.8 million).
The decrease at PSNH was due primarily to lower state taxes ($2.0 million), an increase in amortization of EDIT ($11.4 million), and an increase in share-based payment excess tax benefits ($0.6 million), partially offset by higher pre-tax earnings ($0.6 million), return to provision adjustments ($1.7 million), and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.4 million).

EARNINGS SUMMARY

CL&P's earnings increased $47.0 million in 2020, as compared to 2019, due primarily to the base distribution rate increases effective May 1, 2020 and May 1, 2019, an increase in transmission earnings driven by a higher transmission rate base, and higher earnings from its capital tracker mechanism due to increased electric system improvements. The earnings increase was partially offset by higher depreciation expense, higher property tax expense, and higher interest expense.

NSTAR Electric's earnings increased $13.0 million in 2020, as compared to 2019, due primarily to the base distribution rate increase effective January 1, 2020, an increase in transmission earnings driven by a higher transmission rate base, and higher energy efficiency incentives earned. The earnings increase was partially offset by higher operations and maintenance expense, higher interest expense, higher depreciation expense, and higher property tax expense.

PSNH's earnings increased $13.3 million in 2020, as compared to 2019, due primarily to the temporary base distribution rate increase effective July 1, 2019, an increase in transmission earnings driven by a higher transmission rate base, and the impact of the PSNH rate settlement agreement approved in December 2020 that was due primarily to the reconciliation of permanent rates back to the temporary rate period. The settlement agreement primarily resulted in a benefit to income tax expense for the reduction of the EDIT regulatory liability, partially offset by a reduction in revenues driven by the negative impact from the over-refunding of the change in the 2018 federal corporate income tax rate as a result of the Tax Cuts and Jobs Act of 2017 that was reflected in temporary rates. The earnings increase was partially offset by higher operations and maintenance expense, higher property tax expense, and the absence of the 2019 recognition of carrying charges on its 2013 through 2016 storm costs approved for recovery.

LIQUIDITY

Cash Flows: CL&P had cash flows provided by operating activities of $397.1 million in 2020, as compared to $726.4 million in 2019.  The decrease in operating cash flows was due primarily to cash payments made in 2020 for storm restoration costs of approximately $180 million related to Tropical Storm Isaias and the timing of cash payments made on our accounts payable. In addition, the timing of collections for regulatory tracking mechanisms, which includes the impact of the CL&P temporary rate suspension, the timing of cash collections on our accounts receivable, and the timing of other working capital items contributed to the decrease in operating cash flows. Partially offsetting these unfavorable impacts was lower income tax payments made of $69.7 million in 2020, as compared to 2019.

NSTAR Electric had cash flows provided by operating activities of $525.8 million in 2020, as compared to $698.3 million in 2019.  The decrease in operating cash flows was due primarily to the timing of collections for regulatory tracking mechanisms primarily related to transmission costs, the timing of cash collections on our accounts receivable, a $32.8 million increase in income tax payments made in 2020, as compared to 2019, and the timing of other working capital items. Partially offsetting these unfavorable impacts were the timing of cash payments on our accounts payable and a $5.7 million decrease in Pension and PBOP contributions made in 2020, as compared to 2019.

54


PSNH had cash flows provided by operating activities of $218.7 million in 2020, as compared to $274.4 million in 2019.  The decrease in operating cash flows was due primarily to the timing of cash collections on our accounts receivable and an increase in income tax payments made of $30.8 million in 2020, as compared to 2019. Also contributing to the decrease were the timing of collections for regulatory tracking mechanisms and an increase of $4.1 million in Pension contributions made in 2020, as compared to 2019. Partially offsetting these unfavorable impacts was the timing of cash payments on our accounts payable.

Receivables, net of reserves, on the balance sheets have increased $58.3 million at CL&P, $56.3 million at NSTAR Electric, and $20.0 million at PSNH in 2020, as compared to 2019, due primarily to an increase in delinquent receivables from customers attributable to the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic.

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.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

Market Risk Information

Commodity Price Risk Management:  Our regulated companies enter into energy contracts to serve our customers, and the economic impacts of those contracts are passed on to our customers.  Accordingly, the regulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments.  Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all large-scale energy related transactions entered into by its regulated companies.

Other Risk Management Activities

We have an Enterprise Risk Management (ERM) program for identifying the principal risks of the Company.  Our ERM program involves the application of a well-defined, enterprise-wide methodology designed to allow our Risk Committee, comprised of our senior officers of the Company, to identify, categorize, prioritize, and mitigate the principal risks to the Company.  The ERM program is integrated with other assurance functions throughout the Company including Compliance, Auditing, and Insurance to ensure appropriate coverage of risks that could impact the Company.  In addition to known risks, ERM identifies emerging risks to the Company, through participation in industry groups, discussions with management and in consultation with outside advisers.  Our management then analyzes risks to determine materiality, likelihood and impact, and develops mitigation strategies.  Management broadly considers our business model, the utility industry, the global economy, climate change, sustainability and the current environment to identify risks.  The Finance Committee of the Board of Trustees is responsible for oversight of the Company's ERM program and enterprise-wide risks as well as specific risks associated with insurance, credit, financing, investments, pensions and overall system security including cyber security.  The findings of the ERM process are periodically discussed with the Finance Committee of our Board of Trustees, as well as with other Board Committees or the full Board of Trustees, as appropriate, including reporting on how these issues are being measured and managed.  However, there can be no assurances that the ERM process will identify or manage every risk or event that could impact our financial position, results of operations or cash flows.

Interest Rate Risk Management:  We manage our interest rate risk exposure in accordance with our written policies and procedures by maintaining a mix of fixed and variable rate long-term debt.  As of December 31, 2020, all of our long-term debt except for $11.7 million of fees and interest due for CYAPC's spent nuclear fuel disposal costs, was at a fixed interest rate.  

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 natural gas producers, financial institutions, and other energy marketers.  Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts.  This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.

Our regulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies.  Our regulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contracting risks, including credit risk.  As of December 31, 2020, our regulated companies held collateral (letters of credit or cash) of $10.0 million from counterparties related to our standard service contracts. As of December 31, 2020, Eversource had $34.6 million of cash posted with ISO-NE related to energy transactions.

For further information on cash collateral deposited and posted with counterparties, see Note 1O, "Summary of Significant Accounting Policies - Supplemental Cash Flow Information," to the financial statements.

If the respective unsecured debt ratings of Eversource or its subsidiaries were reduced to below investment grade by either Moody's or S&P, certain of Eversource's contracts would require additional collateral in the form of cash to be provided to counterparties and independent system operators.  Eversource would have been and remains able to provide that collateral.  

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Item 8.    Financial Statements and Supplementary Data
Eversource  
Management’s Report on Internal Controls Over Financial Reporting  
Reports of Independent Registered Public Accounting Firm  
Consolidated Financial Statements  
 
CL&P  
Management’s Report on Internal Controls Over Financial Reporting  
Report of Independent Registered Public Accounting Firm  
Financial Statements  
 
NSTAR Electric  
Management’s Report on Internal Controls Over Financial Reporting  
Report of Independent Registered Public Accounting Firm  
Consolidated Financial Statements  
 
PSNH  
Management’s Report on Internal Controls Over Financial Reporting  
Report of Independent Registered Public Accounting Firm  
Consolidated Financial Statements  
 

56



Management’s Report on Internal Controls Over Financial Reporting

Eversource Energy

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

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, Eversource conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2020.

Management has excluded from our assessment of and conclusion on the effectiveness of internal controls over financial reporting the internal
controls of Eversource Gas Company of Massachusetts (EGMA). On October 9, 2020, Eversource completed the acquisition of certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA). The natural gas distribution assets acquired from CMA were assigned to EGMA, and are included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020, constituting 3.4 percent and 5.8 percent of total and net assets, respectively, as of December 31, 2020, and 1.7 percent and 1.2 percent of revenues and net income attributable to common shareholders, respectively, for the year ended December 31, 2020.

February 17, 2021


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Eversource Energy:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Eversource Energy and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
As described in the Management’s Report on Internal Controls Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Eversource Gas Company of Massachusetts (previously doing business as Columbia Gas of Massachusetts), which was acquired on October 9, 2020, and whose financial statements constitute 3.4% and 5.8% of total and net assets, respectively, 1.7% of revenues, and 1.2% of net income attributable to common shareholders of the consolidated financial statement amounts as of and for the year ended December 31, 2020. Accordingly, our audit did not include the internal control over financial reporting at Eversource Gas Company of Massachusetts.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 17, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP

Hartford, Connecticut
February 17, 2021

58


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Eversource Energy:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Eversource Energy and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, common shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting.

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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

Critical Audit Matter Description

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

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

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that each of the regulated companies will recover its respective investment in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the regulated companies’ operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

59


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

How the Critical Audit Matter Was Addressed in the Audit

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

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.


/s/ Deloitte & Touche LLP
Hartford, Connecticut
February 17, 2021

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

60


EVERSOURCE ENERGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  As of December 31,
(Thousands of Dollars) 2020 2019
ASSETS    
Current Assets:    
Cash $ 106,599  $ 15,432 
Receivables, Net (net of allowance for uncollectible accounts of $358,851 and $224,821 as of December 31, 2020 and 2019, respectively)
1,195,925  989,383 
Unbilled Revenues 233,025  181,006 
Fuel, Materials, Supplies and REC Inventory 265,599  235,471 
Regulatory Assets 1,076,556  651,112 
Prepayments and Other Current Assets 252,439  342,135 
Total Current Assets 3,130,143  2,414,539 
Property, Plant and Equipment, Net 30,882,523  27,585,470 
Deferred Debits and Other Assets:    
Regulatory Assets 5,493,330  4,863,639 
Goodwill 4,445,988  4,427,266 
Investments in Unconsolidated Affiliates 1,107,143  871,633 
Marketable Securities 456,617  449,130 
Other Long-Term Assets 583,854  512,238 
Total Deferred Debits and Other Assets 12,086,932  11,123,906 
Total Assets $ 46,099,598  $ 41,123,915 
LIABILITIES AND CAPITALIZATION    
Current Liabilities:    
Notes Payable $ 1,249,325  $ 889,084 
Long-Term Debt – Current Portion 1,053,186  327,411 
Rate Reduction Bonds – Current Portion 43,210  43,210 
Accounts Payable 1,370,647  1,147,872 
Regulatory Liabilities 389,430  361,152 
Other Current Liabilities 809,214  836,834 
Total Current Liabilities 4,915,012  3,605,563 
Deferred Credits and Other Liabilities:    
Accumulated Deferred Income Taxes 4,095,339  3,755,777 
Regulatory Liabilities 3,850,781  3,658,042 
Derivative Liabilities 294,535  338,710 
Asset Retirement Obligations 499,713  488,511 
Accrued Pension, SERP and PBOP 1,653,788  1,370,245 
Other Long-Term Liabilities 948,506  810,553 
Total Deferred Credits and Other Liabilities 11,342,662  10,421,838 
Long-Term Debt 15,125,876  13,770,828 
Rate Reduction Bonds 496,912  540,122 
Noncontrolling Interest - Preferred Stock of Subsidiaries 155,570  155,570 
Common Shareholders' Equity:    
Common Shares 1,789,092  1,729,292 
Capital Surplus, Paid In 8,015,663  7,087,768 
Retained Earnings 4,613,201  4,177,048 
Accumulated Other Comprehensive Loss (76,411) (65,059)
Treasury Stock (277,979) (299,055)
Common Shareholders' Equity 14,063,566  12,629,994 
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization $ 46,099,598  $ 41,123,915 

The accompanying notes are an integral part of these consolidated financial statements.
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EVERSOURCE ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
  For the Years Ended December 31,
(Thousands of Dollars, Except Share Information) 2020 2019 2018
Operating Revenues $ 8,904,430  $ 8,526,470  $ 8,448,201 
Operating Expenses:      
Purchased Power, Fuel and Transmission 2,987,840  3,040,160  3,138,969 
Operations and Maintenance 1,480,252  1,363,113  1,335,213 
Depreciation 981,380  885,278  819,930 
Amortization 177,679  195,380  252,026 
Energy Efficiency Programs 535,760  501,369  472,380 
Taxes Other Than Income Taxes 752,785  711,035  729,753 
Impairment of Northern Pass Transmission —  239,644  — 
Total Operating Expenses 6,915,696  6,935,979  6,748,271 
Operating Income 1,988,734  1,590,491  1,699,930 
Interest Expense 538,452  533,197  498,805 
Other Income, Net 108,590  132,777  128,366 
Income Before Income Tax Expense 1,558,872  1,190,071  1,329,491 
Income Tax Expense 346,186  273,499  288,972 
Net Income 1,212,686  916,572  1,040,519 
Net Income Attributable to Noncontrolling Interests 7,519  7,519  7,519 
Net Income Attributable to Common Shareholders $ 1,205,167  $ 909,053  $ 1,033,000 
Basic Earnings Per Common Share $ 3.56  $ 2.83  $ 3.25 
Diluted Earnings Per Common Share $ 3.55  $ 2.81  $ 3.25 
Weighted Average Common Shares Outstanding:      
Basic 338,836,147  321,416,086  317,370,369 
Diluted 339,847,062  322,941,636  317,993,934 

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



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Net Income $ 1,212,686  $ 916,572  $ 1,040,519 
Other Comprehensive (Loss)/Income, Net of Tax:      
Qualified Cash Flow Hedging Instruments 1,596  1,393  1,756 
Changes in Unrealized Gains/(Losses) on Marketable Securities 342  1,166  (547)
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans (13,290) (7,618) 5,194 
Other Comprehensive (Loss)/Income, Net of Tax (11,352) (5,059) 6,403 
Comprehensive Income Attributable to Noncontrolling Interests (7,519) (7,519) (7,519)
Comprehensive Income Attributable to Common Shareholders $ 1,193,815  $ 903,994  $ 1,039,403 

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


62


EVERSOURCE ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
  Common Shares Capital
Surplus,
Paid In
Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Common Shareholders' Equity
(Thousands of Dollars, Except Share Information) Shares Amount
Balance as of January 1, 2018 316,885,808  $ 1,669,392  $ 6,239,940  $ 3,561,084  $ (66,403) $ (317,771) $ 11,086,242 
Net Income       1,040,519      1,040,519 
Dividends on Common Shares - $2.02 Per Share
      (640,110)     (640,110)
Dividends on Preferred Stock       (7,519)     (7,519)
Long-Term Incentive Plan Activity     (543)     (543)
Other Changes in Shareholders' Equity     1,825      1,825 
Other Comprehensive Income         6,403    6,403 
Balance as of December 31, 2018 316,885,808  1,669,392  6,241,222  3,953,974  (60,000) (317,771) 11,486,817 
Net Income       916,572      916,572 
Dividends on Common Shares - $2.14 Per Share
      (685,979)     (685,979)
Dividends on Preferred Stock       (7,519)     (7,519)
Issuance of Common Shares - $5 par value
11,980,000  59,900  808,650  868,550 
Long-Term Incentive Plan Activity     3,434        3,434 
Issuance of Treasury Shares 1,014,837    50,758      18,716  69,474 
Capital Stock Expense (16,296) (16,296)
Other Comprehensive Loss         (5,059)   (5,059)
Balance as of December 31, 2019 329,880,645  1,729,292  7,087,768  4,177,048  (65,059) (299,055) 12,629,994 
Net Income       1,212,686      1,212,686 
Dividends on Common Shares - $2.27 Per Share
      (767,500)     (767,500)
Dividends on Preferred Stock       (7,519)     (7,519)
Issuance of Common Shares - $5 par value
11,960,000 59,800 889,860  949,660 
Long-Term Incentive Plan Activity 7,890  7,890 
Issuance of Treasury Shares 1,113,378   50,812      21,076 71,888 
Capital Stock Expense (20,667) (20,667)
Adoption of New Accounting Standard (See Note 1C) (1,514) (1,514)
Other Comprehensive Loss       (11,352)   (11,352)
Balance as of December 31, 2020 342,954,023  $ 1,789,092  $ 8,015,663  $ 4,613,201  $ (76,411) $ (277,979) $ 14,063,566 

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

63


EVERSOURCE ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Activities:      
Net Income $ 1,212,686  $ 916,572  $ 1,040,519 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation 981,380  885,278  819,930 
Deferred Income Taxes 257,154  209,812  174,812 
Uncollectible Expense 53,461  63,446  61,337 
Pension, SERP and PBOP Expense, Net 12,888  22,000  5,498 
Pension and PBOP Contributions (111,524) (121,782) (194,947)
Regulatory (Under)/Over Recoveries, Net (516,411) (124,870) 34,920 
Amortization 177,679  195,380  252,026 
Payments Related to CYAPC's DOE Pre-1983 Spent Nuclear Fuel Obligation —  (29,000) (145,000)
Proceeds from DOE Spent Nuclear Fuel Litigation —  68,840  — 
Impairment of Northern Pass Transmission —  239,644  — 
Other (174,289) (196,087) (111,225)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net (351,843) (98,716) (141,433)
Fuel, Materials, Supplies and REC Inventory (15,404) (8,074) (831)
Taxes Receivable/Accrued, Net 43,819  (16,129) (67,770)
Accounts Payable 122,567  14,866  24,481 
Other Current Assets and Liabilities, Net (9,591) (11,603) 78,226 
Net Cash Flows Provided by Operating Activities 1,682,572  2,009,577  1,830,543 
 
Investing Activities:      
Investments in Property, Plant and Equipment (2,942,996) (2,911,489) (2,569,936)
Proceeds from Sales of Marketable Securities 434,124  566,592  900,749 
Proceeds from Sales of Marketable Securities Used to Pay Pre-1983 Spent Nuclear Fuel Obligation —  —  145,000 
Purchases of Marketable Securities (401,823) (537,258) (908,387)
Acquisition of Assets of Columbia Gas of Massachusetts, Net of Restricted Cash
(1,113,252) —  — 
Investments in Unconsolidated Affiliates, Net (239,673) (416,337) (205,150)
Proceeds from the Sale of Hingham Water System 110,536  —  — 
Proceeds from the Sale of PSNH Generation Assets —  —  193,924 
Other Investing Activities 23,809  24,204  6,754 
Net Cash Flows Used in Investing Activities (4,129,275) (3,274,288) (2,437,046)
Financing Activities:      
Issuance of Common Shares, Net of Issuance Costs 928,992  852,254  — 
Cash Dividends on Common Shares (744,665) (663,239) (640,110)
Cash Dividends on Preferred Stock (7,519) (7,519) (7,519)
Increase/(Decrease) in Notes Payable 13,955  325,370  (379,310)
(Repayments)/Issuance of Rate Reduction Bonds (43,210) (52,332) 635,663 
Issuance of Long-Term Debt 2,760,000  1,520,000  2,200,000 
Retirement of Long-Term Debt (327,236) (801,078) (1,050,330)
Other Financing Activities 14,273  (1,006) (28,457)
Net Cash Flows Provided by Financing Activities 2,594,590  1,172,450  729,937 
Net Increase/(Decrease) in Cash and Restricted Cash 147,887  (92,261) 123,434 
Cash and Restricted Cash - Beginning of Year 117,063  209,324  85,890 
Cash and Restricted Cash - End of Year $ 264,950  $ 117,063  $ 209,324 

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

64



Management’s Report on Internal Controls Over Financial Reporting

The Connecticut Light and Power Company

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

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, CL&P conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2020.

February 17, 2021


65


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying balance sheets of The Connecticut Light and Power Company (the “Company”) as of December 31, 2020 and 2019, the related statements of income, comprehensive income, common stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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

Critical Audit Matter

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

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

Critical Audit Matter Description

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

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

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Company’s operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

66


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

How the Critical Audit Matter Was Addressed in the Audit

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

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.


/s/ Deloitte & Touche LLP

Hartford, Connecticut
February 17, 2021

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


67


THE CONNECTICUT LIGHT AND POWER COMPANY
BALANCE SHEETS
  As of December 31,
(Thousands of Dollars) 2020 2019
ASSETS    
Current Assets:    
Cash $ 90,801  $ — 
Receivables, Net (net of allowance for uncollectible accounts of $157,447 and $97,348 as of December 31, 2020 and 2019, respectively)
459,214  400,927 
Accounts Receivable from Affiliated Companies 17,486  24,577 
Unbilled Revenues 57,407  56,465 
Materials and Supplies 57,924  50,700 
Regulatory Assets 345,622  178,607 
Prepayments and Other Current Assets 83,950  73,184 
Total Current Assets 1,112,404  784,460 
Property, Plant and Equipment, Net 10,234,556  9,625,765 
Deferred Debits and Other Assets:    
Regulatory Assets 1,866,152  1,557,261 
Other Long-Term Assets 242,862  217,705 
Total Deferred Debits and Other Assets 2,109,014  1,774,966 
Total Assets $ 13,455,974  $ 12,185,191 
LIABILITIES AND CAPITALIZATION    
Current Liabilities:    
Notes Payable to Eversource Parent $ —  $ 63,800 
Accounts Payable 451,240  374,698 
Accounts Payable to Affiliated Companies 51,118  97,793 
Obligations to Third Party Suppliers 49,967  56,952 
Regulatory Liabilities 137,166  82,763 
Derivative Liabilities 68,767  67,804 
Other Current Liabilities 102,060  132,339 
Total Current Liabilities 860,318  876,149 
Deferred Credits and Other Liabilities:    
Accumulated Deferred Income Taxes 1,408,343  1,244,551 
Regulatory Liabilities 1,204,942  1,164,991 
Derivative Liabilities 294,535  338,594 
Accrued Pension, SERP and PBOP 478,325  391,159 
Other Long-Term Liabilities 133,690  147,586 
Total Deferred Credits and Other Liabilities 3,519,835  3,286,881 
Long-Term Debt 3,914,835  3,518,136 
Preferred Stock Not Subject to Mandatory Redemption 116,200  116,200 
Common Stockholder's Equity:    
Common Stock 60,352  60,352 
Capital Surplus, Paid In 2,810,765  2,535,765 
Retained Earnings 2,173,367  1,791,392 
Accumulated Other Comprehensive Income 302  316 
Common Stockholder's Equity 5,044,786  4,387,825 
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization $ 13,455,974  $ 12,185,191 

The accompanying notes are an integral part of these financial statements.
68


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Revenues $ 3,547,527  $ 3,232,551  $ 3,096,174 
Operating Expenses:    
Purchased Power and Transmission 1,369,196  1,188,202  1,095,187 
Operations and Maintenance 572,897  549,167  506,448 
Depreciation 320,709  301,188  278,557 
Amortization of Regulatory Assets, Net 58,412  51,621  129,021 
Energy Efficiency Programs 141,453  118,235  93,977 
Taxes Other Than Income Taxes 344,451  342,489  357,147 
Total Operating Expenses 2,807,118  2,550,902  2,460,337 
Operating Income 740,409  681,649  635,837 
Interest Expense 153,547  151,357  151,727 
Other Income, Net 20,774  17,531  22,663 
Income Before Income Tax Expense 607,636  547,823  506,773 
Income Tax Expense 149,702  136,971  129,056 
Net Income $ 457,934  $ 410,852  $ 377,717 

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



STATEMENTS OF COMPREHENSIVE INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Net Income $ 457,934  $ 410,852  $ 377,717 
Other Comprehensive (Loss)/Income, Net of Tax:      
Qualified Cash Flow Hedging Instruments (26) (26) 51 
Changes in Unrealized Gains/(Losses) on Marketable Securities 12  41  (19)
Other Comprehensive (Loss)/Income, Net of Tax (14) 15  32 
Comprehensive Income $ 457,920  $ 410,867  $ 377,749 

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

69


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
  Common Stock Capital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information) Stock Amount
Balance as of January 1, 2018 6,035,205  $ 60,352  $ 2,110,765  $ 1,415,741  $ 269  $ 3,587,127 
Net Income       377,717    377,717 
Dividends on Preferred Stock       (5,559)   (5,559)
Dividends on Common Stock       (60,000)   (60,000)
Capital Contributions from Eversource Parent     300,000      300,000 
Other Comprehensive Income         32  32 
Balance as of December 31, 2018 6,035,205  60,352  2,410,765  1,727,899  301  4,199,317 
Net Income       410,852    410,852 
Dividends on Preferred Stock       (5,559)   (5,559)
Dividends on Common Stock       (341,800)   (341,800)
Capital Contributions from Eversource Parent     125,000      125,000 
Other Comprehensive Income         15  15 
Balance as of December 31, 2019 6,035,205  60,352  2,535,765  1,791,392  316  4,387,825 
Net Income       457,934    457,934 
Dividends on Preferred Stock     (5,559) (5,559)
Dividends on Common Stock     (69,500) (69,500)
Capital Contributions from Eversource Parent     275,000  275,000 
Adoption of New Accounting Standard (See Note 1C) (900) (900)
Other Comprehensive Loss     (14) (14)
Balance as of December 31, 2020 6,035,205  $ 60,352  $ 2,810,765  $ 2,173,367  $ 302  $ 5,044,786 

The accompanying notes are an integral part of these financial statements.
70


THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Activities:      
Net Income $ 457,934  $ 410,852  $ 377,717 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation 320,709  301,188  278,557 
Deferred Income Taxes 144,527  54,005  54,859 
Uncollectible Expense 12,882  15,948  15,831 
Pension, SERP and PBOP Expense, Net 11,372  12,761  8,943 
Pension Contributions (23,200) (24,000) (41,150)
Regulatory Underrecoveries, Net (279,941) (24,653) (53,372)
Amortization of Regulatory Assets, Net 58,412  51,621  129,021 
Other (115,213) (80,266) (69,786)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net (126,638) (52,746) (67,334)
Materials and Supplies (7,225) (6,171) 3,909 
Taxes Receivable/Accrued, Net (12,014) (23,089) 8,954 
Accounts Payable (17,028) 102,344  (76,924)
Other Current Assets and Liabilities, Net (27,504) (11,350) 18,846 
Net Cash Flows Provided by Operating Activities 397,073  726,444  588,071 
Investing Activities:      
Investments in Property, Plant and Equipment (833,973) (917,532) (864,136)
Other Investing Activities 573  714  209 
Net Cash Flows Used in Investing Activities (833,400) (916,818) (863,927)
Financing Activities:      
Cash Dividends on Common Stock (69,500) (341,800) (60,000)
Cash Dividends on Preferred Stock (5,559) (5,559) (5,559)
(Decrease)/Increase in Notes Payable to Eversource Parent (63,800) 63,800  (69,500)
Issuance of Long-Term Debt 400,000  500,000  500,000 
Retirement of Long-Term Debt —  (250,000) (300,000)
Capital Contributions from Eversource Parent 275,000  125,000  300,000 
Other Financing Activities (4,976) 12,291  (7,091)
Net Cash Flows Provided by Financing Activities 531,165  103,732  357,850 
Increase/(Decrease) in Cash and Restricted Cash 94,838  (86,642) 81,994 
Cash and Restricted Cash - Beginning of Year 4,971  91,613  9,619 
Cash and Restricted Cash - End of Year $ 99,809  $ 4,971  $ 91,613 

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


71



Management’s Report on Internal Controls Over Financial Reporting

NSTAR Electric Company

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

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, NSTAR Electric conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2020.

February 17, 2021




















72


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of NSTAR Electric Company and subsidiary (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, common stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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

Critical Audit Matter

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

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

Critical Audit Matter Description

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

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

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Company’s operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

73


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

How the Critical Audit Matter Was Addressed in the Audit

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

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.


/s/ Deloitte & Touche LLP

Hartford, Connecticut
February 17, 2021

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

74


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
  As of December 31,
(Thousands of Dollars) 2020 2019
ASSETS    
Current Assets:    
Cash $ 102  $ 52 
Receivables, Net (net of allowance for uncollectible accounts of $91,583 and $75,406 as of December 31, 2020 and 2019, respectively)
403,045  346,785 
Accounts Receivable from Affiliated Companies 30,095  29,914 
Unbilled Revenues 38,342  37,482 
Materials, Supplies and REC Inventory 133,894  124,060 
Taxes Receivable 65,051  20,408 
Regulatory Assets 399,882  285,591 
Prepayments and Other Current Assets 21,833  10,742 
Total Current Assets 1,092,244  855,034 
Property, Plant and Equipment, Net 10,123,062  9,472,770 
Deferred Debits and Other Assets:    
Regulatory Assets 1,304,019  1,250,029 
Prepaid PBOP 204,138  166,058 
Other Long-Term Assets 162,836  144,368 
Total Deferred Debits and Other Assets 1,670,993  1,560,455 
Total Assets $ 12,886,299  $ 11,888,259 
LIABILITIES AND CAPITALIZATION    
Current Liabilities:    
Notes Payable $ 195,000  $ 10,500 
Notes Payable to Eversource Parent 21,300  30,300 
Long-Term Debt Current Portion
250,000  95,000 
Accounts Payable 383,558  363,691 
Accounts Payable to Affiliated Companies 95,703  96,307 
Obligations to Third Party Suppliers 98,572  108,827 
Renewable Portfolio Standards Compliance Obligations 127,536  150,429 
Regulatory Liabilities 164,761  209,180 
Other Current Liabilities 72,118  71,333 
Total Current Liabilities 1,408,548  1,135,567 
Deferred Credits and Other Liabilities:    
Accumulated Deferred Income Taxes 1,459,906  1,357,265 
Regulatory Liabilities 1,550,390  1,516,585 
Accrued Pension and SERP 172,571  108,243 
Other Long-Term Liabilities 337,245  320,629 
Total Deferred Credits and Other Liabilities 3,520,112  3,302,722 
Long-Term Debt 3,393,221  3,247,086 
Preferred Stock Not Subject to Mandatory Redemption 43,000  43,000 
Common Stockholder's Equity:    
Common Stock —  — 
Capital Surplus, Paid In 1,993,942  1,813,442 
Retained Earnings 2,527,167  2,346,287 
Accumulated Other Comprehensive Income 309  155 
Common Stockholder's Equity 4,521,418  4,159,884 
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization $ 12,886,299  $ 11,888,259 

The accompanying notes are an integral part of these consolidated financial statements.
75


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Revenues $ 2,941,148  $ 3,044,642  $ 3,112,926 
Operating Expenses:      
Purchased Power and Transmission 879,244  1,064,289  1,257,073 
Operations and Maintenance 534,118  468,436  462,100 
Depreciation 319,468  296,500  276,372 
Amortization of Regulatory Assets, Net 83,248  103,735  46,654 
Energy Efficiency Programs 263,986  289,206  292,288 
Taxes Other Than Income Taxes 206,764  195,586  194,316 
Total Operating Expenses 2,286,828  2,417,752  2,528,803 
Operating Income 654,320  626,890  584,123 
Interest Expense 130,508  114,198  105,193 
Other Income, Net 52,017  44,577  53,066 
Income Before Income Tax Expense 575,829  557,269  531,996 
Income Tax Expense 130,828  125,313  148,906 
Net Income $ 445,001  $ 431,956  $ 383,090 

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



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Net Income $ 445,001  $ 431,956  $ 383,090 
Other Comprehensive Income, Net of Tax:      
Changes in Funded Status of SERP Benefit Plan (286) 1,084  13 
Qualified Cash Flow Hedging Instruments 437  437  437 
Changes in Unrealized Gains/(Losses) on Marketable Securities 12  (5)
Other Comprehensive Income, Net of Tax 154  1,533  445 
Comprehensive Income $ 445,155  $ 433,489  $ 383,535 

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


76


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
  Common Stock Capital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss)/Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information) Stock Amount
Balance as of January 1, 2018 200  $ —  $ 1,502,942  $ 1,944,961  $ (1,823) $ 3,446,080 
Net Income       383,090    383,090 
Dividends on Preferred Stock       (1,960)   (1,960)
Dividends on Common Stock       (228,000)   (228,000)
Capital Contributions from Eversource Parent     130,500      130,500 
Other Comprehensive Income         445  445 
Balance as of December 31, 2018 200  —  1,633,442  2,098,091  (1,378) 3,730,155 
Net Income       431,956    431,956 
Dividends on Preferred Stock       (1,960)   (1,960)
Dividends on Common Stock       (181,800)   (181,800)
Capital Contributions from Eversource Parent     180,000      180,000 
Other Comprehensive Income         1,533  1,533 
Balance as of December 31, 2019 200  —  1,813,442  2,346,287  155  4,159,884 
Net Income       445,001    445,001 
Dividends on Preferred Stock       (1,960)   (1,960)
Dividends on Common Stock       (262,000)   (262,000)
Capital Contributions from Eversource Parent     180,500      180,500 
Adoption of New Accounting Standard (See Note 1C) (161) (161)
Other Comprehensive Income         154  154 
Balance as of December 31, 2020 200  $ —  $ 1,993,942  $ 2,527,167  $ 309  $ 4,521,418 

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

77


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Activities:      
Net Income $ 445,001  $ 431,956  $ 383,090 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation 319,468  296,500  276,372 
Deferred Income Taxes 72,595  27,107  41,438 
Pension, SERP and PBOP Income, Net (18,132) (12,399) (21,521)
Pension and PBOP Contributions (650) (6,359) (61,751)
Regulatory (Under)/Over Recoveries, Net (186,081) (60,863) 149,647 
Amortization of Regulatory Assets, Net 83,248  103,735  46,654 
Uncollectible Expense 15,293  25,079  22,279 
Other (62,054) (78,220) (65,523)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net (81,571) (11,087) (26,403)
Materials, Supplies and REC Inventory (9,834) (9,858) (18,685)
Taxes Receivable/Accrued, Net (44,045) 14,147  (33,900)
Accounts Payable 25,573  (22,659) 37,140 
Other Current Assets and Liabilities, Net (32,997) 1,194  51,674 
Net Cash Flows Provided by Operating Activities 525,814  698,273  780,511 
Investing Activities:      
Investments in Property, Plant and Equipment (907,000) (861,391) (725,766)
Other Investing Activities 159  86  58 
Net Cash Flows Used in Investing Activities (906,841) (861,305) (725,708)
Financing Activities:      
Cash Dividends on Common Stock (262,000) (181,800) (228,000)
Cash Dividends on Preferred Stock (1,960) (1,960) (1,960)
Increase/(Decrease) in Short-Term Debt 184,500  (268,000) 44,500 
(Decrease)/Increase in Notes Payable to Eversource Parent (9,000) 30,300  — 
Capital Contributions from Eversource Parent 180,500  180,000  130,500 
Issuance of Long-Term Debt 400,000  400,000  — 
Retirement of Long-Term Debt (95,000) —  — 
Other Financing Activities (4,915) (3,855) 108 
Net Cash Flows Provided by/(Used in) Financing Activities 392,125  154,685  (54,852)
Net Increase/(Decrease) in Cash and Restricted Cash 11,098  (8,347) (49)
Cash and Restricted Cash - Beginning of Year 6,312  14,659  14,708 
Cash and Restricted Cash - End of Year $ 17,410  $ 6,312  $ 14,659 

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

78



Management’s Report on Internal Controls Over Financial Reporting

Public Service Company of New Hampshire

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

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

Under the supervision and with the participation of the principal executive officer and principal financial officer, PSNH conducted an evaluation of the effectiveness of internal controls over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting were effective as of December 31, 2020.


February 17, 2021
79


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Public Service Company of New Hampshire and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, common stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 of Part IV (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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

Critical Audit Matter

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

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

Critical Audit Matter Description

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

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

The Company uses judgment when recording regulatory assets and liabilities; however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements. Management believes it is probable that the Company will recover its investment in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Company’s operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

80


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

How the Critical Audit Matter Was Addressed in the Audit

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

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.


/s/ Deloitte & Touche LLP

Hartford, Connecticut
February 17, 2021

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


81


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  As of December 31,
(Thousands of Dollars) 2020 2019
ASSETS    
Current Assets:    
Cash $ 141  $ 413 
Receivables, Net (net of allowance for uncollectible accounts of $17,157 and $10,497 as of December 31, 2020 and 2019, respectively)
119,899  99,934 
Accounts Receivable from Affiliated Companies 10,925  6,763 
Unbilled Revenues 46,041  48,146 
Materials, Supplies and REC Inventory 26,829  24,957 
Regulatory Assets 115,852  84,053 
Special Deposits 36,767  32,513 
Prepaid Property Taxes 26,257  15,768 
Prepayments and Other Current Assets 10,788  3,663 
Total Current Assets 393,499  316,210 
Property, Plant and Equipment, Net 3,374,270  3,129,506 
Deferred Debits and Other Assets:    
Regulatory Assets 873,203  861,672 
Other Long-Term Assets 23,733  43,270 
Total Deferred Debits and Other Assets 896,936  904,942 
Total Assets $ 4,664,705  $ 4,350,658 
LIABILITIES AND CAPITALIZATION    
Current Liabilities:    
Notes Payable to Eversource Parent $ 46,300  $ 27,000 
Long-Term Debt Current Portion
282,000  — 
Rate Reduction Bonds Current Portion
43,210  43,210 
Accounts Payable 132,635  127,081 
Accounts Payable to Affiliated Companies 43,397  37,946 
Regulatory Liabilities 58,756  65,766 
Accrued Interest 19,671  19,138 
Other Current Liabilities 38,816  32,736 
Total Current Liabilities 664,785  352,877 
Deferred Credits and Other Liabilities:    
Accumulated Deferred Income Taxes 537,627  506,212 
Regulatory Liabilities 383,183  413,381 
Accrued Pension, SERP and PBOP 184,715  157,638 
Other Long-Term Liabilities 37,874  37,075 
Total Deferred Credits and Other Liabilities 1,143,399  1,114,306 
Long-Term Debt 817,070  951,620 
Rate Reduction Bonds 496,912  540,122 
Common Stockholder's Equity:    
Common Stock —  — 
Capital Surplus, Paid In 928,134  903,134 
Retained Earnings 615,018  490,306 
Accumulated Other Comprehensive Loss (613) (1,707)
Common Stockholder's Equity 1,542,539  1,391,733 
Commitments and Contingencies (Note 13)
Total Liabilities and Capitalization $ 4,664,705  $ 4,350,658 

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

82


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Revenues $ 1,079,095  $ 1,065,936  $ 1,047,619 
Operating Expenses:      
Purchased Power and Transmission 364,067  398,449  370,246 
Operations and Maintenance 219,325  210,995  210,541 
Depreciation 100,372  93,737  92,055 
Amortization of Regulatory Assets, Net 52,804  57,732  80,978 
Energy Efficiency Programs 37,583  25,982  20,105 
Taxes Other Than Income Taxes 81,611  62,574  77,280 
Total Operating Expenses 855,762  849,469  851,205 
Operating Income 223,333  216,467  196,414 
Interest Expense 58,127  60,666  60,634 
Other Income, Net 13,786  19,222  27,672 
Income Before Income Tax Expense 178,992  175,023  163,452 
Income Tax Expense 31,680  40,975  47,576 
Net Income $ 147,312  $ 134,048  $ 115,876 

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



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Net Income $ 147,312  $ 134,048  $ 115,876 
Other Comprehensive Income, Net of Tax:      
Qualified Cash Flow Hedging Instruments 1,075  1,075  1,104 
Changes in Unrealized Gains/(Losses) on Marketable Securities 19  69  (33)
Other Comprehensive Income, Net of Tax 1,094  1,144  1,071 
Comprehensive Income $ 148,406  $ 135,192  $ 116,947 

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


83


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
  Common Stock Capital
Surplus,
Paid In
Retained
Earnings
Accumulated Other
Comprehensive
Loss
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information) Stock Amount
Balance as of January 1, 2018 301  $ —  $ 843,134  $ 511,382  $ (3,922) $ 1,350,594 
Net Income       115,876    115,876 
Return of Capital     (530,000)     (530,000)
Capital Contributions from Eversource Parent 365,000 365,000 
Other Comprehensive Income         1,071  1,071 
Balance as of December 31, 2018 301  —  678,134  627,258  (2,851) 1,302,541 
Net Income       134,048    134,048 
Dividends on Common Stock       (271,000)   (271,000)
Capital Contributions from Eversource Parent 225,000  225,000 
Other Comprehensive Income         1,144  1,144 
Balance as of December 31, 2019 301  —  903,134  490,306  (1,707) 1,391,733 
Net Income       147,312    147,312 
Dividends on Common Stock     (22,300)   (22,300)
Capital Contributions from Eversource Parent 25,000  25,000 
Adoption of New Accounting Standard (See Note 1C) (300) (300)
Other Comprehensive Income         1,094  1,094 
Balance as of December 31, 2020 301  $ —  $ 928,134  $ 615,018  $ (613) $ 1,542,539 

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

84


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,
(Thousands of Dollars) 2020 2019 2018
Operating Activities:      
Net Income $ 147,312  $ 134,048  $ 115,876 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Depreciation 100,372  93,737  92,055 
Deferred Income Taxes 7,337  15,917  35,924 
Uncollectible Expense 5,164  6,726  6,383 
Pension, SERP and PBOP (Income)/Expense, Net (1,255) 417  754 
Pension Contributions (19,500) (15,400) — 
Regulatory Underrecoveries, Net (45,830) (26,288) (27,264)
Amortization of Regulatory Assets, Net 52,804  57,732  80,978 
Other (4,842) (28,228) (15,363)
Changes in Current Assets and Liabilities:      
Receivables and Unbilled Revenues, Net (33,612) (210) (19,307)
Materials, Supplies and REC Inventory (1,872) 1,902  16,928 
Taxes Receivable/Accrued, Net (6,942) 25,374  (19,970)
Accounts Payable 27,270  12,281  (10,147)
Other Current Assets and Liabilities, Net (7,738) (3,573) 3,028 
Net Cash Flows Provided by Operating Activities 218,668  274,435  259,875 
Investing Activities:      
Investments in Property, Plant and Equipment (342,586) (308,993) (323,910)
Proceeds from the Sale of Generation Assets —  —  193,924 
Proceeds from the Sale of Property —  —  4,782 
Other Investing Activities 982  1,023  437 
Net Cash Flows Used in Investing Activities (341,604) (307,970) (124,767)
Financing Activities:      
Cash Dividends on Common Stock (22,300) (271,000) (150,000)
Increase/(Decrease) in Notes Payable to Eversource Parent 19,300  (30,000) (205,900)
Issuance of Long-Term Debt 150,000  300,000  — 
Retirement of Long-Term Debt —  (150,000) (199,250)
(Repayment)/Issuance of Rate Reduction Bonds (43,210) (52,332) 635,663 
Return of Capital —  —  (530,000)
Capital Contributions from Eversource Parent 25,000  225,000  365,000 
Other Financing Activities (2,987) (4,168) (89)
Net Cash Flows Provided by/(Used in) Financing Activities 125,803  17,500  (84,576)
Net Increase/(Decrease) in Cash and Restricted Cash 2,867  (16,035) 50,532 
Cash and Restricted Cash - Beginning of Year 36,688  52,723  2,191 
Cash and Restricted Cash - End of Year $ 39,555  $ 36,688  $ 52,723 

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


85


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

COMBINED NOTES TO FINANCIAL STATEMENTS

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

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.     About Eversource, CL&P, NSTAR Electric and PSNH
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business.  Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and Eversource Gas Company of Massachusetts (EGMA) (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.3 million electric, natural gas and water customers through nine regulated utilities in Connecticut, Massachusetts and New Hampshire.  

On October 9, 2020, Eversource completed the acquisition of certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA). The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. The cash purchase price was $1.1 billion, plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date that has not yet been finalized. Eversource's consolidated financial information includes the results of EGMA beginning from the date of acquisition on October 9, 2020. See Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," for further information.

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

CL&P, NSTAR Electric and PSNH furnish franchised retail electric service in Connecticut, Massachusetts and New Hampshire.  NSTAR Gas and EGMA are engaged in the distribution and sale of natural gas to customers within Massachusetts and Yankee Gas is engaged in the distribution and sale of natural gas to customers within Connecticut. Aquarion is engaged in the collection, treatment and distribution of water in Connecticut, Massachusetts and New Hampshire. CL&P, NSTAR Electric and PSNH's results include the operations of their respective distribution and transmission businesses. The distribution business also includes the results of NSTAR Electric's solar power facilities and PSNH's generation facilities prior to sale in 2018. PSNH completed the sales of all its thermal and hydroelectric generation assets in 2018.

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

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

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

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

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

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In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric, which are not owned by Eversource or its consolidated subsidiaries and are not subject to mandatory redemption, have been presented as noncontrolling interests in the financial statements of Eversource.  The Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities and permanent shareholders' equity on the balance sheets of Eversource, CL&P and NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR Electric Boards of Directors, respectively, should certain conditions exist, such as if preferred dividends are in arrears for a specified amount of time.  The Net Income reported in the statements of income and cash flows represents net income prior to apportionment to noncontrolling interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric.

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

COVID-19 has adversely affected workers and the economy and caused volatility in the financial markets. Due to the inherent uncertainty of the unprecedented and evolving situation, we continue to closely monitor how COVID-19 related developments affect Eversource. Based on available information, we have not experienced significant impacts directly related to the pandemic that have adversely affected our current operations or results of operations. The extent of the impact to us in the future will vary and depend in large part on the duration, scope and severity of the pandemic and the timing and extent of COVID-19 relief legislation, and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of planned proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19.

We believe that we have in place, or are developing, successful mechanisms with our state regulatory commissions that allow, or will allow, us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. See Note 1F, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for discussion of our evaluation of the allowance for doubtful accounts as of December 31, 2020 in light of the COVID-19 pandemic.

An extended economic slowdown has resulted in lower demand for electricity, natural gas and/or water by our commercial and industrial customers. However, fluctuations in retail sales volumes for CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas, EGMA, and our Connecticut water distribution business do not materially impact earnings due to their respective state regulatory commission-approved distribution revenue decoupling mechanisms.

As of December 31, 2020, we did not identify indicators or triggering events for impairments to our goodwill, long-lived assets, available-for-sale debt securities, or equity method investment carrying values.

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

As of December 31, 2020 and 2019, Eversource's carrying amount of goodwill was approximately $4.45 billion and $4.43 billion, respectively. Eversource performs an assessment for possible impairment of its goodwill at least annually.  Eversource completed its annual goodwill impairment assessment for each of its reporting units as of October 1, 2020 and determined that no impairment exists.  See Note 25, "Goodwill," for further information.

C.     Accounting Standards
Accounting Standards Issued but Not Yet Effective: In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The guidance is effective in the first quarter of 2021. The ASU is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric and PSNH.

Accounting Standards Recently Adopted: On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides a model for recognizing credit losses on financial instruments based on an estimate of current expected losses, requiring immediate recognition of credit losses expected over the life of a financial instrument. The Company determined the impacts of this standard on the allowance for credit losses on its financial instruments, primarily accounts receivable.  As of January 1, 2020, the Company recorded increases to the allowance for uncollectible accounts for late fees and other receivable amounts of $1.6 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, respectively. The impact to retained earnings, net of tax, was $1.5 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, respectively.

The Company also adjusted the allowance for uncollectible amounts of hardship receivables and other low-income assistance programs, which are ultimately collectible in rates at specified points in time under approved regulatory mechanisms. The impact on the allowance, which was offset in other long-term assets on the balance sheets, was an increase of $22.2 million and $21.3 million at Eversource and CL&P, respectively, and a decrease of $1.5 million at NSTAR Electric as of January 1, 2020. See Note 1F, “Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts,” for further information.

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The Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment as of January 1, 2020. The ASU simplified the accounting for goodwill impairment by removing a complex step in the goodwill impairment test. Under the guidance, goodwill impairment is measured as the amount by which its carrying value exceeds its fair value. The ASU did not have an impact on the financial statements of Eversource.

On January 1, 2020, the Company adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU aligned the requirements for capitalizing costs incurred to implement a cloud computing arrangement with existing internal-use software guidance. The prospective implementation of this standard did not have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric or PSNH for the year ended December 31, 2020.

On January 1, 2020, the Company prospectively adopted ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modified fair value disclosure requirements. The standard includes new disclosure requirements for Level 3 unobservable inputs and eliminated the requirement to disclose certain information relating to transfers between levels. The modified disclosures are included in Note 1I, “Summary of Significant Accounting Policies - Fair Value Measurements,” and Note 4, “Derivative Instruments.”

The Company adopted ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General, Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans as of January 1, 2020. The guidance eliminated certain disclosures about defined benefit plans, added new disclosures, and clarified other requirements. This guidance is effective for fiscal years ending after December 15, 2020. Adoption of this guidance did not have a material effect on our annual financial statement disclosures. The modified disclosures are included in Note 11A, “Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pension.”

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

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

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

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

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

Receivables, net of reserves, increased $206.5 million ($58.3 million at CL&P, $56.3 million at NSTAR Electric, and $20.0 million at PSNH) in 2020, as compared to 2019, due primarily to an increase in delinquent receivables from customers attributable to the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic. Receivables, net of reserves, also increased due to the addition of EGMA of $65.8 million as of December 31, 2020.

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

As of December 31, 2020, management evaluated the adequacy of the allowance for uncollectible accounts in light of the COVID-19 pandemic and the related economic downturn. This evaluation included an analysis of collection and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and some lower cash collections from customers because of the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic. Based upon the evaluation performed, for the year ended December 31, 2020, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $31.5 million for Eversource ($2.8 million for CL&P, $11.0 million for NSTAR Electric, $2.3 million for PSNH and $15.4 million at our natural gas businesses). These COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in rates.

Management concluded that the reserve balance as of December 31, 2020 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.

The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively.  The DPU allows NSTAR Electric and NSTAR Gas to recover in rates, amounts associated with certain uncollectible hardship accounts receivable. Management also believes that uncollectible hardship accounts receivable at EGMA will be recoverable in future rates. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. As a result of the adoption of ASU 2016-13, management aligned the allowance for uncollectible hardship accounts across all regulatory jurisdictions, using a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. Implementation impacts of the accounting standard on the allowance for uncollectible hardship accounts are reflected in the rollforward of the uncollectible allowance in the table below. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.  
 
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment is as follows:
As of December 31, 2020
Eversource CL&P NSTAR Electric PSNH
(Millions of Dollars) Hardship Accounts Retail (Non-Hardship),
Wholesale, and Other Receivables
Total Allowance Hardship Accounts Retail (Non-Hardship),
Wholesale and Other Receivables
Total Allowance Hardship Accounts Retail (Non-Hardship),
Wholesale, and Other Receivables
Total Allowance Total Allowance
Beginning Balance $ 143.3  $ 81.5  $ 224.8  $ 80.1  $ 17.2  $ 97.3  $ 43.9  $ 31.5  $ 75.4  $ 10.5 
ASU 2016-13 Implementation Impact on January 1, 2020 21.6  2.2  23.8  21.3  0.9  22.2  (1.6) 0.3  (1.3) 0.3 
Increase due to CMA asset acquisition —  24.2  24.2  —  —  —  —  —  —  — 
Uncollectible Expense (1)
—  53.5  53.5  —  12.9  12.9  —  15.3  15.3  5.2 
Uncollectible Costs Deferred (2)
43.1  53.9  97.0  38.2  10.8  49.0  (1.7) 26.4  24.7  7.4 
Write-Offs (14.7) (63.3) (78.0) (11.9) (17.8) (29.7) (0.9) (26.3) (27.2) (6.9)
Recoveries Collected 1.5  12.1  13.6  1.4  4.3  5.7  —  4.7  4.7  0.7 
Ending Balance $ 194.8  $ 164.1  $ 358.9  $ 129.1  $ 28.3  $ 157.4  $ 39.7  $ 51.9  $ 91.6  $ 17.2 

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(1) Uncollectible expense associated with customer and other accounts receivable is included in Operations and Maintenance expense on the statements of income. For the years ended December 31, 2019 and 2018, uncollectible expense included in Operations and Maintenance Expense was $63.4 million and $61.3 million for Eversource, $15.9 million and $15.8 million for CL&P, $25.1 million and $22.3 million for NSTAR Electric and $6.7 million and $6.4 million for PSNH, respectively.

(2) The current period provision for expected credit losses is deferred as a regulatory cost on the balance sheets, as this amount is ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to COVID-19.

G.    Transfer of Energy Efficiency Loans
CL&P has transferred a portion of its energy efficiency customer loan portfolio to outside lenders in order to make additional loans to customers.  CL&P remains the servicer of the loans and will transmit customer payments to the lenders, with a maximum amount outstanding under this program of $55 million.  The amounts of the loans are included in Accounts Receivable, Net and Other Long-Term Assets, and are offset by Other Current Liabilities and Other Long-Term Liabilities on CL&P’s balance sheet. The current and long-term portions totaled $12.9 million and $9.5 million, respectively, as of December 31, 2020, and $16.5 million and $18.2 million, respectively, as of December 31, 2019.

H.     Fuel, Materials, Supplies and REC Inventory
Fuel, Materials, Supplies and REC Inventory include natural gas inventory, materials and supplies purchased primarily for construction or operation and maintenance purposes, and RECs.  Inventory is valued at the lower of cost or net realizable value. RECs are purchased from suppliers of renewable sources of generation and are used to meet state mandated Renewable Portfolio Standards requirements.  The carrying amounts of fuel, materials and supplies, and RECs, which are included in Current Assets on the balance sheets, were as follows:
  As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Fuel $ 38.2  $ —  $ —  $ —  $ 26.7  $ —  $ —  $ — 
Materials and Supplies 151.3  57.9  62.1  22.5  132.9  50.7  54.7  18.5 
RECs 76.1  —  71.8  4.3  75.9  —  69.4  6.5 
Total $ 265.6  $ 57.9  $ 133.9  $ 26.8  $ 235.5  $ 50.7  $ 124.1  $ 25.0 

I.     Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" (normal) and to the marketable securities held in trusts.  Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, and AROs, and in the valuation of the acquisition of CMA in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.

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

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

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

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

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

Determination of Fair Value:  The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," Note 6, "Investments in Unconsolidated Affiliates," Note 7, "Asset Retirement Obligations," Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," Note 15, "Fair Value of Financial Instruments," Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," and Note 25, “Goodwill,” to the financial statements.

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J.     Derivative Accounting
Many of the electric and natural gas companies' contracts for the purchase and sale of energy or energy-related products are derivatives.  The accounting treatment for energy contracts entered into varies and depends on the intended use of the particular contract and on whether or not the contract is a derivative.  

The application of derivative accounting is complex and requires management judgment in the following respects: identification of derivatives and embedded derivatives, election and designation of a contract as normal, and determination of the fair value of derivative contracts.  All of these judgments can have a significant impact on the financial statements.  The judgment applied in the election of a contract as normal (and resulting accrual accounting) includes the conclusion that it is probable at the inception of the contract and throughout its term that it will result in physical delivery of the underlying product and that the quantities will be used or sold by the business in the normal course of business.  If facts and circumstances change and management can no longer support this conclusion, then a contract cannot be considered normal, accrual accounting is terminated, and fair value accounting is applied prospectively.  

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

Regulatory assets or regulatory liabilities are recorded to offset the fair values of derivative contracts related to energy and energy-related products, as contract settlements are recovered from, or refunded to, customers in future rates. All changes in the fair value of derivative contracts are recorded as regulatory assets or liabilities and do not impact net income.

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

K.     Operating Expenses
Costs related to fuel and natural gas included in Purchased Power, Fuel and Transmission on the statements of income were as follows:
  For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
Eversource - Natural Gas and Fuel $ 464.2  $ 462.1  $ 442.6 
PSNH - Fuel (1)
—  —  7.9 

(1) PSNH completed the sale of its generation assets in 2018.

L.     Allowance for Funds Used During Construction
AFUDC represents the cost of borrowed and equity funds used to finance construction and is included in the cost of the electric, natural gas and water companies' utility plant on the balance sheet.  The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Interest Expense, and the AFUDC related to equity funds is recorded as Other Income, Net on the statements of income.  AFUDC costs are recovered from customers over the service life of the related plant in the form of increased revenue collected as a result of higher depreciation expense.

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

AFUDC costs and the weighted-average AFUDC rates were as follows:
Eversource For the Years Ended December 31,
(Millions of Dollars, except percentages) 2020 2019 2018
Borrowed Funds $ 23.7  $ 25.6  $ 19.7 
Equity Funds 42.0  45.0  44.0 
Total AFUDC $ 65.7  $ 70.6  $ 63.7 
Average AFUDC Rate 5.0  % 5.4  % 4.9  %
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars,
except percentages)
CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Borrowed Funds $ 6.6  $ 9.1  $ 2.1  $ 7.1  $ 10.4  $ 2.8  $ 6.3  $ 7.8  $ 1.3 
Equity Funds 13.8  21.5  4.2  13.2  19.8  3.4  12.2  15.6  — 
Total AFUDC $ 20.4  $ 30.6  $ 6.3  $ 20.3  $ 30.2  $ 6.2  $ 18.5  $ 23.4  $ 1.3 
Average AFUDC Rate 5.9  % 5.7  % 4.7  % 6.3  % 5.7  % 4.6  % 5.8  % 5.0  % 0.7  %

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M.     Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
Eversource For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
Pension, SERP and PBOP Non-Service Income Components $ 44.4  $ 31.3  $ 60.8 
AFUDC Equity 42.0  45.0  44.0 
Equity in Earnings of Unconsolidated Affiliates (1)
14.2  42.2  3.8 
Investment Income/(Loss) 1.1  0.8  (4.0)
Interest Income 4.8  12.8  18.1 
Gains on Sales of Property 1.8  0.3  5.1 
Other 0.3  0.4  0.6 
Total Other Income, Net $ 108.6  $ 132.8  $ 128.4 
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Pension, SERP and PBOP Non-Service
Income Components
$ 3.8  $ 29.3  $ 7.0  $ 0.5  $ 23.5  $ 4.9  $ 9.5  $ 36.0  $ 9.9 
AFUDC Equity 13.8  21.5  4.2  13.2  19.8  3.4  12.2  15.6  — 
Equity in Earnings of Unconsolidated Affiliates —  0.4  —  0.1  0.7  —  0.1  0.7  — 
Investment Income/(Loss) 1.1  (0.8) 0.1  2.3  (0.4) 0.3  (3.0) (0.5) (0.8)
Interest Income 2.0  0.9  2.4  1.5  0.7  10.5  3.7  0.8  14.1 
Gains on Sales of Property —  0.3  —  —  0.1  —  —  0.5  4.4 
Other 0.1  0.4  0.1  (0.1) 0.2  0.1  0.2  —  0.1 
Total Other Income, Net $ 20.8  $ 52.0  $ 13.8  $ 17.5  $ 44.6  $ 19.2  $ 22.7  $ 53.1  $ 27.7 

(1)    Equity in earnings of unconsolidated affiliates includes other-than-temporary impairments of $2.8 million related to a write-off of an investment within a renewable energy fund, and $32.9 million of the Access Northeast project investment for the years ended December 31, 2020 and 2018, respectively. See Note 6, "Investments in Unconsolidated Affiliates," for further information. Equity in earnings includes $2.4 million of primarily realized gains, and $20.4 million and $17.6 million of pre-tax unrealized gains, for the years ended December 31, 2020, 2019 and 2018, respectively, associated with an equity method investment in a renewable energy fund.

N.     Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are recorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
  For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
Eversource $ 170.6  $ 163.1  $ 161.9 
CL&P 149.9  141.1  141.4 

Separate from above were amounts recorded as Taxes Other Than Income Taxes at CL&P related to the remittance to the State of Connecticut of energy efficiency funds collected from customers of $21.4 million and $46.8 million in 2019 and 2018, respectively. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. These amounts were recorded separately, with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the Eversource and CL&P statements of income.

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

O.     Supplemental Cash Flow Information
Eversource
(Millions of Dollars)
As of and For the Years Ended December 31,
2020 2019 2018
Cash Paid During the Year for:      
Interest, Net of Amounts Capitalized $ 518.0  $ 532.4  $ 503.2 
Income Taxes 48.9  56.0  158.8 
Non-Cash Investing Activities:    
Plant Additions Included in Accounts Payable (As of) 367.2  379.4  389.3 
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  As of and For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Cash Paid During the Year for:                  
Interest, Net of Amounts Capitalized $ 149.0  $ 129.4  $ 54.5  $ 144.6  $ 121.9  $ 56.9  $ 149.7  $ 122.1  $ 40.5 
Income Taxes 10.9  110.7  34.2  80.6  77.9  3.4  66.1  120.0  27.3 
Non-Cash Investing Activities:                  
Plant Additions Included in Accounts Payable (As of) 101.8  103.2  33.3  111.3  116.4  49.9  106.1  116.5  35.1 

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

The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows:
As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Cash as reported on the Balance Sheets $ 106.6  $ 90.8  $ 0.1  $ 0.1  $ 15.4  $ —  $ 0.1  $ 0.4 
Restricted cash included in:
Special Deposits 73.6  8.7  17.2  36.8  52.5  4.6  6.2  32.5 
Marketable Securities 41.2  0.3  0.1  0.6  46.0  0.4  —  0.6 
Other Long-Term Assets 43.6  —  —  2.1  3.2  —  —  3.2 
Cash and Restricted Cash reported on the
Statements of Cash Flows
$ 265.0  $ 99.8  $ 17.4  $ 39.6  $ 117.1  $ 5.0  $ 6.3  $ 36.7 

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

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

As of both December 31, 2020 and 2019, CL&P, NSTAR Electric and PSNH had long-term receivables from Eversource Service in the amounts of $25.0 million, $5.5 million and $3.8 million, respectively, which were included in Other Long-Term Assets on the balance sheets. These amounts related to the funding of investments held in trust by Eversource Service in connection with certain postretirement benefits for CL&P, NSTAR Electric and PSNH employees and have been eliminated in consolidation on the Eversource financial statements.  

Included in the CL&P, NSTAR Electric and PSNH balance sheets as of December 31, 2020 and 2019 were Accounts Receivable from Affiliated Companies and Accounts Payable to Affiliated Companies relating to transactions between CL&P, NSTAR Electric and PSNH and other subsidiaries that are wholly-owned by Eversource.  These amounts have been eliminated in consolidation on the Eversource financial statements.

The Eversource Energy Foundation is an independent not-for-profit charitable entity and is not included in the consolidated financial statements of Eversource as the Company does not have title to, and cannot receive contributions back from, the Eversource Energy Foundation's assets. Eversource made contributions to the Eversource Energy Foundation of $6.4 million in 2020 and did not make any contributions in 2019 or 2018.


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2.     REGULATORY ACCOUNTING

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

The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities.  Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates.  Regulatory assets are amortized as the incurred costs are recovered through customer rates.  Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.

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

Regulatory Assets:  The components of regulatory assets were as follows:
  As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Benefit Costs $ 2,794.2  $ 632.3  $ 690.0  $ 267.6  $ 2,382.9  $ 539.0  $ 629.8  $ 218.2 
Income Taxes, Net 747.1  458.9  110.4  15.2  725.8  458.8  108.0  12.8 
Securitized Stranded Costs 522.1  —  —  522.1  565.3  —  —  565.3 
Storm Restoration Costs, Net 765.6  515.1  186.4  64.1  540.6  274.6  200.6  65.4 
Regulatory Tracker Mechanisms 850.5  246.6  332.2  95.3  411.5  78.3  207.1  65.8 
Derivative Liabilities 296.3  293.1  —  —  334.5  329.2  —  — 
Goodwill-related 314.7  —  270.2  —  331.5  —  284.6  — 
Asset Retirement Obligations 118.4  32.1  58.6  3.9  97.2  30.8  50.3  3.6 
Other Regulatory Assets 161.0  33.7  56.1  20.9  125.4  25.2  55.2  14.7 
Total Regulatory Assets 6,569.9  2,211.8  1,703.9  989.1  5,514.7  1,735.9  1,535.6  945.8 
Less:  Current Portion 1,076.6  345.6  399.9  115.9  651.1  178.6  285.6  84.1 
Total Long-Term Regulatory Assets $ 5,493.3  $ 1,866.2  $ 1,304.0  $ 873.2  $ 4,863.6  $ 1,557.3  $ 1,250.0  $ 861.7 

Benefit Costs:  Eversource's Pension, SERP and PBOP Plans are accounted for in accordance with accounting guidance on defined benefit pension and other PBOP plans.  The liability (or asset) recorded by the regulated companies to recognize the funded status of their retiree benefit plans is offset by a regulatory asset (or offset by a regulatory liability in the case of a benefit plan asset) in lieu of a charge to Accumulated Other Comprehensive Income/(Loss), reflecting ultimate recovery from customers through rates.  The regulatory asset (or regulatory liability) is amortized as the actuarial gains and losses and prior service cost are amortized to net periodic benefit cost for the pension and PBOP plans.  All amounts are remeasured annually.  Regulatory accounting is also applied to the portions of Eversource's service company costs that support the regulated companies, as these amounts are also recoverable.  As these regulatory assets or regulatory liabilities do not represent a cash outlay for the regulated companies, no carrying charge is recovered from customers. See Note 11A, "Employee Benefits - Pension Benefits and Postretirement Benefits Other Than Pension," for further information on regulatory benefit plan amounts recognized and amortized during the year.

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

Income Taxes, Net:  The tax effect of temporary book-tax differences (differences between the periods in which transactions affect income in the financial statements and the periods in which they affect the determination of taxable income, including those differences relating to uncertain tax positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and accounting guidance for income taxes.  Differences in income taxes between the accounting guidance and the rate-making treatment of the applicable regulatory commissions are recorded as regulatory assets.  As these assets are offset by deferred income tax liabilities, no carrying charge is collected.  The amortization period of these assets varies depending on the nature and/or remaining life of the underlying assets and liabilities.  For further information regarding income taxes, see Note 12, "Income Taxes," to the financial statements.  

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

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Storm Restoration Costs, Net: The storm restoration cost deferrals relate to costs incurred for storm events at CL&P, NSTAR Electric and PSNH that each company expects to recover from customers.  A storm must meet certain criteria to qualify for deferral and recovery with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies for recovery, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. Costs for storms that do not meet the specific criteria are expensed as incurred. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover pre-staging storm costs. Management believes storm restoration costs deferred were prudently incurred and meet the criteria for specific cost recovery in Connecticut, Massachusetts and New Hampshire, and that recovery from customers is probable through the applicable regulatory recovery processes. Each electric utility company either recovers a carrying charge on its deferred storm restoration cost regulatory asset balance or the regulatory asset balance is included in rate base. Of the total deferred storm restoration costs, $591 million is either pending regulatory approval or has yet to be filed with the applicable regulatory commission (including $390 million at CL&P, $166 million at NSTAR Electric and $35 million at PSNH).

Storm Event: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant amounts and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA has opened an investigation into CL&P's response to Tropical Storm Isaias.  PURA will also investigate the prudence of costs incurred by CL&P to restore service as part of its response.  CL&P is fully participating in PURA’s investigations and believes that these storm restoration costs were prudently incurred and meet the criteria for cost recovery.  As a result, management does not expect the storm costs to have a material impact on the results of operations of Eversource or CL&P.

Based on current estimates, the storm resulted in deferred storm restoration costs on our balance sheets of approximately $228 million at CL&P and $245 million at Eversource as of December 31, 2020. The estimated cost of restoration will change as additional cost information becomes available, final storm costs are deferred or capitalized, and post-storm restoration work is completed. The majority of incremental storm costs relate to third-party vendors that are external field crews needed to restore power and address municipal priorities. CL&P’s current estimate of total storm costs includes its projection of the cost of such vendors, but that estimate will change as CL&P receives and examines all storm related invoices.

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

CL&P, NSTAR Electric and PSNH each recover, on a fully reconciling basis, the costs associated with the procurement of energy, transmission related costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, certain uncollectible accounts receivable for hardship customers, and restructuring and stranded costs as a result of deregulation (including securitized RRB charges), and additionally for the Massachusetts utilities, pension and PBOP benefits and net metering for distributed generation. Energy procurement costs at NSTAR Electric include the costs related to its solar power facilities.

CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas and EGMA each have a regulatory commission approved revenue decoupling mechanism. Distribution revenues are decoupled from customer sales volumes, where applicable, which breaks the relationship between sales volumes and revenues.  Each company reconciles its annual base distribution rate recovery amount to the pre-established levels of baseline distribution delivery service revenues. Any difference between the allowed level of distribution revenue and the actual amount realized during a 12-month period is adjusted through rates in the following period. 

CL&P Rate Suspension: On July 31, 2020, PURA temporarily suspended its June 26, 2020 approval of certain delivery rate components effective July 1, 2020, and ordered CL&P to restore rates to those in effect as of June 30, 2020 in order to allow PURA time to reexamine the rates to ensure that CL&P is not over-collecting revenues in the short-term. Rates were adjusted effective August 1, 2020. On December 2, 2020, PURA issued a final decision in which it adjusted the timing of the annual rate adjustments for the Revenue Decoupling Mechanism Charge, the Transmission Adjustment Clause charge, the Non-Bypassable Federally Mandated Congestion Charge, and the Electric System Improvements Tracker so that these rates take effect on May 1st of each year, as opposed to the current process of adjusting rates each January 1 and July 1. The temporary suspension of rates has resulted in a current period under-recovery of costs, which results in an increase to our regulatory assets, with no impact on the statement of income other than carrying charges, and a delay in the collection of our costs. This deferral is reflected within Regulatory Tracker Mechanisms in the table above.

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

Goodwill-related:  The goodwill regulatory asset originated from a 1999 transaction, and the DPU allowed its recovery in NSTAR Electric and NSTAR Gas rates.  This regulatory asset is currently being amortized and recovered from customers in rates without a carrying charge over a 40-year period, and as of December 31, 2020, there were 19 years of amortization remaining.

Asset Retirement Obligations: The costs associated with the depreciation of the regulated companies' ARO assets and accretion of the ARO liabilities are recorded as regulatory assets in accordance with regulatory accounting guidance. The regulated companies' ARO assets, regulatory assets, and ARO liabilities offset and are excluded from rate base. These costs are being recovered over the life of the underlying property, plant and equipment.
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Other Regulatory Assets:  Other Regulatory Assets primarily include contractual obligations associated with the spent nuclear fuel storage costs of the CYAPC, YAEC and MYAPC decommissioned nuclear power facilities, environmental remediation costs, losses associated with the reacquisition or redemption of long-term debt, certain uncollectible accounts receivable for hardship customers, certain merger-related costs allowed for recovery, water tank painting costs, and various other items.

Regulatory Costs in Long-Term Assets:  Eversource's regulated companies had $196.9 million (including $84.1 million for CL&P, $69.8 million for NSTAR Electric and $4.3 million for PSNH) and $146.0 million (including $51.8 million for CL&P, $55.7 million for NSTAR Electric and $18.0 million for PSNH) of additional regulatory costs as of December 31, 2020 and 2019, respectively, that were included in long-term assets on the balance sheets.  These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency.  However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.  As of December 31, 2020, net incremental costs as a result of COVID-19 deferred by Eversource totaled $24.0 million, of which $15.8 million ($3.0 million at CL&P, $6.8 million at NSTAR Electric and $0.6 million at PSNH) was related to non-tracked uncollectible expense and $8.2 million ($1.7 million at CL&P, $5.1 million at NSTAR Electric and $0.5 million at PSNH) related to facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment.

Equity Return on Regulatory Assets:  For rate-making purposes, the regulated companies recover the carrying costs related to their regulatory assets.  For certain regulatory assets, the carrying cost recovered includes an equity return component.  This equity return, which is not recorded on the balance sheets, totaled $0.2 million and $0.5 million for CL&P as of December 31, 2020 and 2019, respectively, and $5.1 million and $6.5 million for PSNH as of December 31, 2020 and 2019, respectively. These carrying costs will be recovered from customers in future rates.  

Regulatory Liabilities:  The components of regulatory liabilities were as follows:
As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
EDIT due to Tax Cuts and Jobs Act of 2017 $ 2,778.6  $ 1,010.7  $ 1,044.0  $ 371.5  $ 2,844.6  $ 1,022.8  $ 1,071.2  $ 392.8 
Cost of Removal 624.8  98.4  363.6  12.9  559.8  64.6  330.6  16.3 
Benefit Costs 83.6  —  72.5  —  84.5  —  72.2  — 
Regulatory Tracker Mechanisms 366.5  148.9  139.7  47.8  325.1  94.8  165.6  57.0 
AFUDC - Transmission 76.8  44.6  32.2  —  73.2  46.0  27.2  — 
Other Regulatory Liabilities 309.9  39.5  63.2  9.8  132.0  19.6  59.0  13.1 
Total Regulatory Liabilities 4,240.2  1,342.1  1,715.2  442.0  4,019.2  1,247.8  1,725.8  479.2 
Less:  Current Portion 389.4  137.2  164.8  58.8  361.2  82.8  209.2  65.8 
Total Long-Term Regulatory Liabilities $ 3,850.8  $ 1,204.9  $ 1,550.4  $ 383.2  $ 3,658.0  $ 1,165.0  $ 1,516.6  $ 413.4 

EDIT due to Tax Cuts and Jobs Act of 2017: Pursuant to the Tax Cuts and Jobs Act of 2017, Eversource had remeasured its existing deferred federal income tax balances to reflect the decrease in the U.S. federal corporate income tax rate from 35 percent to 21 percent. The remeasurement resulted in provisional regulated excess accumulated deferred income tax (excess ADIT or EDIT) liabilities that will benefit our customers in future periods and were recognized as regulatory liabilities on the balance sheet. EDIT liabilities related to property, plant, and equipment are subject to IRS normalization rules and will be returned to customers using the same timing as the remaining useful lives of the underlying assets that gave rise to the ADIT liabilities.

Eversource's regulated companies are in the process of, or will be, refunding the EDIT liabilities to customers based on orders issued by applicable state regulatory commissions. For PSNH (effective January 1, 2021), CL&P (effective May 1, 2019) and Yankee Gas (effective November 15, 2018), the refund of EDIT liabilities was incorporated into base distribution rates. For NSTAR Electric (effective January 1, 2019) and NSTAR Gas (effective February 1, 2019), the refund of EDIT liabilities occurred in rates through a new reconciling factor. The Connecticut water business has not yet begun to reflect the refund of EDIT in distribution rates. See "Recent Regulatory Developments" below for information on the PSNH 2020 rate settlement agreement and the impact on the EDIT balance.

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

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

FERC ROE Complaints:  As of December 31, 2020, Eversource has a reserve established for the second ROE complaint period in the pending FERC ROE complaint proceedings, which was recorded as a regulatory liability and is reflected within Regulatory Tracker Mechanisms in the table above.  The cumulative pre-tax reserve (excluding interest) as of December 31, 2020 totaled $39.1 million for Eversource (including $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH). See Note 13E, "Commitments and Contingencies – FERC ROE Complaints," for further information on developments in the pending ROE complaint proceedings.

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Recent Regulatory Developments:

PSNH Distribution Rates: On December 15, 2020, the NHPUC approved an October 9, 2020 settlement agreement on permanent rates between PSNH and all parties to the proceeding. The NHPUC approved a permanent rate increase of $45.0 million effective January 1, 2021, inclusive of the temporary rate increase previously approved. PSNH was also permitted three step increases, effective January 1, 2021, August 1, 2021, and August 1, 2022, to reflect plant additions in calendar years 2019, 2020 and 2021, respectively. On December 23, 2020, the NHPUC approved the first step adjustment for 2019 plant in service to recover a revenue requirement of $10.6 million, subject to reconciliation after completion of an audit, effective January 1, 2021. The settlement agreement also established an authorized regulatory ROE of 9.3 percent with a 54.4 percent common equity ratio in PSNH’s capital structure and provided for a new tracker to recover regulatory assessments, vegetation management costs, property tax costs, and lost distribution revenue attributable to net metering. In addition, base distribution rates were adjusted to reflect the refund of EDIT from the Tax Cuts and Jobs Act of 2017.

The settlement agreement allowed for the effect of the permanent rate increase to be extended back to the temporary rate period. In lieu of a customer rate increase for this recoupment of revenue, the NHPUC directed a portion of the total EDIT regulatory liability to offset bill impacts to customers. The impact of the settlement agreement resulted in an after-tax benefit to earnings in 2020 of $11.0 million at Eversource ($7.2 million at PSNH), due primarily to the reconciliation of permanent rates back to the temporary rate period resulting in a reduction of the EDIT regulatory liability, which reduced Income Tax Expense on the statement of income, and the allowed recovery of previously expensed costs. The earnings impact was partially offset by the negative impact from the over-refunding of the change in the 2018 federal corporate income tax rate as a result of the Tax Cuts and Jobs Act of 2017 that was reflected in temporary rates, which reduced Operating Revenues on the statement of income.

PSNH Generation Asset Divestiture-Related Costs: On May 15, 2020, the NHPUC Audit Staff issued a final report on the audit of PSNH’s generation asset divestiture-related costs and resulting securitized and stranded costs. The findings in the audit report as well as other aspects of the divestiture process were further investigated by NHPUC Staff through the discovery phase, which was completed in July 2020. On September 30, 2020, PSNH filed a settlement agreement on the generation asset divestiture-related costs with the NHPUC Audit Staff. The settlement agreement resolved all issues with respect to PSNH’s divestiture of its generating assets and the recovery of $12.0 million of divestiture-related costs incurred above the $635.7 million amount previously securitized. On December 17, 2020, the NHPUC approved the additional $12.0 million proposed in the settlement agreement to be recovered over a one-year period through the SCRC rate beginning February 1, 2021. As a result of the settlement agreement, the $12.0 million of divestiture-related costs were transferred from Other Long-Term Assets to Regulatory Assets on the Eversource and PSNH balance sheets as of December 31, 2020.

NSTAR Gas Rate Case: On October 30, 2020, the DPU approved a base distribution rate increase of $23.0 million effective November 1, 2020, compared to the original request of $38.0 million. NSTAR Gas' 2019 plant additions are allowed recovery beginning on November 1, 2021.  Thus, the reduced revenue requirement reflects the removal of this recovery, among other adjustments. The DPU also approved NSTAR Gas' proposal to continue its ongoing Gas System Enhancement Program (GSEP), the inclusion of GSEP investments since 2015 into base rates, and the implementation of a 10-year performance-based ratemaking plan, which includes an inflation-based adjustment mechanism to annual base distribution rates. The decision allows an authorized regulatory ROE of 9.9 percent on a capital structure including 54.77 percent equity. The decision also approves a geothermal pilot program. The impact of the rate case decision resulted in a pre-tax charge to earnings in 2020 of $2.7 million at NSTAR Gas, primarily due to certain plant-related disallowances.

EGMA Rate Settlement Agreement: On October 7, 2020, the DPU approved a rate settlement agreement, which approved the CMA asset acquisition as well as a rate stabilization plan, among other items. See Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts" for further information.

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3.     PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

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

The following tables summarize property, plant and equipment by asset category:
Eversource As of December 31,
(Millions of Dollars) 2020 2019
Distribution - Electric $ 16,703.2  $ 15,880.0 
Distribution - Natural Gas 6,111.2  3,931.1 
Transmission - Electric 11,954.0  10,958.4 
Distribution - Water 1,743.1  1,726.5 
Solar 201.5  200.2 
Utility 36,713.0  32,696.2 
Other (1)
1,269.0  1,025.6 
Property, Plant and Equipment, Gross 37,982.0  33,721.8 
Less:  Accumulated Depreciation    
Utility     (8,476.3) (7,483.5)
Other (477.6) (387.4)
Total Accumulated Depreciation (8,953.9) (7,870.9)
Property, Plant and Equipment, Net 29,028.1  25,850.9 
Construction Work in Progress 1,854.4  1,734.6 
Total Property, Plant and Equipment, Net $ 30,882.5  $ 27,585.5 
  As of December 31,
  2020 2019
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Distribution - Electric $ 6,820.7  $ 7,544.4  $ 2,378.4  $ 6,485.5  $ 7,163.7  $ 2,271.1 
Transmission - Electric 5,512.0  4,701.3  1,742.4  5,043.0  4,411.9  1,498.7 
Solar —  201.5  —  —  200.2  — 
Property, Plant and Equipment, Gross 12,332.7  12,447.2  4,120.8  11,528.5  11,775.8  3,769.8 
Less:  Accumulated Depreciation (2,475.4) (3,074.1) (848.9) (2,385.7) (2,895.3) (799.9)
Property, Plant and Equipment, Net 9,857.3  9,373.1  3,271.9  9,142.8  8,880.5  2,969.9 
Construction Work in Progress 377.3  750.0  102.4  483.0  592.3  159.6 
Total Property, Plant and Equipment, Net $ 10,234.6  $ 10,123.1  $ 3,374.3  $ 9,625.8  $ 9,472.8  $ 3,129.5 

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

On October 9, 2020, Eversource completed the CMA asset acquisition. EGMA’s net plant assets of $1.20 billion are reflected in the natural gas distribution asset category as of December 31, 2020.

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

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

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

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The depreciation rates for the various classes of utility property, plant and equipment aggregate to composite rates as follows:
(Percent) 2020 2019 2018
Eversource 3.0  % 3.0  % 2.9  %
CL&P 2.8  % 2.8  % 2.8  %
NSTAR Electric 2.8  % 2.8  % 2.8  %
PSNH 2.8  % 2.8  % 2.8  %

The following table summarizes average remaining useful lives of depreciable assets:
  As of December 31, 2020
(Years) Eversource CL&P NSTAR Electric PSNH
Distribution - Electric 34.3 35.4 33.7 33.3
Distribution - Natural Gas 41.5 —  —  — 
Transmission - Electric 40.7 36.9 45.5 42.6
Distribution - Water 34.1 —  —  — 
Solar 24.3 —  24.3 — 
Other (1)
11.0 —  —  — 

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

4.     DERIVATIVE INSTRUMENTS

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

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

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

The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets.  The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
  As of December 31,
  2020 2019
(Millions of Dollars) Fair Value Hierarchy Commodity Supply
and Price Risk
Management
Netting (1)
Net Amount
Recorded as
a Derivative
Commodity Supply
and Price Risk
Management
Netting (1)
Net Amount
Recorded as
a Derivative
Current Derivative Assets:
CL&P Level 3 $ 13.7  $ (0.4) $ 13.3  $ 12.2  $ (0.4) $ 11.8 
Long-Term Derivative Assets:
CL&P Level 3 58.7  (1.8) 56.9  67.5  (2.1) 65.4 
Current Derivative Liabilities:
CL&P Level 3 (68.8) —  (68.8) (67.8) —  (67.8)
Other Level 2 (3.3) 0.1  (3.2) (5.2) —  (5.2)
Long-Term Derivative Liabilities:
CL&P Level 3 (294.5) —  (294.5) (338.6) —  (338.6)
Other Level 2 —  —  —  (0.1) —  (0.1)

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

The business activities that result in the recognition of derivative assets also create exposure to various counterparties.  As of December 31, 2020, CL&P's derivative assets were exposed to counterparty credit risk and contracted with investment grade entities.

For further information on the fair value of derivative contracts, see Note 1I, "Summary of Significant Accounting Policies – Fair Value Measurements," and Note 1J, "Summary of Significant Accounting Policies – Derivative Accounting," to the financial statements.
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Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management:  As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities.  CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI.  The combined capacities of these contracts as of December 31, 2020 and 2019 were 675 MW and 676 MW, respectively.  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 had a contract to purchase 0.1 million MWh of energy per year through 2020.

As of December 31, 2020 and 2019, Eversource had New York Mercantile Exchange (NYMEX) financial contracts for natural gas futures in order to reduce variability associated with the price of 8.9 million and 9.6 million MMBtu of natural gas, respectively.

For the years ended December 31, 2020, 2019 and 2018, there were losses of $21.2 million, $20.7 million and $25.0 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts.

Fair Value Measurements of Derivative Instruments
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 capacity prices for periods that are not quoted in an active market or established at auction are based on available market data and are escalated based on estimates of inflation in order to address the full term of the contract.  

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

The following is a summary of Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:
  As of December 31,
  2020 2019
CL&P Range
Weighted Average (1)
Period Covered Range Period Covered
Capacity Prices $ 4.30  5.30 $ 4.63  per kW-Month 2024 - 2026 $ 3.01  $ 7.34  per kW-Month 2023 - 2026
Forward Reserve 0.54  0.90 0.72  per kW-Month 2021 - 2024 0.80  1.90 per kW-Month 2020 - 2024

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

Exit price premiums of 7.1 percent through 11.4 percent, or a weighted average of 10.3 percent, are also applied to these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts. The risk premium was weighted by the relative fair value of the net derivative instruments.

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

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&P
(Millions of Dollars)
For the Years Ended December 31,
2020 2019
Derivatives, Net:  
Fair Value as of Beginning of Period $ (329.2) $ (356.5)
Net Realized/Unrealized Losses Included in Regulatory Assets (17.9) (15.0)
Settlements 54.0  42.3 
Fair Value as of End of Period $ (293.1) $ (329.2)

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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: Unrealized gains and losses on equity securities held in Eversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. The fair value of these equity securities as of December 31, 2020 and 2019 was $40.9 million and $45.7 million, respectively.  For the years ended December 31, 2020 and 2019, there were unrealized gains of $3.7 million and $9.8 million recorded in Other Income, Net related to these equity securities, respectively.

Eversource's equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts, which had fair values of $205.1 million and $182.8 million as of December 31, 2020 and 2019, respectively.  Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to 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 December 31,
  2020 2019
Eversource
(Millions of Dollars)
Amortized
Cost
Pre-Tax
Unrealized
Gains
Pre-Tax
Unrealized
Losses
Fair Value Amortized
Cost
Pre-Tax
Unrealized
Gains
Pre-Tax
Unrealized
Losses
Fair Value
Debt Securities $ 213.1  $ 11.2  $ (0.1) $ 224.2  $ 228.4  $ 5.8  $ (0.1) $ 234.1 

Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $192.5 million and $198.1 million as of December 31, 2020 and 2019, respectively.  

Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There have been no significant unrealized losses and no credit losses for the years ended December 31, 2020 or 2019, and no allowance for credit losses as of December 31, 2020.  Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and rating changes of the security, and the severity of the impairment.  For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality.

As of December 31, 2020, the contractual maturities of available-for-sale debt securities were as follows:    
Eversource
(Millions of Dollars)
Amortized
Cost
Fair
Value
Less than one year (1)
$ 43.6  $ 43.6 
One to five years 57.4  59.7 
Six to ten years 46.6  49.7 
Greater than ten years 65.5  71.2 
Total Debt Securities $ 213.1  $ 224.2 

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

Realized Gains and Losses:  Realized gains and losses are recorded in Other Income, Net for Eversource's benefit trust and are offset in 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 fuel trusts to compute the realized gains and losses on the sale of marketable securities.

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Fair Value Measurements:  The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
Eversource
(Millions of Dollars)
As of December 31,
2020 2019
Level 1:      
Mutual Funds and Equities $ 246.0  $ 228.5 
Money Market Funds 41.2  46.0 
Total Level 1 $ 287.2  $ 274.5 
Level 2:    
U.S. Government Issued Debt Securities (Agency and Treasury) $ 72.9  $ 96.8 
Corporate Debt Securities 63.8  44.0 
Asset-Backed Debt Securities 11.9  12.9 
Municipal Bonds 24.0  26.7 
Other Fixed Income Securities 10.4  7.7 
Total Level 2 $ 183.0  $ 188.1 
Total Marketable Securities $ 470.2  $ 462.6 

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

6.     INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in entities that are not consolidated are included in long-term assets on the balance sheets and earnings impacts from these equity investments are included in Other Income, Net on the statements of income.  Eversource's investments included the following:
  Investment Balance as of December 31,
(Millions of Dollars) Ownership Interest 2020 2019
Offshore Wind Business - North East Offshore and Bay State Wind 50  % $ 887.1  $ 649.3 
Natural Gas Pipeline - Algonquin Gas Transmission, LLC 15  % 125.2  127.8 
Renewable Energy Investment Fund 90  % 71.6  72.4 
Other various 23.2  22.1 
Total Investments in Unconsolidated Affiliates $ 1,107.1  $ 871.6 

For the years ended December 31, 2020, 2019 and 2018, Eversource had equity in earnings, net of impairment, of unconsolidated affiliates of $14.2 million, $42.2 million, and $3.8 million, respectively. Eversource received dividends from its equity method investees of $21.8 million, $48.9 million, and $22.3 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

Investments in affiliates where Eversource has the ability to exercise significant influence, but not control, over an investee are initially recognized as an equity method investment at cost. Any differences between the cost of an investment and the amount of underlying equity in net assets of an investee are considered basis differences, and are determined based upon the estimated fair values of the investee's identifiable assets and liabilities. The carrying amount of Eversource’s offshore wind investments exceeded its share of underlying equity in net assets by $264.1 million and $240.3 million, respectively, as of December 31, 2020 and 2019. As of December 31, 2020, these basis differences are primarily comprised of $168.3 million of equity method goodwill that is not being amortized, intangible assets for PPAs, which will be amortized over the term of the PPAs, and capitalized interest.

Offshore Wind Business: Eversource's offshore wind business includes ownership interests in North East Offshore and Bay State Wind, which together hold PPAs and contracts for the Revolution Wind, South Fork Wind, and Sunrise Wind projects, as well as offshore leases through BOEM. Eversource's offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. On February 8, 2019, Eversource and Ørsted entered into an equal partnership to acquire key offshore wind assets in the Northeast. Eversource has a 50 percent ownership interest in North East Offshore, which holds the Revolution Wind and South Fork Wind projects, as well as a 257 square-mile lease off the coasts of Massachusetts and Rhode Island. Eversource also has a 50 percent ownership interest in Bay State Wind, which holds the Sunrise Wind project. Bay State Wind's separate 300-square-mile ocean lease is located approximately 25 miles south of the coast of Massachusetts adjacent to the North East Offshore area.

NSTAR Electric: As of December 31, 2020 and 2019, NSTAR Electric's investments included a 14.5 percent ownership interest in two companies that transmit hydro-electricity imported from the Hydro-Quebec system in Canada of $8.6 million and $8.2 million, respectively.

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

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

During the year ended December 31, 2018, Eversource recorded an other-than-temporary impairment of $32.9 million within Other Income, Net on the statement of income, related to Access Northeast, a natural gas pipeline and storage project, which represented the full carrying value of our equity method investment. 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.

7.     ASSET RETIREMENT OBLIGATIONS

Eversource, including CL&P, NSTAR Electric and PSNH, recognizes a liability for the fair value of an ARO on the obligation date if the liability's fair value can be reasonably estimated, even if it is conditional on a future event.  Settlement dates and future costs are reasonably estimated when sufficient information becomes available.  Management has identified various categories of AROs, primarily CYAPC's and YAEC's obligation to dispose of spent nuclear fuel and high level waste, and also certain assets containing asbestos and hazardous contamination. Management has performed fair value calculations reflecting expected probabilities for settlement scenarios.

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

A reconciliation of the beginning and ending carrying amounts of ARO liabilities is as follows:
  As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR
Electric
PSNH Eversource CL&P NSTAR
Electric
PSNH
Balance as of Beginning of Year $ 489.5  $ 32.0  $ 97.5  $ 4.2  $ 466.2  $ 33.5  $ 72.4  $ 4.0 
Liability Assumed Upon CMA Asset Acquisition 20.1  —  —  —  —  —  —  — 
Liabilities Incurred During the Year 2.1  —  2.1  —  30.3  —  30.3  — 
Liabilities Settled During the Year (21.8) (0.7) (1.0) —  (21.3) (3.6) —  — 
Accretion 28.9  2.1  4.3  0.2  27.1  2.2  3.5  0.2 
Revisions in Estimated Cash Flows (19.1) —  (11.1) —  (12.8) (0.1) (8.7) — 
Balance as of End of Year $ 499.7  $ 33.4  $ 91.8  $ 4.4  $ 489.5  $ 32.0  $ 97.5  $ 4.2 

The ARO balance includes the current portion of $1.0 million for Eversource and NSTAR Electric as of December 31, 2019, which is included in Other Current Liabilities on the balance sheets.

Eversource's amounts include CYAPC and YAEC's AROs of $330.3 million and $337.7 million as of December 31, 2020 and 2019, respectively. The fair value of the ARO for CYAPC and YAEC includes uncertainties of the fuel off-load dates related to the DOE's timing of performance regarding its obligation to dispose of the spent nuclear fuel and high level waste and other assumptions, including discount rates.  The incremental asset recorded as an offset to the ARO liability was fully depreciated since the plants have no remaining useful life.  Any changes in the ARO liability are recorded with a corresponding offset to the related regulatory asset.  The assets held in the CYAPC and YAEC spent nuclear fuel trusts are restricted for settling the ARO and all other nuclear fuel storage obligations.  For further information on the assets held in the spent nuclear fuel trusts, see Note 5, "Marketable Securities," to the financial statements.

8.     SHORT-TERM DEBT

Short-Term Debt - Borrowing Limits:  The amount of short-term borrowings that may be incurred by CL&P and NSTAR Electric is subject to periodic approval by the FERC.  Because the NHPUC has jurisdiction over PSNH's short-term debt, PSNH is not currently required to obtain FERC approval for its short-term borrowings.  On October 25, 2019, the FERC granted authorization that allows CL&P to issue total short-term borrowings in an aggregate principal amount not to exceed $600 million outstanding at any one time, through December 31, 2021.  On December 18, 2019, the FERC granted authorization that allows NSTAR Electric to issue total short-term borrowings in an aggregate principal amount not to exceed $655 million outstanding at any one time, through December 31, 2021.

PSNH is authorized by regulation of the NHPUC to incur short-term borrowings up to 10 percent of net fixed plant plus an additional $60 million until further ordered by the NHPUC.  As of December 31, 2020, PSNH's short-term debt authorization under the 10 percent of net fixed plant test plus $60 million totaled $383.9 million.  

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CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur, including limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization.  As of December 31, 2020, CL&P had $907.6 million of unsecured debt capacity available under this authorization.

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

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas and Aquarion Water Company of Connecticut are parties to a five-year $1.45 billion revolving credit facility, which terminates on December 6, 2024. On October 21, 2020, Eversource parent and EGMA entered into a short-term $550 million revolving credit facility, which terminates on October 20, 2021. These revolving credit facilities serve to backstop Eversource parent's $2.00 billion commercial paper program.

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $650 million commercial paper program.

The amount of borrowings outstanding and available under the commercial paper programs were as follows:
Borrowings Outstanding
as of December 31,
Available Borrowing Capacity as of December 31, Weighted-Average Interest Rate as of December 31,
(Millions of Dollars) 2020 2019 2020 2019 2020 2019
Eversource Parent Commercial Paper Program $ 1,054.3  $ 1,224.9  $ 945.7  $ 225.1  0.25  % 1.98  %
NSTAR Electric Commercial Paper Program 195.0  10.5  455.0  639.5  0.16  % 1.63  %

There were no borrowings outstanding on the revolving credit facilities as of December 31, 2020 or 2019.

On May 15, 2020, CL&P and PSNH entered into uncommitted line of credit agreements, which will expire by May 14, 2021. The CL&P agreements total $450 million and the PSNH agreements total $300 million. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of December 31, 2020.

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

Under the credit facilities described above, Eversource and its subsidiaries, including CL&P, NSTAR Electric, PSNH, NSTAR Gas, EGMA, Yankee Gas, and Aquarion Water Company of Connecticut, must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization ratio.  As of December 31, 2020 and 2019, Eversource and its subsidiaries were in compliance with these covenants. If Eversource or its subsidiaries were not in compliance with these covenants, an event of default would occur requiring all outstanding borrowings by such borrower to be repaid, and additional borrowings by such borrower would not be permitted under its respective credit facility.

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

Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. As of December 31, 2019, there were intercompany loans from Eversource parent to CL&P of $63.8 million, to PSNH of $27.0 million, and to a subsidiary of NSTAR Electric of $30.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.

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9.    LONG-TERM DEBT

Details of long-term debt outstanding are as follows:
CL&P
(Millions of Dollars)
As of December 31,
2020 2019
First Mortgage Bonds:    
7.875% 1994 Series D due 2024
$ 139.8  $ 139.8 
5.750% 2004 Series B due 2034
130.0  130.0 
5.625% 2005 Series B due 2035
100.0  100.0 
6.350% 2006 Series A due 2036
250.0  250.0 
5.750% 2007 Series B due 2037
150.0  150.0 
6.375% 2007 Series D due 2037
100.0  100.0 
2.500% 2013 Series A due 2023
400.0  400.0 
4.300% 2014 Series A due 2044  
475.0  475.0 
4.150% 2015 Series A due 2045
350.0  350.0 
   3.200% 2017 Series A due 2027
500.0  500.0 
4.000% 2018 Series A due 2048
800.0  800.0 
0.750% 2020 Series A due 2025
400.0  — 
Total First Mortgage Bonds 3,794.8  3,394.8 
Pollution Control Revenue Bonds:    
4.375% Fixed Rate Tax Exempt due 2028
120.5  120.5 
Less Amounts due Within One Year —  — 
Unamortized Premiums and Discounts, Net 25.9  27.8 
Unamortized Debt Issuance Costs (26.4) (25.0)
CL&P Long-Term Debt $ 3,914.8  $ 3,518.1 
NSTAR Electric
(Millions of Dollars)
As of December 31,
2020 2019
Debentures:    
5.750% due 2036
$ 200.0  $ 200.0 
5.500% due 2040
300.0  300.0 
2.375% due 2022
400.0  400.0 
4.400% due 2044  
300.0  300.0 
3.250% due 2025
250.0  250.0 
2.700% due 2026
250.0  250.0 
3.200% due 2027
700.0  700.0 
3.250% due 2029
400.0  400.0 
3.950% due 2030
400.0  — 
Total Debentures 3,200.0  2,800.0 
Notes:    
5.900% Senior Notes Series B due 2034
50.0  50.0 
6.700% Senior Notes Series D due 2037
40.0  40.0 
5.100% Senior Notes Series E due 2020
—  95.0 
3.500% Senior Notes Series F due 2021
250.0  250.0 
3.880% Senior Notes Series G due 2023
80.0  80.0 
2.750% Senior Notes Series H due 2026
50.0  50.0 
Total Notes 470.0  565.0 
Less Amounts due Within One Year (250.0) (95.0)
Unamortized Premiums and Discounts, Net (6.8) (4.1)
Unamortized Debt Issuance Costs (20.0) (18.8)
NSTAR Electric Long-Term Debt $ 3,393.2  $ 3,247.1 
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PSNH
(Millions of Dollars)
As of December 31,
2020 2019
First Mortgage Bonds:    
5.600% Series M due 2035
$ 50.0  $ 50.0 
4.050% Series Q due 2021
122.0  122.0 
3.200% Series R due 2021
160.0  160.0 
3.500% Series S due 2023  
325.0  325.0 
3.600% Series T due 2049  
300.0  300.0 
2.400% Series U due 2050
150.0  — 
Total First Mortgage Bonds $ 1,107.0  $ 957.0 
Less Amounts due Within One Year (282.0) — 
Unamortized Premiums and Discounts, Net (1.5) (0.7)
Unamortized Debt Issuance Costs (6.4) (4.7)
PSNH Long-Term Debt $ 817.1  $ 951.6 
OTHER
(Millions of Dollars)
As of December 31,
2020 2019
Yankee Gas - First Mortgage Bonds: 2.230% - 8.480% due 2022 - 2050
$ 640.0  $ 620.0 
NSTAR Gas - First Mortgage Bonds: 2.330% - 7.110% due 2025 - 2050
500.0  460.0 
Aquarion - Senior Note 4.000% due 2024
360.0  360.0 
Aquarion - Unsecured Notes 0% - 6.430% due 2021 - 2049
335.2  335.3 
Aquarion - Secured Debt 4.450% - 9.290% due 2022 - 2035
35.9  68.8 
Eversource Parent - Senior Notes 0.800% - 4.250% due 2021 - 2050
5,550.0  4,000.0 
Pre-1983 Spent Nuclear Fuel Obligation (CYAPC) 11.7  11.6 
Fair Value Adjustment (1)
74.7  109.1 
Less Fair Value Adjustment - Current Portion (1)
(31.0) (31.3)
Less Amounts due in One Year (490.2) (201.1)
Commercial Paper Classified as Long-Term Debt —  346.3 
Unamortized Premiums and Discounts, Net   46.5  (4.1)
Unamortized Debt Issuance Costs (32.0) (20.6)
Total Other Long-Term Debt $ 7,000.8  $ 6,054.0 
Total Eversource Long-Term Debt $ 15,125.9  $ 13,770.8 

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

Long-Term Debt Issuance Authorizations: On January 27, 2020, the DPU approved NSTAR Gas' request for authorization to issue up to $270 million in long-term debt through December 31, 2021. On July 31, 2020, the NHPUC approved PSNH's request for authorization to issue up to $200 million in long-term debt through December 31, 2020. On December 14, 2020, NSTAR Electric filed a petition with the DPU for authorization to issue $1.6 billion in long-term debt through December 31, 2023. On December 16, 2020, Aquarion Water Company of Connecticut filed an application with PURA for authorization to issue $100 million in long-term debt through December 31, 2021.
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Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars) Issuance/(Repayment) Issue Date or Repayment Date Maturity Date Use of Proceeds for Issuance/
Repayment Information
CL&P:
0.75% Series A First Mortgage Bonds
$ 400.0  December 2020 December 2025 Refinanced short-term borrowings, funded capital expenditures and working capital
NSTAR Electric:
3.95% 2020 Debentures
400.0  March 2020 April 2030 Refinanced investments in eligible green expenditures, which were previously financed in 2018 and 2019
5.10% Series E Senior Notes
(95.0) March 2020 March 2020 Paid at maturity
PSNH:
2.40% Series U First Mortgage Bonds
150.0  August 2020 September 2050 Refinanced short-term borrowings, funded capital expenditures and working capital
Other:
Eversource Parent 3.45% Series P Senior Notes
350.0  January 2020 January 2050 Paid short-term borrowings
Eversource Parent 3.45% Series P Senior Notes (1)
300.0  August 2020 January 2050
 (2)
Eversource Parent 0.80% Series Q Senior Notes
300.0  August 2020 August 2025
 (2)
Eversource Parent 1.65% Series R Senior Notes
600.0  August 2020 August 2030
 (2)
Eversource Parent 2.50% Series I Senior Notes
(450.0) February 2021 March 2021
Paid on par call date in advance of maturity date
NSTAR Gas 4.46% Series N First Mortgage Bonds
(125.0) January 2020 January 2020 Paid at maturity
NSTAR Gas 2.33% Series R First Mortgage Bonds
75.0  May 2020 May 2025 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
NSTAR Gas 3.15% Series S First Mortgage Bonds
115.0  May 2020 May 2050 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
NSTAR Gas 9.95% Series J First Mortgage Bonds
(25.0) December 2020 December 2020 Paid at maturity
Yankee Gas 4.87% Series K First Mortgage Bonds
(50.0) April 2020 April 2020 Paid at maturity
Yankee Gas 2.90% Series R First Mortgage Bonds
70.0  September 2020 September 2050 Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes
Aquarion Water Company of Massachusetts, Inc. and Aquarion Water Capital of Massachusetts, Inc. various term loans and general mortgage bonds (32.2) July 2020 Various Redeemed long-term debt in conjunction with the sale of assets to the Town of Hingham, Massachusetts

(1) These senior notes are part of the same series issued by Eversource parent in January 2020. The aggregate outstanding principal amount of these senior notes is now $650 million.

(2) The proceeds from these Eversource parent issuances funded a portion of the purchase price for the CMA asset acquisition and refinanced short-term borrowings.

In January 2021, PSNH provided a redemption notice to the holders of the PSNH 4.050% Series Q First Mortgage Bonds that PSNH will redeem the $122 million of bonds on March 1, 2021, the par call date, in advance of the June 1, 2021 maturity date.

Long-Term Debt Provisions:  The utility plant of CL&P, PSNH, Yankee Gas, NSTAR Gas and a portion of Aquarion is subject to the lien of each company's respective first mortgage bond indenture.  The Eversource parent, NSTAR Electric and a portion of Aquarion debt is unsecured. Additionally, the long-term debt agreements provide that Eversource and certain of its subsidiaries must comply with certain covenants as are customarily included in such agreements, including equity requirements for NSTAR Electric, NSTAR Gas and Aquarion.  Under the equity requirements, NSTAR Electric's and Aquarion's senior notes must maintain a certain consolidated indebtedness to capitalization ratio as of the end of any fiscal quarter and NSTAR Gas' outstanding long-term debt must not exceed equity.

CL&P's obligation to repay the Pollution Control Revenue Bonds (PCRBs) is secured by first mortgage bonds.  The first mortgage bonds contain similar terms and provisions as the applicable series of PCRBs.  If CL&P fails to meet its obligations under the first mortgage bonds, then the holder of the first mortgage bonds (the issuer of the PCRBs) would have rights under the first mortgage bonds.  CL&P's tax-exempt PCRBs will be subject to redemption at par on or after September 1, 2021.

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

No long-term debt defaults have occurred as of December 31, 2020.

CYAPC's Pre-1983 Spent Nuclear Fuel Obligation:  Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the selection and development of repositories for, and the disposal of, spent nuclear fuel and high-level radioactive waste. CYAPC is obligated to pay the DOE for the costs to dispose of spent nuclear fuel and high-level radioactive waste generated prior to April 7, 1983 (pre-1983 Spent Nuclear Fuel) and recorded an accrual for the full liability thereof to the DOE. This liability accrues interest costs at the 3-month Treasury bill yield rate. For nuclear fuel used to generate electricity prior to April 7, 1983, payment may be made any time prior to the first delivery of spent fuel to the DOE. Fees for disposal of nuclear fuel burned on or after April 7, 1983 were billed to member companies and paid to the DOE.
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As of December 31, 2020 and 2019, as a result of consolidating CYAPC, Eversource has consolidated $11.7 million and $11.6 million, respectively, in pre-1983 spent nuclear fuel obligations to the DOE. In December 2019, CYAPC paid $29 million to the DOE to partially settle this obligation. The obligation includes accumulated interest costs of $8.7 million and $8.6 million as of December 31, 2020 and 2019, respectively.  CYAPC maintains a trust to fund amounts due to the DOE for the disposal of pre-1983 spent nuclear fuel.  For further information, see Note 5, "Marketable Securities," to the financial statements.

Long-Term Debt Maturities:  Long-term debt maturities on debt outstanding for the years 2021 through 2025 and thereafter are shown below. These amounts exclude PSNH rate reduction bonds, CYAPC pre-1983 spent nuclear fuel obligation, net unamortized premiums, discounts and debt issuance costs, and other fair value adjustments as of December 31, 2020:
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH
2021 $ 1,022.2  $ —  $ 250.0  $ 282.0 
2022 1,175.2  —  400.0  — 
2023 1,658.2  400.0  80.0  325.0 
2024 1,049.9  139.8  —  — 
2025 1,400.0  400.0  250.0  — 
Thereafter 9,807.9  2,975.5  2,690.0  500.0 
Total $ 16,113.4  $ 3,915.3  $ 3,670.0  $ 1,107.0 

10.    RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES

Rate Reduction Bonds: 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 be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance order issued by the NHPUC on January 30, 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.

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

PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements. The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:
(Millions of Dollars) As of December 31,
Balance Sheet: 2020 2019
Restricted Cash - Current Portion (included in Current Assets) $ 36.8  $ 32.5 
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets) 2.1  3.2 
Securitized Stranded Cost (included in Regulatory Assets) 522.1  565.3 
Other Regulatory Liabilities (included in Regulatory Liabilities) 9.1  5.6 
Accrued Interest (included in Other Current Liabilities) 8.0  8.6 
Rate Reduction Bonds - Current Portion 43.2  43.2 
Rate Reduction Bonds - Long-Term Portion 496.9  540.1 
(Millions of Dollars)
Income Statement:
For the Years Ended December 31,
2020 2019
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net) $ 43.2  $ 43.0 
Interest Expense on RRB Principal (included in Interest Expense) 19.7  21.1 

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.

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11.     EMPLOYEE BENEFITS

A.     Pension Benefits and Postretirement Benefits Other Than Pension
Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees and are subject to the provisions of ERISA, as amended by the Pension Protection Act of 2006. Eversource's policy is to annually fund the Pension Plans in an amount at least equal to an amount that will satisfy all federal funding requirements. In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans (SERP Plans) which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees.

Eversource also provides defined benefit postretirement plans (PBOP Plans) that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that meet certain age and service eligibility requirements. The benefits provided under the PBOP Plans are not vested, and the Company has the right to modify any benefit provision subject to applicable laws at that time. Eversource annually funds postretirement costs through tax deductible contributions to external trusts.

The Pension, SERP and PBOP Plans cover eligible employees, including, among others, employees of the regulated companies. Because the regulated companies recover retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of recording an adjustment to Accumulated Other Comprehensive Income/(Loss) as an offset to the funded status of the Pension, SERP and PBOP Plans.  Regulatory accounting is also applied to the portions of the Eversource Service retiree benefit costs that support the regulated companies, as these costs are also recovered from customers.  Adjustments to the Pension, SERP and PBOP Plans' funded status for the unregulated companies are recorded on an after-tax basis to Accumulated Other Comprehensive Income/(Loss).  For further information, see Note 2, "Regulatory Accounting," and Note 16, "Accumulated Other Comprehensive Income/(Loss)," to the financial statements.  

Funded Status:  The Pension, SERP and PBOP Plans are accounted for under the multiple-employer approach, with each operating company's balance sheet reflecting its share of the funded status of the plans.  Although Eversource maintains marketable securities in a benefit trust, the SERP Plans do not contain any assets.  For further information, see Note 5, "Marketable Securities," to the financial statements.  The following tables provide information on the plan benefit obligations, fair values of plan assets, and funded status:  
  Pension and SERP
As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR
Electric
PSNH Eversource CL&P NSTAR
Electric
PSNH
Change in Benefit Obligation:            
Benefit Obligation as of Beginning of Year $ (6,321.7) $ (1,331.3) $ (1,397.3) $ (692.6) $ (5,520.0) $ (1,160.4) $ (1,236.5) $ (610.7)
Service Cost (76.2) (21.8) (15.4) (8.2) (67.7) (18.0) (14.6) (7.1)
Interest Cost (177.8) (37.3) (38.6) (19.4) (219.0) (45.7) (49.0) (24.0)
Actuarial Loss (658.2) (152.3) (139.5) (62.1) (815.3) (176.6) (181.0) (84.5)
Benefits Paid - Pension 279.3  63.6  59.4  33.5  273.0  60.2  67.1  30.3 
Benefits Paid - Lump Sum 23.4  —  13.1  —  20.0  —  12.9  — 
Benefits Paid - SERP 7.3  0.3  0.2  0.4  7.3  0.3  0.1  0.4 
Employee Transfers —  1.5  0.2  (0.3) —  8.9  3.7  3.0 
Increase due to acquisition of CMA (121.4) —  —  —  —  —  —  — 
Benefit Obligation as of End of Year $ (7,045.3) $ (1,477.3) $ (1,517.9) $ (748.7) $ (6,321.7) $ (1,331.3) $ (1,397.3) $ (692.6)
Change in Pension Plan Assets:            
Fair Value of Pension Plan Assets as of
Beginning of Year
$ 4,968.6  $ 986.2  $ 1,288.8  $ 551.6  $ 4,573.9  $ 918.4  $ 1,222.1  $ 506.6 
Employer Contributions 109.6  23.2  0.7  19.5  112.5  24.0  0.4  15.4 
Actual Return on Pension Plan Assets 512.3  98.8  128.3  55.8  575.2  112.9  150.0  62.9 
Benefits Paid - Pension (279.3) (63.6) (59.4) (33.5) (273.0) (60.2) (67.1) (30.3)
Benefits Paid - Lump Sum (23.4) —  (13.1) —  (20.0) —  (12.9) — 
Employee Transfers —  (1.5) (0.2) 0.3  —  (8.9) (3.7) (3.0)
Increase due to acquisition of CMA 121.4  —  —  —  —  —  —  — 
Fair Value of Pension Plan Assets as of End of Year $ 5,409.2  $ 1,043.1  $ 1,345.1  $ 593.7  $ 4,968.6  $ 986.2  $ 1,288.8  $ 551.6 
Funded Status as of December 31st $ (1,636.1) $ (434.2) $ (172.8) $ (155.0) $ (1,353.1) $ (345.1) $ (108.5) $ (141.0)

For the year ended December 31, 2020, the increase in the benefit obligation was primarily attributable to a decrease in the discount rate, which resulted in an increase to Eversource's pension liability of $603.0 million. The increase in the benefit obligation was partially offset by the actual return on assets exceeding the expected asset return and changes in the mortality assumption. For the year ended December 31, 2019, the increase in the benefit obligation was primarily attributable to a decrease in the discount rate, which resulted in an increase to Eversource's pension liability of $813.1 million, which was partially offset by changes in actual plan experience and changes in other assumptions.

The pension and SERP Plans' funded status includes the current portion of the SERP liability totaling $6.8 million and $8.7 million as of December 31, 2020 and 2019, respectively, which is included in Other Current Liabilities on the balance sheets.  
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As of December 31, 2020 and 2019, the accumulated benefit obligation for the Pension and SERP Plans is as follows:
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH
2020 $ 6,669.4  $ 1,356.4  $ 1,449.4  $ 707.2 
2019 5,963.4  1,205.4  1,340.8  646.7 
  PBOP
  As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR
Electric
PSNH Eversource CL&P NSTAR
Electric
PSNH
Change in Benefit Obligation:            
Benefit Obligation as of Beginning of Year $ (899.0) $ (172.7) $ (258.3) $ (93.0) $ (841.5) $ (161.7) $ (246.3) $ (91.9)
Service Cost (10.2) (1.7) (2.1) (0.9) (7.8) (1.4) (1.7) (0.7)
Interest Cost (24.6) (4.4) (6.6) (2.8) (32.7) (6.3) (9.5) (3.4)
Actuarial Loss (82.8) (8.6) (7.4) (19.0) (67.0) (13.4) (15.2) (3.1)
Benefits Paid 50.2  10.1  14.9  6.1  50.0  10.8  15.4  5.6 
Employee Transfers —  (1.3) (1.0) 0.1  —  (0.7) (1.0) 0.5 
Increase due to acquisition of CMA (27.5) —  —  —  —  —  —  — 
Benefit Obligation as of End of Year $ (993.9) $ (178.6) $ (260.5) $ (109.5) $ (899.0) $ (172.7) $ (258.3) $ (93.0)
Change in Plan Assets:            
Fair Value of Plan Assets as of Beginning of Year $ 935.9  $ 126.3  $ 424.4  $ 76.0  $ 849.6  $ 120.6  $ 379.1  $ 71.2 
Actual Return on Plan Assets 116.5  15.7  53.3  9.3  127.0  17.1  57.0  10.0 
Employer Contributions 1.9  —  —  —  9.3  —  6.0  — 
Benefits Paid (50.2) (10.1) (14.9) (6.1) (50.0) (10.8) (15.4) (5.6)
Employee Transfers —  2.2  1.8  0.2  —  (0.6) (2.3) 0.4 
Fair Value of Plan Assets as of End of Year $ 1,004.1  $ 134.1  $ 464.6  $ 79.4  $ 935.9  $ 126.3  $ 424.4  $ 76.0 
Funded Status as of December 31st $ 10.2  $ (44.5) $ 204.1  $ (30.1) $ 36.9  $ (46.4) $ 166.1  $ (17.0)

The Eversource PBOP funded status includes prepaid assets of $34.7 million and $62.7 million recorded in Other Long-Term Assets and liabilities of $24.5 million and $25.8 million included in Accrued Pension, SERP and PBOP on the balance sheets as of December 31, 2020 and 2019, respectively.

For the year ended December 31, 2020, the increase in the benefit obligation was primarily attributable to a decrease in the discount rate, which resulted in an increase to the Eversource PBOP liability of $68.3 million, and by changes in our retirement assumptions. For the year ended December 31, 2019, the increase in the benefit obligation was primarily attributable to a decrease in the discount rate, which resulted in an increase to the Eversource PBOP liability of $88.6 million.

The following actuarial assumptions were used in calculating the Pension, SERP and PBOP Plans' year end funded status:
  Pension and SERP PBOP
  As of December 31, As of December 31,
  2020 2019 2020 2019
Discount Rate 2.4% 2.7% 3.0% 3.4% 2.5% 2.6% 3.2% 3.3%
Compensation/Progression Rate 3.5% 4.0% 3.5% 4.0% N/A

For the Eversource Service PBOP Plan, the health care cost trend rate is not applicable. For the Aquarion PBOP Plan, the health care cost trend rate for pre-65 retirees is 6.3 percent, with an ultimate rate of 5 percent in 2023, and for post-65 retirees, the health care trend rate and ultimate rate is 3.5 percent.

Expense:  Eversource charges net periodic benefit expense/(income) for the Pension, SERP and PBOP Plans to its subsidiaries based on the actual participant demographic data for each subsidiary's participants.  The actual investment return in the trust is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year. The Company utilizes the spot rate methodology to estimate the discount rate for the service and interest cost components of benefit expense, which provides a more precise measurement by matching projected cash flows to the corresponding spot rates on the yield curve.

The components of net periodic benefit expense/(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/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income.  The remaining components of net periodic benefit expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include the intercompany allocations or the corresponding capitalized and deferred portion, as these amounts are cash settled on a short-term basis.
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  Pension and SERP PBOP
  For the Year Ended December 31, 2020 For the Year Ended December 31, 2020
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost $ 76.2  $ 21.8  $ 15.4  $ 8.2  $ 10.2  $ 1.7  $ 2.1  $ 0.9 
Interest Cost 177.8  37.3  38.6  19.4  24.6  4.4  6.6  2.8 
Expected Return on Plan Assets (400.3) (79.2) (103.0) (44.7) (73.6) (9.9) (34.0) (5.7)
Actuarial Loss 202.0  39.2  55.2  15.6  8.4  1.1  2.5  0.8 
Prior Service Cost/(Credit) 1.2  —  0.3  —  (21.2) 1.1  (17.0) 0.4 
Total Net Periodic Benefit Expense/(Income) $ 56.9  $ 19.1  $ 6.5  $ (1.5) $ (51.6) $ (1.6) $ (39.8) $ (0.8)
Intercompany Allocations N/A $ 9.1  $ 8.9  $ 2.9  N/A $ (1.1) $ (1.4) $ (0.5)
  Pension and SERP PBOP
  For the Year Ended December 31, 2019 For the Year Ended December 31, 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost $ 67.7  $ 18.0  $ 14.6  $ 7.1  $ 7.8  $ 1.4  $ 1.7  $ 0.7 
Interest Cost 219.0  45.7  49.0  24.0  32.7  6.3  9.5  3.4 
Expected Return on Plan Assets (367.1) (73.2) (97.1) (40.7) (66.8) (9.2) (30.2) (5.4)
Actuarial Loss 143.2  26.9  44.7  10.6  8.3  1.3  3.3  0.3 
Prior Service Cost/(Credit) 0.9  —  0.3  —  (23.5) 1.1  (16.9) 0.4 
Total Net Periodic Benefit Expense/(Income) $ 63.7  $ 17.4  $ 11.5  $ 1.0  $ (41.5) $ 0.9  $ (32.6) $ (0.6)
Intercompany Allocations N/A $ 8.5  $ 8.0  $ 2.3  N/A $ (0.9) $ (1.2) $ (0.4)
  Pension and SERP PBOP
  For the Year Ended December 31, 2018 For the Year Ended December 31, 2018
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Service Cost $ 84.8  $ 21.4  $ 17.4  $ 11.2  $ 10.0  $ 1.9  $ 2.0  $ 1.1 
Interest Cost 196.4  41.8  43.5  22.0  30.7  5.8  8.7  3.4 
Expected Return on Plan Assets (391.6) (79.1) (104.9) (43.6) (72.4) (10.4) (32.5) (6.0)
Actuarial Loss 145.7  29.1  41.1  11.6  10.3  1.6  2.3  0.7 
Prior Service Cost/(Credit) 4.3  1.1  0.2  0.4  (23.6) 1.1  (16.9) 0.5 
Total Net Periodic Benefit Expense/(Income) $ 39.6  $ 14.3  $ (2.7) $ 1.6  $ (45.0) $ —  $ (36.4) $ (0.3)
Intercompany Allocations N/A $ 6.1  $ 6.5  $ 1.9  N/A $ (1.0) $ (1.3) $ (0.4)

The following actuarial assumptions were used to calculate Pension, SERP and PBOP expense amounts:
Pension and SERP PBOP
  For the Years Ended December 31, For the Years Ended December 31,
  2020 2019 2018 2020 2019 2018
Discount Rate 2.6% 3.5% 2.7% 3.6% 3.9% 4.6% 2.7% 3.6% 3.9% 4.6% 3.3% 3.9%
Expected Long-Term Rate of Return 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Compensation/Progression Rate 3.5% 4.0% 3.5% 4.0% 3.5% 4.0% N/A N/A N/A

For the Aquarion Pension and PBOP Plans, the expected long-term rate of return was 7 percent for the years ended December 31, 2020 and 2019. For the Aquarion PBOP Plan, the health care cost trend rate was a range of 3.5 percent to 6.5 percent for the year ended December 31, 2020, and 3.5 percent to 6.8 percent for the year ended December 31, 2019.

The following is a summary of the changes in plan assets and benefit obligations recognized in Regulatory Assets and Other Comprehensive Income (OCI) as well as amounts in Regulatory Assets and OCI that were reclassified as net periodic benefit expense during the years presented:
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Pension and SERP PBOP
  Regulatory Assets OCI Regulatory Assets OCI
  For the Years Ended December 31, For the Years Ended December 31,
(Millions of Dollars)
2020 (1)
2019 2020 2019
2020 (1)
2019 2020 2019
Actuarial Losses Arising During the Year $ 553.1  $ 591.6  $ 24.3  $ 15.4  $ 39.1  $ 4.6  $ 1.3  $ 2.3 
Actuarial Losses Reclassified as Net Periodic Benefit Expense (194.3) (137.8) (7.7) (5.4) (8.0) (8.0) (0.4) (0.3)
Prior Service Cost Arising During the Year 2.0  —  —  —  —  —  —  — 
Prior Service (Cost)/Credit Reclassified as Net Periodic Benefit (Expense)/Income (1.0) (0.7) (0.2) (0.2) 21.3  25.1  (0.1) (1.6)

(1) Amounts include the impact of the CMA asset acquisition from October 9, 2020 through December 31, 2020.

The following is a summary of the remaining Regulatory Assets and Accumulated Other Comprehensive Income amounts that have not been recognized as components of net periodic benefit expense as of December 31, 2020 and 2019:
Regulatory Assets as of December 31, AOCI as of December 31,
(Millions of Dollars) 2020 2019 2020 2019
Pension and SERP
Actuarial Loss $ 2,620.2  $ 2,261.4  $ 107.4  $ 90.8 
Prior Service Cost 6.6  5.6  0.7  0.9 
PBOP
Actuarial Loss $ 235.0  $ 203.9  $ 7.9  $ 7.0 
Prior Service (Credit)/Cost (151.2) (172.5) 0.9  1.0 

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

Estimated Future Benefit Payments:  The following benefit payments, which reflect expected future service, are expected to be paid by the Pension, SERP and PBOP Plans:
(Millions of Dollars) 2021 2022 2023 2024 2025 2026 - 2030
Pension and SERP $ 346.9  $ 355.6  $ 362.9  $ 397.5  $ 373.8  $ 1,883.2 
PBOP 60.1  60.1  59.7  59.1  58.3  273.6 

Eversource Contributions:   Based on the current status of the Pension Plans and federal pension funding requirements, Eversource currently expects to make contributions of $130.0 million in 2021, of which $78.9 million will be contributed by CL&P.  The remaining $51.1 million is expected to be contributed by other Eversource subsidiaries, primarily Eversource Service. Eversource currently estimates contributing $2.8 million to the PBOP Plans in 2021.

Fair Value of Pension and PBOP Plan Assets:  Pension and PBOP funds are held in external trusts.  Trust assets, including accumulated earnings, must be used exclusively for Pension and PBOP payments.  Eversource's investment strategy for its Pension and PBOP Plans is to maximize the long-term rates of return on these plans' assets within an acceptable level of risk.  The investment strategy for each asset category includes a diversification of asset types, fund strategies and fund managers and it establishes target asset allocations that are routinely reviewed and periodically rebalanced.  PBOP assets are comprised of assets held in the PBOP Plan trust, as well as specific assets within the Pension Plan trust (401(h) assets).  The investment policy and strategy of the 401(h) assets is consistent with that of the defined benefit pension plan. Eversource's expected long-term rates of return on Pension and PBOP Plan assets are based on target asset allocation assumptions and related expected long-term rates of return.  In developing its expected long-term rate of return assumptions for the Pension and PBOP Plans, Eversource evaluated input from consultants, as well as long-term inflation assumptions and historical returns. Management has assumed long-term rates of return of 8.25 percent for the Eversource Service Pension and PBOP Plan assets and a 7 percent long-term rate of return for the Aquarion Plans to estimate its 2021 Pension and PBOP costs.
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These long-term rates of return are based on the assumed rates of return for the target asset allocations as follows:
  As of December 31,
2020 2019
 
Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan
Eversource Pension Plan and Tax-Exempt Assets Within PBOP Plan
  Target Asset Allocation Assumed Rate of Return Target Asset Allocation Assumed Rate of Return
Equity Securities:    
United States 15.0  % 8.5  % 15.0  % 8.5  %
Global 10.0  % 8.75  % 10.0  % 8.75  %
Non-United States 8.0  % 8.5  % 8.0  % 8.5  %
Emerging Markets 4.0  % 10.0  % 4.0  % 10.0  %
Debt Securities:
Fixed Income 13.0  % 4.0  % 13.0  % 4.0  %
Public High Yield Fixed Income 4.0  % 6.5  % 4.0  % 6.5  %
Private Debt 15.0  % 9.0  % 15.0  % 9.0  %
Private Equity 15.0  % 12.0  % 15.0  % 12.0  %
Real Assets 16.0  % 7.5  % 16.0  % 7.5  %

The taxable assets within the Eversource PBOP Plan have a target asset allocation of 70 percent equity securities and 30 percent fixed income securities. The target asset allocation for the Aquarion Pension Plan is 54 percent equity, 36 percent debt and 10 percent other. The target asset allocation for the Aquarion PBOP Plan is 54 percent equity, 41 percent debt and 5 percent other.

The following table presents, by asset category, the Pension and PBOP Plan assets recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:  
  
Pension Plan
  
Fair Value Measurements as of December 31,
(Millions of Dollars) 2020 2019
Asset Category: Level 1 Level 2 Uncategorized Total Level 1 Level 2 Uncategorized Total
Equity Securities (1)
$ 630.8  $ —  $ 1,321.7  $ 1,952.5  $ 592.6  $ —  $ 1,349.9  $ 1,942.5 
Fixed Income (2)
113.6  265.6  1,402.5  1,781.7  99.4  303.0  1,222.8  1,625.2 
Private Equity   22.3  —  1,175.4  1,197.7  16.9  —  971.4  988.3 
Real Assets (3)
158.4  —  580.8  739.2  58.7  —  615.0  673.7 
Total $ 925.1  $ 265.6  $ 4,480.4  $ 5,671.1  $ 767.6  $ 303.0  $ 4,159.1  $ 5,229.7 
Less:  401(h) PBOP Assets (4)
    (261.9)     (261.1)
Total Pension Assets     $ 5,409.2      $ 4,968.6 
   PBOP Plan
  
Fair Value Measurements as of December 31,
(Millions of Dollars) 2020 2019
Asset Category: Level 1 Level 2 Uncategorized Total Level 1 Level 2 Uncategorized Total
Equity Securities (1)
$ 176.5  $ —  $ 217.8  $ 394.3  $ 158.0  $ —  $ 187.0  $ 345.0 
Fixed Income (2)
16.0  43.2  152.9  212.1  15.8  39.6  148.1  203.5 
Private Equity —  —  31.5  31.5  —  —  26.5  26.5 
Real Assets (3)
82.1  —  22.2  104.3  51.2  —  48.6  99.8 
Total $ 274.6  $ 43.2  $ 424.4  $ 742.2  $ 225.0  $ 39.6  $ 410.2  $ 674.8 
Add:  401(h) PBOP Assets (4)
    261.9      261.1 
Total PBOP Assets     $ 1,004.1      $ 935.9 

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

(2)     Fixed Income investments that are uncategorized include investments in commingled funds, fixed income funds that invest in a variety of opportunistic and fixed income strategies, and hedge funds that are overlaid with fixed income futures.  

(3)     Real assets include real estate funds and hedge funds.

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

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The Company values assets based on observable inputs when available.  Equity securities, exchange traded funds and futures contracts classified as Level 1 in the fair value hierarchy are priced based on the closing price on the primary exchange as of the balance sheet date.

Fixed income securities, such as government issued securities and corporate bonds, are included in Level 2 and are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows.  The pricing models utilize observable inputs such as recent trades for the same or similar instruments, yield curves, discount margins and bond structures. Swaps are valued using pricing models that incorporate interest rates and equity and fixed income index closing prices to determine a net present value of the cash flows.  

Certain investments, such as commingled funds, private equity investments, real estate funds and hedge funds are valued using the net asset value (NAV) as a practical expedient. These investments are structured as investment companies offering shares or units to multiple investors for the purpose of providing a return. Commingled funds are recorded at NAV provided by the asset manager, which is based on the market prices of the underlying equity securities.  Private Equity investments, Fixed Income partnership funds and Real Assets are valued using the NAV provided by the partnerships, which are based on discounted cash flows of the underlying investments, real estate appraisals or public market comparables of the underlying investments, or the NAV of underlying assets held in hedge funds. Assets valued at NAV are uncategorized in the fair value hierarchy.

B.     Defined Contribution Plans
Eversource maintains defined contribution plans on behalf of eligible participants.  The Eversource 401k Plan provides for employee and employer contributions up to statutory limits.  For eligible employees, the Eversource 401k Plan provides employer matching contributions of either 100 percent up to a maximum of three percent of eligible compensation or 50 percent up to a maximum of eight percent of eligible compensation. The Eversource 401k Plan also contains a K-Vantage feature for the benefit of eligible participants, which provides an additional annual employer contribution based on age and years of service.  K-Vantage participants are not eligible to actively participate in the Eversource Pension Plan.

The total Eversource 401k Plan employer matching contributions, including the K-Vantage contributions, were as follows:
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH
2020 $ 49.4  $ 6.6  $ 11.8  $ 4.1 
2019 41.6  5.5  10.3  3.5 
2018 38.4  5.0  9.7  3.3 

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

Eversource Incentive Plans:  Eversource maintains long-term equity-based incentive plans in which Eversource, CL&P, NSTAR Electric and PSNH employees, officers and board members are eligible to participate.  The incentive plans authorize Eversource to grant up to 6,700,000 new shares for various types of awards, including RSUs and performance shares, to eligible employees, officers, and board members. As of December 31, 2020 and 2019, Eversource had 2,876,601 and 3,302,526 common shares, respectively, available for issuance under these plans.

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

RSUs - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period based upon the fair value of Eversource's common shares at the date of grant.  The par value of RSUs is reclassified to Common Stock from Capital Surplus, Paid In as RSUs become issued as common shares.

Performance Shares - Eversource records compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period.  Performance shares vest based upon the extent to which Company goals are achieved.  Vesting of outstanding performance shares is based upon both the Company's EPS growth over the requisite service period and the total shareholder return as compared to the Edison Electric Institute (EEI) Index during the requisite service period.  The fair value of performance shares is determined at the date of grant using a lattice model.

RSUs:  Eversource granted RSUs under the annual long-term incentive programs that are subject to three-year graded vesting schedules for employees, and one-year graded vesting schedules, or immediate vesting, for board members.  RSUs are paid in shares, reduced by amounts sufficient to satisfy withholdings for income taxes, subsequent to vesting.  A summary of RSU transactions is as follows:
RSUs
(Units)
Weighted Average
Grant-Date Fair Value
Outstanding as of December 31, 2019 774,163  $ 54.43 
Granted 208,937  $ 88.23 
Shares Issued (301,938) $ 57.61 
Forfeited (6,944) $ 60.95 
Outstanding as of December 31, 2020 674,218  $ 63.42 

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The weighted average grant-date fair value of RSUs granted for the years ended December 31, 2020, 2019 and 2018 was $88.23, $67.91 and $56.69, respectively.  As of December 31, 2020 and 2019, the number and weighted average grant-date fair value of unvested RSUs was 379,258 and $77.13 per share, and 439,293 and $63.06 per share, respectively.  During 2020, there were 265,020 RSUs at a weighted average grant-date fair value of $62.99 per share that vested during the year and were either paid or deferred.  As of December 31, 2020, 294,960 RSUs were fully vested and deferred and an additional 360,295 are expected to vest.  

Performance Shares:  Eversource granted performance shares under the annual long-term incentive programs that vest based upon the extent to which Company goals are achieved at the end of three-year performance measurement periods.  Performance shares are paid in shares, after the performance measurement period.  A summary of performance share transactions is as follows:
Performance Shares
(Units)
Weighted Average
Grant-Date Fair Value
Outstanding as of December 31, 2019 486,907  $ 60.30 
Granted 211,224  $ 75.36 
Shares Issued (249,922) $ 55.72 
Forfeited (404) $ 89.85 
Outstanding as of December 31, 2020 447,805  $ 69.93 

The weighted average grant-date fair value of performance shares granted for the years ended December 31, 2020, 2019 and 2018 was $75.36, $68.33 and $56.77, respectively.  As of December 31, 2020 and 2019, the number and weighted average grant-date fair value of unvested performance shares was 404,698 and $70.85 per share, and 427,894 and $60.38 per share, respectively.  During 2020, there were 233,426 performance shares at a weighted average grant-date fair value of $55.75 per share that vested during the year and were either paid or deferred.  As of December 31, 2020, 43,107 performance shares were fully vested and deferred.

Compensation Expense: The total compensation expense and associated future income tax benefits recognized by Eversource, CL&P, NSTAR Electric and PSNH for share-based compensation awards were as follows:
Eversource For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
Compensation Expense $ 33.9  $ 27.3  $ 21.4 
Future Income Tax Benefit 8.9  7.0  5.4 
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Compensation Expense $ 10.9  $ 11.3  $ 3.6  $ 9.8  $ 9.7  $ 3.3  $ 7.8  $ 7.7  $ 2.9 
Future Income Tax Benefit 2.9  3.0  1.0  2.5  2.5  0.8  2.0  1.9  0.7 

As of December 31, 2020, there was $19.3 million of total unrecognized compensation expense related to nonvested share-based awards for Eversource, including $3.6 million for CL&P, $5.7 million for NSTAR Electric, and $1.2 million for PSNH.  This cost is expected to be recognized ratably over a weighted-average period of 1.74 years for Eversource, CL&P and PSNH, and 1.75 years NSTAR Electric.

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

For the years ended December 31, 2020, 2019 and 2018, excess tax benefits associated with the distribution of stock compensation awards reduced income tax expense by $6.6 million, $1.5 million, and $1.5 million, respectively, which increased cash flows from operating activities on the statements of cash flows.

D.     Other Retirement Benefits
Eversource provides retirement and other benefits for certain current and past company officers.  These benefits are accounted for on an accrual basis and expensed over a period equal to the service lives of the employees.  The actuarially-determined liability for these benefits is included in Other Current and Long-Term Liabilities on the balance sheets. The related expense, which includes the allocation of expense associated with Eversource's service company officers that support CL&P, NSTAR Electric and PSNH, is included in Operations and Maintenance Expense on the income statements. The liability and expense amounts are as follows:
Eversource
(Millions of Dollars)
As of and For the Years Ended December 31,
2020 2019 2018
Actuarially-Determined Liability $ 45.7  $ 52.0  $ 49.1 
Other Retirement Benefits Expense 3.3  2.7  2.7 
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  As of and For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH
Actuarially-Determined
Liability
$ 0.2  $ 0.1  $ 1.7  $ 0.2  $ 0.1  $ 1.7  $ 0.3  $ 0.1  $ 1.7 
Other Retirement Benefits
Expense
1.2  1.1  0.5  1.0  0.9  0.4  1.1  1.1  0.4 

12.     INCOME TAXES

The components of income tax expense are as follows:
Eversource
(Millions of Dollars)
For the Years Ended December 31,
2020 2019 2018
Current Income Taxes:      
Federal $ 73.6  $ 56.9  $ 106.5 
State 19.1  10.5  10.6 
Total Current 92.7  67.4  117.1 
Deferred Income Taxes, Net:      
Federal 173.5  138.4  122.6 
State 83.7  71.4  52.2 
Total Deferred 257.2  209.8  174.8 
Investment Tax Credits, Net (3.7) (3.7) (2.9)
Income Tax Expense $ 346.2  $ 273.5  $ 289.0 
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH
Current Income Taxes:                  
Federal $ 12.0  $ 53.9  $ 20.6  $ 68.4  $ 82.6  $ 22.9  $ 54.2  $ 79.3  $ 12.2 
State (6.1) 6.9  3.8  15.4  18.2  2.2  20.9  30.0  (0.5)
Total Current 5.9  60.8  24.4  83.8  100.8  25.1  75.1  109.3  11.7 
Deferred Income Taxes, Net:      
Federal 101.1  33.8  (1.3) 35.2  0.1  5.8  48.5  27.9  15.4 
State 43.4  38.8  8.6  18.8  27.0  10.1  6.4  13.5  20.5 
Total Deferred 144.5  72.6  7.3  54.0  27.1  15.9  54.9  41.4  35.9 
Investment Tax Credits, Net (0.7) (2.6) —  (0.8) (2.6) —  (0.9) (1.8) — 
Income Tax Expense $ 149.7  $ 130.8  $ 31.7  $ 137.0  $ 125.3  $ 41.0  $ 129.1  $ 148.9  $ 47.6 

A reconciliation between income tax expense and the expected tax expense at the statutory rate is as follows:
Eversource
(Millions of Dollars, except percentages)
For the Years Ended December 31,
2020 2019 2018
Income Before Income Tax Expense $ 1,558.9  $ 1,190.1  $ 1,329.5 
Statutory Federal Income Tax Expense at 21% 327.4  249.9  279.2 
Tax Effect of Differences:    
Depreciation (11.1) 1.9  (30.8)
Investment Tax Credit Amortization (3.7) (3.7) (2.9)
State Income Taxes, Net of Federal Impact 44.9  24.6  44.4 
Dividends on ESOP (5.1) (5.1) (5.1)
Tax Asset Valuation Allowance/Reserve Adjustments 33.4  40.1  5.2 
Excess Stock Benefit (6.6) (1.5) (1.5)
EDIT Amortization (48.7) (37.4) (5.0)
Other, Net 15.7  4.7  5.5 
Income Tax Expense $ 346.2  $ 273.5  $ 289.0 
Effective Tax Rate 22.2  % 23.0  % 21.7  %
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  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars, except percentages) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Income Before Income Tax Expense $ 607.6  $ 575.8  $ 179.0  $ 547.8  $ 557.3  $ 175.0  $ 506.8  $ 532.0  $ 163.5 
Statutory Federal Income Tax
Expense at 21%
127.6  120.9  37.6  115.0  117.0  36.8  106.4  111.7  34.3 
Tax Effect of Differences:                  
Depreciation 0.4  (3.7) (1.4) (0.2) (3.0) (0.8) (1.2) (2.8) 0.1 
Investment Tax Credit Amortization (0.7) (2.6) —  (0.8) (2.6) —  (0.9) (1.8) — 
State Income Taxes,
  Net of Federal Impact
(1.2) 36.0  9.8  2.5  35.7  9.8  14.5  33.2  15.8 
Tax Asset Valuation
  Allowance/Reserve Adjustments
30.7  —  —  24.5  —  —  7.1  1.2  — 
Excess Stock Benefit (2.3) (2.3) (0.8) (0.5) (0.5) (0.2) (0.1) (0.1) (0.1)
EDIT Amortization (9.0) (20.4) (15.4) (5.8) (22.9) (4.0) —  —  (4.4)
Other, Net 4.2  2.9  1.9  2.3  1.6  (0.6) 3.3  7.5  1.9 
Income Tax Expense $ 149.7  $ 130.8  $ 31.7  $ 137.0  $ 125.3  $ 41.0  $ 129.1  $ 148.9  $ 47.6 
Effective Tax Rate 24.6  % 22.7  % 17.7  % 25.0  % 22.5  % 23.4  % 25.5  % 28.0  % 29.1  %

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

Deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the carrying amounts and the tax basis of assets and liabilities.  The tax effect of temporary differences is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and relevant accounting authoritative literature.  The tax effects of temporary differences that give rise to the net accumulated deferred income tax obligations are as follows:
  As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR
Electric
PSNH Eversource CL&P NSTAR
Electric
PSNH
Deferred Tax Assets:            
Employee Benefits $ 602.4  $ 144.5  $ 79.8  $ 56.6  $ 509.4  $ 125.4  $ 54.8  $ 46.7 
Derivative Liabilities 92.6  91.8  —  —  105.0  103.6  —  — 
Regulatory Deferrals - Liabilities 259.8  30.2  161.8  13.4  267.0  37.1  165.7  19.0 
Allowance for Uncollectible Accounts 87.5  42.3  20.9  4.6  56.7  25.7  17.7  2.8 
Tax Effect - Tax Regulatory Liabilities 810.9  331.4  271.8  105.2  830.4  333.5  280.9  111.3 
Net Operating Loss Carryforwards 12.7  —  —  —  9.1  —  —  — 
Purchase Accounting Adjustment 54.5  —  —  —  58.7  —  —  — 
Other 200.3  100.9  14.3  19.8  190.4  92.0  35.8  20.0 
Total Deferred Tax Assets 2,120.7  741.1  548.6  199.6  2,026.7  717.3  554.9  199.8 
Less:  Valuation Allowance 48.3  33.7  —  —  43.0  24.9  —  — 
Net Deferred Tax Assets $ 2,072.4  $ 707.4  $ 548.6  $ 199.6  $ 1,983.7  $ 692.4  $ 554.9  $ 199.8 
Deferred Tax Liabilities:                
Accelerated Depreciation and Other
  Plant-Related Differences
$ 4,153.6  $ 1,438.1  $ 1,489.4  $ 453.8  $ 3,901.0  $ 1,362.2  $ 1,391.9  $ 428.9 
Property Tax Accruals 88.7  39.0  37.0  5.8  76.8  36.8  29.0  4.7 
Regulatory Amounts:
Regulatory Deferrals - Assets 1,376.7  444.8  324.4  263.4  1,155.6  340.7  276.2  260.9 
Tax Effect - Tax Regulatory Assets 244.6  174.4  11.3  8.6  238.2  171.7  11.7  8.3 
Goodwill Regulatory Asset - 1999 Merger 86.0  —  73.8  —  90.6  —  77.8  — 
Derivative Assets 17.8  17.8  —  —  19.7  19.7  —  — 
Other 200.3  1.6  72.6  5.6  257.6  5.9  125.6  3.2 
Total Deferred Tax Liabilities $ 6,167.7  $ 2,115.7  $ 2,008.5  $ 737.2  $ 5,739.5  $ 1,937.0  $ 1,912.2  $ 706.0 

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

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

Carryforwards:  The following table provides the amounts and expiration dates of state tax credit and loss carryforwards and federal tax credit and net operating loss carryforwards:
As of December 31,
  2020 2019
(Millions of Dollars) Eversource CL&P NSTAR
Electric
PSNH Expiration Range Eversource CL&P NSTAR
Electric
PSNH Expiration Range
Federal Net Operating Loss $ —  $ —  $ —  $ —  $ 19.8  $ —  $ —  $ —  2033 - 2037
State Net Operating Loss 183.4  —  —  —  2021 - 2040 65.5  —  —  —  2020 - 2038
State Tax Credit 186.6  133.4  —  —  2020 - 2025 168.1  122.3  —  —  2019 - 2024
State Charitable Contribution 10.2  —  —  —  2020 - 2024 9.9  —  —  —  2019 - 2023

In 2020, the company increased its valuation allowance reserve for state credits by $10.3 million ($8.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. In 2019, the Company increased its valuation allowance reserve for state credits by $18.5 million ($14.2 million for CL&P), net of tax, to reflect an update for expiring tax credits.

For 2020 and 2019, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $48.3 million and $43.0 million (net of tax), respectively.  

Unrecognized Tax Benefits:  A reconciliation of the activity in unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:
(Millions of Dollars) Eversource CL&P
Balance as of January 1, 2018 $ 51.7  $ 18.1 
Gross Increases - Current Year 9.2  3.2 
Gross Decreases - Prior Year (6.5) (0.9)
Lapse of Statute of Limitations (8.5) (2.2)
Balance as of December 31, 2018 45.9  18.2 
Gross Increases - Current Year 12.1  4.0 
Gross Increases - Prior Year 3.4  3.3 
Lapse of Statute of Limitations (6.4) (2.4)
Balance as of December 31, 2019 55.0  23.1 
Gross Increases - Current Year 11.9  4.6 
Gross Increases - Prior Year 1.4  0.7 
Lapse of Statute of Limitations (6.5) (2.6)
Balance as of December 31, 2020 $ 61.8  $ 25.8 

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Interest and Penalties:  Interest on uncertain tax positions is recorded and generally classified as a component of Other Interest Expense on the statements of income.  However, when resolution of uncertainties results in the Company receiving interest income, any related interest benefit is recorded in Other Income, Net on the statements of income.  No penalties have been recorded.  The amount of interest expense/(income) on uncertain tax positions recognized and the related accrued interest payable/(receivable) are as follows:  
  Other Interest Income Accrued Interest Expense
  For the Years Ended December 31, As of December 31,
(Millions of Dollars) 2020 2019 2018 2020 2019
Eversource $ —  $ —  $ (1.7) $ 0.1  $ 0.1 

Tax Positions:  During 2020 and 2019, Eversource did not resolve any of its uncertain tax positions.

Open Tax Years:  The following table summarizes Eversource, CL&P, NSTAR Electric, and PSNH's tax years that remain subject to examination by major tax jurisdictions as of December 31, 2020:
Description Tax Years
Federal 2020
Connecticut 2017 - 2020
Massachusetts 2017 - 2020
New Hampshire 2017 - 2020

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

13.     COMMITMENTS AND CONTINGENCIES

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

Environmental reserves are accrued when assessments indicate it is probable that a liability has been incurred and an amount can be reasonably estimated.  The approach used estimates the liability based on the most likely action plan from a variety of available remediation options, including no action required or several different remedies ranging from establishing institutional controls to full site remediation and monitoring.  These liabilities are estimated on an undiscounted basis and do not assume that the amounts are recoverable from insurance companies or other third parties.  The environmental reserves include sites at different stages of discovery and remediation and do not include any unasserted claims.

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

The amounts recorded as environmental reserves are included in Other Current Liabilities and Other Long-Term Liabilities on the balance sheets and represent management's best estimate of the liability for environmental costs, and take into consideration site assessment, remediation and long-term monitoring costs.  The environmental reserves also take into account recurring costs of managing hazardous substances and pollutants, mandated expenditures to remediate contaminated sites and any other infrequent and non-recurring clean-up costs.  A reconciliation of the activity in the environmental reserves is as follows:
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH
Balance as of January 1, 2019 $ 64.7  $ 5.4  $ 10.9  $ 5.4 
Additions 26.5  7.0  0.5  2.8 
Payments/Reductions (10.2) (1.0) (3.4) (0.7)
Balance as of December 31, 2019 81.0  11.4  8.0  7.5 
Increase Due to CMA Asset Acquisition 22.9  —  —  — 
Additions 8.4  4.2  0.7  — 
Payments/Reductions (9.9) (3.3) (4.0) (0.4)
Balance as of December 31, 2020 $ 102.4  $ 12.3  $ 4.7  $ 7.1 

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The number of environmental sites for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
Eversource CL&P NSTAR Electric PSNH
2020 63 15 12 9
2019 57 15 15 9

The increase in the reserve balance was due primarily to the addition of nine MGP sites at the EGMA natural gas business resulting from the CMA acquisition and changes in cost estimates at the natural gas companies MGP sites and at CL&P for which additional remediation will be required.

Included in the number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability.  The reserve balances related to these former MGP sites were $92.2 million and $67.9 million as of December 31, 2020 and 2019, respectively, and related primarily to the natural gas business segment.

As of December 31, 2020, for 6 environmental sites (1 for CL&P) that are included in the Company's reserve for environmental costs, the information known and the nature of the remediation options allow for the Company to estimate the range of losses for environmental costs.  As of December 31, 2020, $41.7 million (including $0.9 million for CL&P) had been accrued as a liability for these sites, which represents the low end of the range of the liabilities for environmental costs.  Management believes that additional losses of up to approximately $33 million ($0.5 million at CL&P) may be incurred in executing current remediation plans for these sites.  

As of December 31, 2020, for 15 environmental sites (7 for CL&P and 2 for NSTAR Electric) that are included in the Company's reserve for environmental costs, management cannot reasonably estimate the exposure to loss in excess of the reserve, or range of loss, as these sites are under investigation and/or there is significant uncertainty as to what remedial actions, if any, the Company may be required to undertake.  As of December 31, 2020, $17.5 million (including $2.6 million for CL&P and $0.4 million for NSTAR Electric) had been accrued as a liability for these sites.  As of December 31, 2020, for the remaining 42 environmental sites (including 7 for CL&P, 10 for NSTAR Electric and 9 for PSNH) that are included in the Company's reserve for environmental costs, the $43.2 million accrual (including $8.8 million for CL&P, $4.3 million for NSTAR Electric and $7.1 million for PSNH) represents management's best estimate of the probable liability and no additional loss is anticipated at this time.

PSNH, NSTAR Gas, EGMA and Yankee Gas have rate recovery mechanisms for MGP related environmental costs, therefore, changes in their respective environmental reserves do not impact Net Income. CL&P is allowed to defer certain environmental costs for future recovery.  NSTAR Electric does not have a separate environmental cost recovery regulatory mechanism.

B.     Long-Term Contractual Arrangements
Estimated Future Annual Costs:  The estimated future annual costs of significant executed, non-cancelable, long-term contractual arrangements in effect as of December 31, 2020 are as follows:
Eversource              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Renewable Energy $ 650.0  $ 716.8  $ 652.3  $ 648.8  $ 651.5  $ 3,490.7  $ 6,810.1 
Natural Gas Procurement 558.9  374.1  292.0  263.1  260.2  1,825.8  3,574.1 
Purchased Power and Capacity 69.4  75.5  86.8  79.6  60.3  13.2  384.8 
Peaker CfDs 30.0  34.2  46.9  41.6  31.3  102.4  286.4 
Transmission Support Commitments 20.5  18.0  18.1  19.2  19.7  19.7  115.2 
Total $ 1,328.8  $ 1,218.6  $ 1,096.1  $ 1,052.3  $ 1,023.0  $ 5,451.8  $ 11,170.6 
CL&P              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Renewable Energy $ 484.4  $ 548.3  $ 547.2  $ 549.1  $ 551.2  $ 2,645.5  $ 5,325.7 
Purchased Power and Capacity 65.8  71.9  83.3  76.6  57.4  0.1  355.1 
Peaker CfDs 30.0  34.2  46.9  41.6  31.3  102.4  286.4 
Transmission Support Commitments 8.1  7.1  7.2  7.6  7.8  7.8  45.6 
Total $ 588.3  $ 661.5  $ 684.6  $ 674.9  $ 647.7  $ 2,755.8  $ 6,012.8 
NSTAR Electric              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Renewable Energy $ 98.0  $ 100.0  $ 75.4  $ 72.9  $ 73.1  $ 522.1  $ 941.5 
Purchased Power and Capacity 3.1  3.1  3.0  3.0  2.9  13.1  28.2 
Transmission Support Commitments 8.1  7.1  7.1  7.5  7.7  7.7  45.2 
Total $ 109.2  $ 110.2  $ 85.5  $ 83.4  $ 83.7  $ 542.9  $ 1,014.9 
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PSNH              
(Millions of Dollars) 2021 2022 2023 2024 2025 Thereafter Total
Renewable Energy $ 67.6  $ 68.5  $ 29.7  $ 26.8  $ 27.2  $ 323.1  $ 542.9 
Purchased Power and Capacity 0.5  0.5  0.5  —  —  —  1.5 
Transmission Support Commitments 4.3  3.8  3.8  4.1  4.2  4.2  24.4 
Total $ 72.4  $ 72.8  $ 34.0  $ 30.9  $ 31.4  $ 327.3  $ 568.8 

Renewable Energy:  Renewable energy contracts include non-cancellable commitments under contracts of CL&P, NSTAR Electric and PSNH for the purchase of energy and capacity from renewable energy facilities.  Such contracts extend through 2041 for both CL&P and NSTAR Electric and 2033 for PSNH.

As required by 2018 regulation, CL&P and UI entered into ten-year contracts to purchase a combined total of approximately 9 million MWh annually from the Millstone Nuclear Power Station 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. PURA approved the contracts on September 18, 2019. Energy deliveries and payments under these contracts began in the fourth quarter of 2019.

CL&P and UI were also required by 2018 regulation to enter into eight-year contracts to purchase a combined amount of approximately 18 percent of the facility's output (approximately 15 percent by CL&P) from the Seabrook Nuclear Power Plant beginning January 1, 2022. The Seabrook Nuclear Power Plant has an approximate 1,250 MW nameplate capacity. On November 22, 2019, CL&P and UI each signed an eight-year contract with the owner of the Seabrook Nuclear Power Plant. PURA approved the contracts on November 27, 2019.

The total estimated future cost of the Millstone Nuclear Power Station and Seabrook Nuclear Power Plant energy purchase contracts are $3.6 billion and are reflected in the table above. CL&P sells the energy purchased under these contracts into the market and uses the proceeds from these energy sales to offset the contract costs.  As the net costs under these contracts are recovered from customers in future rates, the contracts do not have an impact on the net income of CL&P. These contracts do not meet the definition of a derivative, and accordingly, the costs of these contracts are being accounted for as incurred.

Excluded from the table above are long-term commitments of NSTAR Electric pertaining to the Massachusetts Clean Energy 83D contract, for which construction had not commenced by December 31, 2020. Estimated costs under this contract are expected to begin in 2023 and range between $150 million and $415 million per year under a 20-year contract, totaling approximately $6.7 billion.

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

Natural Gas Procurement:  Eversource's natural gas distribution businesses have long-term contracts for the purchase, transportation and storage of natural gas as part of its portfolio of supplies, which extend through 2045. Long-term purchases for natural gas procurement include contracts of EGMA, which was formed as a result of the CMA asset acquisition.

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

CL&P, along with UI, has three capacity CfDs consisting of two generation units and one demand response project.  The combined capacities of these contracts as of December 31, 2020 and 2019 were 675 MW and 676 MW, respectively. The capacity CfDs extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set contractual capacity price and the capacity market prices received by the generation facilities in the ISO-NE capacity markets.  CL&P has a sharing agreement with UI, whereby UI shares 20 percent of the costs and benefits of these contracts.  CL&P's portion of the costs and benefits of these contracts will be paid by, or refunded to, CL&P's customers.

The contractual obligations table above does not include CL&P's, NSTAR Electric's or PSNH's standard/basic service contracts for the purchase of energy supply, the amounts of which vary with customers' energy needs.

Peaker CfDs:  CL&P, along with UI, has three peaker CfDs for a total of approximately 500 MW of peaking capacity through 2042.  CL&P has a sharing agreement with UI, whereby CL&P is responsible for 80 percent and UI for 20 percent of the net costs or benefits of these CfDs.  The Peaker CfDs pay the generation facility owner the difference between capacity, forward reserve and energy market revenues and a cost-of-service payment stream for 30 years.  The ultimate cost or benefit to CL&P under these contracts will depend on the costs of plant operation and the prices that the projects receive for capacity and other products in the ISO-NE markets.  CL&P's portion of the amounts paid or received under the Peaker CfDs are recovered from, or refunded to, CL&P's customers.

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Transmission Support Commitments:  Along with other New England utilities, CL&P, NSTAR Electric and PSNH entered into a series of agreements in the 1980’s to support the costs of, and receive rights to use, transmission and terminal facilities that were built to import electricity from the Hydro-Québec system in Canada. CL&P, NSTAR Electric and PSNH were obligated to pay, over a 30-year period ending in 2020, their proportionate shares of the annual operation and maintenance expenses and capital costs of those facilities. On December 18, 2020, the parties to these agreements submitted to FERC an offer of settlement and amendments to these agreements implementing the terms of an extension for an additional 20-year period. The parties have requested these terms to be placed in effect as of January 1, 2021 or such other date as authorized by FERC. The estimated future annual costs included in the contractual obligations table above, are subject to the approval of these amendments by FERC and can vary as a result.

The total costs incurred under these agreements were as follows:
Eversource For the Years Ended December 31,
(Millions of Dollars) 2020 2019 2018
Renewable Energy $ 584.2  $ 320.8  $ 218.5 
Natural Gas Procurement 453.4  448.5  432.4 
Purchased Power and Capacity 62.7  62.1  72.0 
Peaker CfDs 22.7  13.0  20.9 
Transmission Support Commitments 22.1  21.8  23.4 
  For the Years Ended December 31,
  2020 2019 2018
(Millions of Dollars) CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH CL&P NSTAR
Electric
PSNH
Renewable Energy $ 426.3  $ 88.8  $ 69.1  $ 160.6  $ 89.9  $ 70.3  $ 63.2  $ 89.8  $ 65.5 
Purchased Power and Capacity 59.3  3.1  0.3  50.4  5.1  6.6  49.4  4.4  18.2 
Peaker CfDs 22.7  —  —  13.0  —  —  20.9  —  — 
Transmission Support Commitments 8.7  8.7  4.7  8.6  8.6  4.6  9.2  9.2  5.0 

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

Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high-level waste disposal contracts between the Yankee Companies and the DOE. The court previously awarded the Yankee Companies damages for Phases I, II 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 a fourth set of lawsuits against the DOE in the Court of Federal Claims. The Yankee Companies sought monetary damages totaling $104.4 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (DOE Phase IV). On February 21, 2019, the Yankee Companies received a partial summary judgment and partial final judgment in their favor for the undisputed amount of monetary damages of $103.2 million.  The court awarded CYAPC, YAEC and MYAPC damages of $40.7 million, $28.1 million and $34.4 million, respectively. The DOE did not appeal the court's judgment and the decision became final on April 23, 2019. On June 12, 2019, each of the Yankee Companies received the damages proceeds. On June 12, 2019, the court accepted an offer of judgment in the amount of $0.5 million to settle the disputed amount of approximately $1 million in Phase IV contested damages. The Yankee Companies received the $0.5 million payment in July 2019.

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

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D.    Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric and PSNH, in the form of guarantees. Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.  

Guarantees issued on behalf of unconsolidated entities, including equity method offshore wind investments, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. Eversource regularly reviews performance risk under these guarantee arrangements, and in the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and was $0.5 million as of December 31, 2020.

The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties as of December 31, 2020:
Company (Obligor) Description Maximum Exposure
(in millions)
Expiration Dates
North East Offshore LLC
Construction-related purchase agreements with third-party contractors (1)
$ 30.5 
 (1)
Eversource Investment LLC
Funding and indemnification obligations of North East Offshore LLC (2)
— 
 (2)
Sunrise Wind LLC
OREC capacity production (3)
2.2 
 (3)
South Fork Wind, LLC
Transmission interconnection
1.7 
Bay State Wind LLC Real estate purchase 2.5  2021
Various
Surety bonds (4)
56.6  2021 - 2023
Rocky River Realty Company and Eversource Service
Lease payments for real estate 5.2  2024

(1)    Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, North East Offshore LLC (NEO), under which Eversource parent agreed to guarantee 50 percent of NEO’s performance of obligations under certain purchase agreements with third-party contactors, in an amount not to exceed $1.3 billion with an expiration date in 2025. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 2, below. The guarantee expires upon the full performance of the guaranteed obligations.    

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

(3)    On October 25, 2019, Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed on October 23, 2019, by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The guarantee expires upon the full performance of the guaranteed obligations.    

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

Letter of Credit: On September 16, 2020, Eversource parent entered into a guarantee on behalf of Eversource Investment LLC, which holds Eversource's investments in offshore wind-related equity method investments, under which Eversource parent would guarantee Eversource Investment LLC's obligations under a letter of credit facility with a financial institution that Eversource Investment LLC may request in an aggregate amount of up to approximately $25 million.

E.    FERC ROE Complaints
Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.

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

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

Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both December 31, 2020 and 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 both December 31, 2020 and 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 and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.

The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.

If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.

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

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

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

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

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

F.    Eversource and NSTAR Electric Boston Harbor Civil Action
In 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts against NSTAR Electric, HEEC, and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants").  The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor.  

The parties reached a settlement pursuant to which HEEC agreed to install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and remove portions of the existing cable. Construction of the new distribution cable was completed in August 2019 and removal of the portions of the existing cable was completed in January 2020. All issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and subsequently, such litigation then dismissed with prejudice.

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 was fully expensed in 2018. In connection with the new cable that was placed into service, a corresponding ARO was recognized for approximately $32 million within Other Long-Term Liabilities on the Eversource and NSTAR Electric balance sheets as of December 31, 2019.

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

14.     LEASES

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

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

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

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

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

The components of lease cost, prior to amounts capitalized, are as follows:
For the Years Ended December 31,
2020 2019
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Financing Lease Cost:
Amortization of Right-of-use-Assets $ 2.6  $ 0.7  $ 0.2  $ 0.1  $ 1.7  $ 0.7  $ 0.2  $ 0.1 
Interest on Lease Liabilities 1.4  0.3  0.6  —  1.2  0.6  0.6  — 
Total Finance Lease Cost 4.0  1.0  0.8  0.1  2.9  1.3  0.8  0.1 
Operating Lease Cost 11.1  0.6  2.1  0.1  11.7  0.5  3.4  0.1 
Variable Lease Cost 57.8  12.2  —  45.6  60.5  13.3  —  47.2 
Total Lease Cost $ 72.9  $ 13.8  $ 2.9  $ 45.8  $ 75.1  $ 15.1  $ 4.2  $ 47.4 

Operating lease rental payments charged to expense in 2018 (which exclude CL&P's and PSNH's energy purchase contracts) were as follows:
(Millions of Dollars) Eversource CL&P NSTAR Electric PSNH
2018 $ 10.8  $ 10.9  $ 11.8  $ 2.5 

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

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Supplemental balance sheet information related to leases is as follows:
As of December 31, 2020
(Millions of Dollars) Balance Sheet Classification Eversource CL&P NSTAR Electric PSNH
Operating Leases:
Operating Lease Right-of-use-Assets, Net Other Long-Term Assets $ 55.2  $ 0.3  $ 23.6  $ 0.3 
Operating Lease Liabilities
Operating Lease Liabilities - Current Portion Other Current Liabilities $ 9.5  $ 0.2  $ 0.7  $ — 
Operating Lease Liabilities - Long-Term Other Long-Term Liabilities 45.7  0.1  22.9  0.3 
Total Operating Lease Liabilities $ 55.2  $ 0.3  $ 23.6  $ 0.3 
Finance Leases:
Finance Lease Right-of-use-Assets, Net Property, Plant and Equipment, Net $ 60.5  $ 0.7  $ 3.5  $ 0.8 
Finance Lease Liabilities
Finance Lease Liabilities - Current Portion Other Current Liabilities $ 5.0  $ 1.4  $ —  $ 0.1 
Finance Lease Liabilities - Long-Term Other Long-Term Liabilities 57.6  —  4.8  0.7 
Total Finance Lease Liabilities $ 62.6  $ 1.4  $ 4.8  $ 0.8 
As of December 31, 2019
(Millions of Dollars) Balance Sheet Classification Eversource CL&P NSTAR Electric PSNH
Operating Leases:
Operating Lease Right-of-use-Assets, Net Other Long-Term Assets $ 49.9  $ 0.7  $ 24.2  $ 0.4 
Operating Lease Liabilities
Operating Lease Liabilities - Current Portion Other Current Liabilities $ 8.6  $ 0.5  $ 0.7  $ 0.1 
Operating Lease Liabilities - Long-Term Other Long-Term Liabilities 41.3  0.2  23.5  0.3 
Total Operating Lease Liabilities $ 49.9  $ 0.7  $ 24.2  $ 0.4 
Finance Leases:
Finance Lease Right-of-use-Assets, Net Property, Plant and Equipment, Net $ 8.2  $ 1.9  $ 3.3  $ 0.9 
Finance Lease Liabilities
Finance Lease Liabilities - Current Portion Other Current Liabilities $ 2.4  $ 1.6  $ —  $ 0.1 
Finance Lease Liabilities - Long-Term Other Long-Term Liabilities 8.1  1.4  4.4  0.8 
Total Finance Lease Liabilities $ 10.5  $ 3.0  $ 4.4  $ 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):
As of December 31,
2020 2019
Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Weighted-Average Remaining Lease Term (Years):
Operating Leases 10 3 19 8 12 2 20 9
Finance Leases 17 1 21 8 12 2 22 9
Weighted-Average Discount Rate (Percentage):
Operating Leases 4.0  % 2.4  % 4.1  % 3.7  % 3.9  % 2.5  % 4.1  % 3.7  %
Finance Leases 2.9  % 10.5  % 2.9  % 3.5  % 4.0  % 10.5  % 2.9  % 3.5  %
Eversource CL&P NSTAR Electric PSNH
For the Year Ended December 31, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows from Operating Leases $ 10.9  $ 0.6  $ 1.8  $ 0.1 
Operating Cash Flows from Finance Leases 1.7  0.3  0.6  — 
Financing Cash Flows from Finance Leases 2.8  1.6  —  0.1 
Supplemental Non-Cash Information on Lease Liabilities:
Right-of-use-Assets Obtained in Exchange for New Operating Lease Liabilities 0.6  0.1  0.2  — 
Right-of-use-Assets Obtained in Exchange for New Finance Lease Liabilities 0.7  —  0.3  — 
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Eversource also acquired $14.7 million of right-of-use assets in exchange for the assumption of new operating lease liabilities and $54.2 million of right-of-use assets in exchange for the assumption of new finance lease liabilities as a result of the CMA asset acquisition.

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

Future minimum lease payments, excluding variable costs, under long-term leases, as of December 31, 2020 are as follows:
Operating Leases Finance Leases

(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH Eversource CL&P NSTAR Electric PSNH
Year Ending December 31,
2021 $ 11.4  $ 0.2  $ 1.6  $ 0.1  $ 7.2  $ 1.5  $ 0.6  $ 0.1 
2022 9.0  0.1  1.6  0.1  5.7  —  0.6  0.1 
2023 6.4  —  1.6  0.1  4.9  —  0.6  0.1 
2024 4.5  —  1.7  —  4.8  —  0.7  0.1 
2025 3.4  —  1.7  —  4.7  —  0.7  0.1 
Thereafter 36.2  —  27.0  0.1  60.7  —  13.0  0.4 
Future lease payments 70.9  0.3  35.2  0.4  88.0  1.5  16.2  0.9 
Less amount representing interest 15.7  —  11.6  0.1  25.4  0.1  11.4  0.1 
Present value of future minimum lease payments $ 55.2  $ 0.3  $ 23.6  $ 0.3  $ 62.6  $ 1.4  $ 4.8  $ 0.8 

15.     FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Preferred Stock, Long-Term Debt and Rate Reduction Bonds:  The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections.  The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields.  The fair values provided in the table below are classified as Level 2 within the fair value hierarchy.  Carrying amounts and estimated fair values are as follows:
  Eversource CL&P NSTAR Electric PSNH
(Millions of Dollars) Carrying Amount Fair Value Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
As of December 31, 2020:
Preferred Stock Not Subject to Mandatory Redemption $ 155.6  $ 169.1  $ 116.2  $ 123.4  $ 43.0  $ 45.7  $ —  $ — 
Long-Term Debt 16,179.1  18,420.1  3,914.8  4,800.9  3,643.2  4,294.0  1,099.1  1,207.0 
Rate Reduction Bonds 540.1  603.4  —  —  —  —  540.1  603.4 
As of December 31, 2019:
Preferred Stock Not Subject to Mandatory Redemption $ 155.6  $ 162.0  $ 116.2  $ 117.8  $ 43.0  $ 44.2  $ —  $ — 
Long-Term Debt 14,098.2  15,170.2  3,518.1  4,058.0  3,342.1  3,659.9  951.6  1,005.7 
Rate Reduction Bonds 583.3  625.9  —  —  —  —  583.3  625.9 

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

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

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16.     ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in accumulated other comprehensive income/(loss) by component, net of tax, are as follows:
  For the Year Ended December 31, 2020 For the Year Ended December 31, 2019
Eversource
(Millions of Dollars)
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
Balance as of January 1st $ (3.0) $ 0.7  $ (62.8) $ (65.1) $ (4.4) $ (0.5) $ (55.1) $ (60.0)
OCI Before Reclassifications —  0.4  (19.6) (19.2) —  1.2  (13.3) (12.1)
Amounts Reclassified from AOCI 1.6  —  6.3  7.9  1.4  —  5.6  7.0 
  Net OCI 1.6  0.4  (13.3) (11.3) 1.4  1.2  (7.7) (5.1)
Balance as of December 31st $ (1.4) $ 1.1  $ (76.1) $ (76.4) $ (3.0) $ 0.7  $ (62.8) $ (65.1)

Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI. The related tax effects of the defined benefit plan OCI amounts before reclassifications recognized in AOCI were net deferred tax assets of $6.0 million and $4.4 million in 2020 and 2019, respectively, and deferred tax liabilities of $0.2 million in 2018.

The following table sets forth the amounts reclassified from AOCI by component and the impacted line item on the statements of income:
  Amounts Reclassified from AOCI  
Eversource
(Millions of Dollars)
For the Years Ended December 31, Statements of Income
Line Item Impacted
2020 2019 2018
Qualified Cash Flow Hedging Instruments $ (2.5) $ (2.5) $ (2.8) Interest Expense
Tax Effect 0.9  1.1  1.0  Income Tax Expense
Qualified Cash Flow Hedging Instruments, Net of Tax $ (1.6) $ (1.4) $ (1.8)  
Defined Benefit Plan Costs:        
Amortization of Actuarial Losses $ (8.1) $ (5.7) $ (6.0)
Other Income, Net (1)
Amortization of Prior Service Cost (0.3) (1.8) (0.4)
Other Income, Net (1)
Total Defined Benefit Plan Costs (8.4) (7.5) (6.4)  
Tax Effect 2.1  1.9  1.6  Income Tax Expense
Defined Benefit Plan Costs, Net of Tax $ (6.3) $ (5.6) $ (4.8)  
Total Amounts Reclassified from AOCI, Net of Tax $ (7.9) $ (7.0) $ (6.6)  

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

As of December 31, 2020, it is estimated that a pre-tax amount of $1.8 million ($0.5 million for NSTAR Electric and $1.3 million for PSNH) will be reclassified from AOCI as a decrease to Net Income over the next 12 months as a result of the amortization of the interest rate swap agreements which have been settled.  
17.     DIVIDEND RESTRICTIONS

Eversource parent's ability to pay dividends may be affected by certain state statutes, the ability of its subsidiaries to pay common dividends and the leverage restriction tied to its consolidated total debt to total capitalization ratio requirement in its revolving credit agreements.  Pursuant to the joint revolving credit agreement of Eversource, CL&P, PSNH, NSTAR Gas, Yankee Gas and Aquarion Water Company of Connecticut, the joint revolving credit agreement of Eversource and EGMA, and to the NSTAR Electric revolving credit agreement, each company is required to maintain consolidated total indebtedness to total capitalization ratio of no greater than 65 percent at the end of each fiscal quarter. As of December 31, 2020, all companies were in compliance with such covenant and in compliance with all such provisions of the revolving credit agreements that may restrict the payment of dividends as of December 31, 2020.

The Retained Earnings balances subject to dividend restrictions were $4.61 billion for Eversource, $2.17 billion for CL&P, $2.53 billion for NSTAR Electric and $615.0 million for PSNH as of December 31, 2020.

CL&P, NSTAR Electric and PSNH are subject to Section 305 of the Federal Power Act that makes it unlawful for a public utility to make or pay a dividend from any funds "properly included in its capital account." Management believes that this Federal Power Act restriction, as applied to CL&P, NSTAR Electric and PSNH, would not be construed or applied by the FERC to prohibit the payment of dividends from retained earnings for lawful and legitimate business purposes. In addition, certain state statutes may impose additional limitations on such companies and on NSTAR Gas, Yankee Gas, EGMA, Aquarion Water Company of Connecticut, Aquarion Water Company of Massachusetts and Aquarion Water Company of New Hampshire. Such state law restrictions do not restrict the payment of dividends from retained earnings or net income.
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18.     COMMON SHARES

The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric and PSNH that were authorized and issued, as well as the respective per share par values:  
  Shares
 
Par Value
Authorized as of December 31, 2020 and 2019 Issued as of December 31,
2020 2019
Eversource $ 380,000,000  357,818,402  345,858,402 
CL&P $ 10  24,500,000  6,035,205  6,035,205 
NSTAR Electric $ 100,000,000  200  200 
PSNH $ 100,000,000  301  301 

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

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

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

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

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

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

Treasury Shares: As of December 31, 2020 and 2019, there were 14,864,379 and 15,977,757 Eversource common shares held as treasury shares, respectively.  As of December 31, 2020 and 2019, there were 342,954,023 and 329,880,645 Eversource common shares outstanding, respectively.

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

19.     PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION

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

CL&P is authorized to issue up to 9,000,000 shares of preferred stock, par value $50 per share, and NSTAR Electric is authorized to issue 2,890,000 shares of preferred stock, par value $100 per share. Holders of preferred stock of CL&P and NSTAR Electric are entitled to receive cumulative dividends in preference to any payment of dividends on the common stock. Upon liquidation, holders of preferred stock of CL&P and NSTAR Electric are entitled to receive a liquidation preference before any distribution to holders of common stock in an amount equal to the par value of the preferred stock plus accrued and unpaid dividends. If the net assets were to be insufficient to pay the liquidation preference in full, then the net assets would be distributed ratably to all holders of preferred stock. The preferred stock of CL&P and NSTAR Electric is subject to optional redemption by the CL&P and NSTAR Electric Boards of Directors at any time.
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Details of preferred stock not subject to mandatory redemption are as follows (in millions, except in redemption price and shares):
  Redemption Price
Per Share
Shares Outstanding as of December 31, As of December 31,
Series 2020 2019 2020 2019
CL&P        
$1.90 Series of 1947 $ 52.50  163,912  163,912  $ 8.2  $ 8.2 
$2.00 Series of 1947 $ 54.00  336,088  336,088  16.8  16.8 
$2.04 Series of 1949 $ 52.00  100,000  100,000  5.0  5.0 
$2.20 Series of 1949 $ 52.50  200,000  200,000  10.0  10.0 
3.90% Series of 1949 $ 50.50  160,000  160,000  8.0  8.0 
$2.06 Series E of 1954 $ 51.00  200,000  200,000  10.0  10.0 
$2.09 Series F of 1955 $ 51.00  100,000  100,000  5.0  5.0 
4.50% Series of 1956 $ 50.75  104,000  104,000  5.2  5.2 
4.96% Series of 1958 $ 50.50  100,000  100,000  5.0  5.0 
4.50% Series of 1963 $ 50.50  160,000  160,000  8.0  8.0 
5.28% Series of 1967 $ 51.43  200,000  200,000  10.0  10.0 
$3.24 Series G of 1968 $ 51.84  300,000  300,000  15.0  15.0 
6.56% Series of 1968 $ 51.44  200,000  200,000  10.0  10.0 
Total CL&P   2,324,000  2,324,000  $ 116.2  $ 116.2 
NSTAR Electric          
4.25% Series of 1956 $ 103.625  180,000  180,000  $ 18.0  $ 18.0 
4.78% Series of 1958 $ 102.80  250,000  250,000  25.0  25.0 
Total NSTAR Electric   430,000  430,000  $ 43.0  $ 43.0 
Fair Value Adjustment due to Merger with NSTAR   (3.6) (3.6)
Other
6.00% Series of 1958 $ 100.00  23  23  $ —  $ — 
Total Eversource - Noncontrolling Interest - Preferred Stock of Subsidiaries $ 155.6  $ 155.6 

20.     COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

Dividends on the preferred stock of CL&P and NSTAR Electric totaled $7.5 million for each of the years ended December 31, 2020, 2019 and 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 December 31, 2020 and 2019.  On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to Eversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.

For the years ended December 31, 2020, 2019 and 2018, there was no change in ownership of the common equity of CL&P and NSTAR Electric.  

21.     EARNINGS PER SHARE

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

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

For the year ended December 31, 2020, there were 39,560 antidilutive share awards excluded from the EPS computation, as their impact would have been antidilutive. Antidilutive shares pertained to a purchase option extended to underwriters in connection with Eversource's common share issuance on June 15, 2020. See Note 18, "Common Shares," for further information. There were no antidilutive share awards excluded from the computation for the years ended December 31, 2019 or 2018.

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The following table sets forth the components of basic and diluted EPS:
Eversource
(Millions of Dollars, except share information)
For the Years Ended December 31,
2020 2019 2018
Net Income Attributable to Common Shareholders $ 1,205.2  $ 909.1  $ 1,033.0 
Weighted Average Common Shares Outstanding:      
Basic 338,836,147  321,416,086  317,370,369 
Dilutive Effect of:
Share-Based Compensation Awards and Other
738,994  762,215  623,565 
Equity Forward Sale Agreement
271,921  763,335  — 
Total Dilutive Effect 1,010,915  1,525,550  623,565 
Diluted 339,847,062  322,941,636  317,993,934 
Basic EPS $ 3.56  $ 2.83  $ 3.25 
Diluted EPS $ 3.55  $ 2.81  $ 3.25 

22.    REVENUES

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

The following tables present operating revenues disaggregated by revenue source:
For the Year Ended December 31, 2020
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water Distribution Other Eliminations Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $ 3,951.5  $ 644.9  $ —  $ 145.1  $ —  $ —  $ 4,741.5 
Commercial 2,353.4  361.9  —  62.4  —  (4.8) 2,772.9 
Industrial 327.1  107.4  —  4.8  —  (13.7) 425.6 
Total Retail Tariff Sales Revenues 6,632.0  1,114.2  —  212.3  —  (18.5) 7,940.0 
Wholesale Transmission Revenues —  —  1,557.3  —  74.2  (1,290.6) 340.9 
Wholesale Market Sales Revenues 327.3  43.0  —  3.8  —  —  374.1 
Other Revenues from Contracts with Customers 74.7  3.6  13.3  7.3  1,161.7  (1,152.0) 108.6 
Amortization of/(Reserve for) Revenues Subject to Refund 4.6  2.1  —  (3.8) —  —  2.9 
Total Revenues from Contracts with Customers 7,038.6  1,162.9  1,570.6  219.6  1,235.9  (2,461.1) 8,766.5 
Alternative Revenue Programs 88.1  44.7  (35.2) (4.7) —  37.1  130.0 
Other Revenues 5.6  1.1  0.7  0.5  —  —  7.9 
Total Operating Revenues $ 7,132.3  $ 1,208.7  $ 1,536.1  $ 215.4  $ 1,235.9  $ (2,424.0) $ 8,904.4 
For the Year Ended December 31, 2019
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water Distribution Other Eliminations Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $ 3,723.7  $ 555.1  $ —  $ 132.3  $ —  $ —  $ 4,411.1 
Commercial 2,584.8  347.6  —  63.9  —  (4.3) 2,992.0 
Industrial 331.8  96.9  —  4.5  —  (11.6) 421.6 
Total Retail Tariff Sales Revenues 6,640.3  999.6  —  200.7  —  (15.9) 7,824.7 
Wholesale Transmission Revenues —  —  1,293.3  —  61.3  (1,085.2) 269.4 
Wholesale Market Sales Revenues 215.7  55.4  —  4.1  —  —  275.2 
Other Revenues from Contracts with Customers 54.8  2.8  13.2  7.0  967.2  (969.0) 76.0 
Amortization of/(Reserve for) Revenues Subject to Refund 1.3  6.2  —  (2.8) —  —  4.7 
Total Revenues from Contracts with Customers 6,912.1  1,064.0  1,306.5  209.0  1,028.5  (2,070.1) 8,450.0 
Alternative Revenue Programs 45.9  (4.9) 81.8  4.6  —  (74.2) 53.2 
Other Revenues 18.5  3.1  0.7  1.0  —  —  23.3 
Total Operating Revenues $ 6,976.5  $ 1,062.2  $ 1,389.0  $ 214.6  $ 1,028.5  $ (2,144.3) $ 8,526.5 
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For the Year Ended December 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 $ 3,766.6  $ 542.5  $ —  $ 130.7  $ —  $ —  $ 4,439.8 
Commercial 2,634.7  334.8  —  63.3  —  (4.5) 3,028.3 
Industrial 351.9  96.0  —  4.4  —  (10.0) 442.3 
Total Retail Tariff Sales Revenues 6,753.2  973.3  —  198.4  —  (14.5) 7,910.4 
Wholesale Transmission Revenues —  —  1,308.9  —  47.3  (1,092.2) 264.0 
Wholesale Market Sales Revenues 179.5  57.5  —  4.1  —  —  241.1 
Other Revenues from Contracts with Customers 65.9  (2.2) 12.6  7.2  889.0  (891.0) 81.5 
Reserve for Revenues Subject to Refund (12.3) (8.3) —  (3.7) —  —  (24.3)
Total Revenues from Contracts with Customers 6,986.3  1,020.3  1,321.5  206.0  936.3  (1,997.7) 8,472.7 
Alternative Revenue Programs (47.0) (1.2) (35.2) 5.4  —  31.9  (46.1)
Other Revenues 17.9  3.1  —  0.6  —  —  21.6 
Total Operating Revenues $ 6,957.2  $ 1,022.2  $ 1,286.3  $ 212.0  $ 936.3  $ (1,965.8) $ 8,448.2 
For the Years Ended December 31,
2020 2019 2018
(Millions of Dollars) CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH CL&P NSTAR Electric PSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $ 2,011.1  $ 1,365.8  $ 574.6  $ 1,837.1  $ 1,322.1  $ 564.5  $ 1,828.2  $ 1,380.9  $ 557.5 
Commercial 878.3  1,176.8  299.9  922.9  1,349.4  314.6  928.1  1,391.5  316.9 
Industrial 137.5  106.4  83.2  138.3  115.8  77.7  147.7  124.9  79.3 
Total Retail Tariff Sales Revenues 3,026.9  2,649.0  957.7  2,898.3  2,787.3  956.8  2,904.0  2,897.3  953.7 
Wholesale Transmission Revenues 754.8  576.5  226.0  587.1  517.3  188.9  620.6  488.8  199.5 
Wholesale Market Sales Revenues 230.1  58.4  38.8  105.1  73.1  37.5  48.3  76.1  56.6 
Other Revenues from Contracts
with Customers
32.9  43.6  14.2  36.4  18.7  15.6  35.0  28.9  15.5 
Amortization of/(Reserve for)
Revenues Subject to Refund
—  —  4.6  —  —  1.3  —  —  (12.3)
Total Revenues from Contracts
with Customers
4,044.7  3,327.5  1,241.3  3,626.9  3,396.4  1,200.1  3,607.9  3,491.1  1,213.0 
Alternative Revenue Programs (4.2) 54.5  2.6  77.5  41.6  8.6  (65.9) 0.9  (17.3)
Other Revenues 2.2  3.5  0.6  10.3  7.0  1.9  8.5  8.3  1.1 
Eliminations (495.2) (444.4) (165.4) (482.1) (400.4) (144.7) (454.3) (387.4) (149.2)
Total Operating Revenues $ 3,547.5  $ 2,941.1  $ 1,079.1  $ 3,232.6  $ 3,044.6  $ 1,065.9  $ 3,096.2  $ 3,112.9  $ 1,047.6 

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

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

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

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

Amortization of/(Reserve for) Revenues Subject to Refund: Eversource has recorded a regulatory liability, recorded as a reduction to revenues, 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 of 2017, until rates billed to customers reflect the lower federal tax rate. The Connecticut water business has not yet reflected the change in the federal corporate income tax rate in distribution rates and continues to accrue the regulatory liability. CL&P and Yankee Gas each have fully refunded this regulatory liability by the end of 2018 and 2020, respectively, and in 2019, PSNH began to refund this regulatory liability to customers in rates. NSTAR Electric and NSTAR Gas were not required to make refunds to customers for the higher federal corporate income tax rate billed to customers in the period between January 1, 2018 to the effective dates of each company's 2018 rate changes. EGMA will begin refunding this amount in November 2021.

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.

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

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

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

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

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

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

23.     SEGMENT INFORMATION

Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates.  These reportable segments represent substantially all of Eversource's total consolidated revenues.  Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer.  The Electric Distribution reportable segment includes the results of 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.  

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, 5) the results of other unregulated subsidiaries, which are not part of its core business, and 6) Eversource parent's equity ownership interests that are not consolidated, which primarily include the offshore wind business, a natural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund.

In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.

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

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

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Eversource's segment information is as follows:
  For the Year Ended December 31, 2020
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric Transmission Water Distribution Other Eliminations Total
Operating Revenues $ 7,132.3  $ 1,208.7  $ 1,536.1  $ 215.4  $ 1,235.9  $ (2,424.0) $ 8,904.4 
Depreciation and Amortization (657.0) (87.9) (278.1) (44.2) (93.5) 1.6  (1,159.1)
Other Operating Expenses (5,642.3) (913.8) (470.0) (86.6) (1,071.9) 2,428.0  (5,756.6)
Operating Income 833.0  207.0  788.0  84.6  70.5  5.6  1,988.7 
Interest Expense (216.0) (40.0) (126.8) (32.9) (161.0) 38.3  (538.4)
Interest Income 3.2  0.9  4.7  —  37.8  (41.8) 4.8 
Other Income, Net 58.0  3.1  23.3  2.0  1,382.9  (1,365.5) 103.8 
Income Tax (Expense)/Benefit (129.6) (36.9) (183.8) (12.5) 16.6  —  (346.2)
Net Income 548.6  134.1  505.4  41.2  1,346.8  (1,363.4) 1,212.7 
Net Income Attributable to Noncontrolling Interests (4.6) —  (2.9) —  —  —  (7.5)
Net Income Attributable to Common Shareholders $ 544.0  $ 134.1  $ 502.5  $ 41.2  $ 1,346.8  $ (1,363.4) $ 1,205.2 
Total Assets (as of) $ 24,981.9  $ 6,450.5  $ 11,695.0  $ 2,375.2  $ 22,089.4  $ (21,492.4) $ 46,099.6 
Cash Flows Used for Investments in Plant $ 1,079.0  $ 494.4  $ 1,004.6  $ 118.8  $ 246.2  $ —  $ 2,943.0 
  For the Year Ended December 31, 2019
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water Distribution
Other (1)
Eliminations (1)
Total
Operating Revenues $ 6,976.5  $ 1,062.2  $ 1,389.0  $ 214.6  $ 1,028.5  $ (2,144.3) $ 8,526.5 
Depreciation and Amortization (651.3) (68.3) (253.3) (46.9) (63.2) 2.3  (1,080.7)
Impairment of Northern Pass Transmission —  —  (239.6) —  —  —  (239.6)
Other Operating Expenses (5,525.1) (830.8) (411.2) (101.0) (891.3) 2,143.7  (5,615.7)
Operating Income 800.1  163.1  484.9  66.7  74.0  1.7  1,590.5 
Interest Expense (206.4) (47.4) (125.7) (34.6) (170.3) 51.2  (533.2)
Interest Income 13.3  0.1  1.5  —  48.7  (50.8) 12.8 
Other Income, Net 46.8  1.6  29.2  0.4  945.3  (903.3) 120.0 
Income Tax (Expense)/Benefit (135.9) (21.2) (130.5) 2.4  11.7  —  (273.5)
Net Income 517.9  96.2  259.4  34.9  909.4  (901.2) 916.6 
Net Income Attributable to Noncontrolling Interests (4.6) —  (2.9) —  —  —  (7.5)
Net Income Attributable to Common Shareholders $ 513.3  $ 96.2  $ 256.5  $ 34.9  $ 909.4  $ (901.2) $ 909.1 
Total Assets (as of) $ 22,541.9  $ 4,345.5  $ 10,904.0  $ 2,351.7  $ 18,843.7  $ (17,862.9) $ 41,123.9 
Cash Flows Used for Investments in Plant $ 1,104.2  $ 460.2  $ 987.0  $ 118.0  $ 242.1  $ —  $ 2,911.5 
  For the Year Ended December 31, 2018
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water Distribution
Other (1)
Eliminations (1)
Total
Operating Revenues $ 6,957.2  $ 1,022.2  $ 1,286.3  $ 212.0  $ 936.3  $ (1,965.8) $ 8,448.2 
Depreciation and Amortization (671.8) (75.0) (231.8) (46.5) (49.1) 2.2  (1,072.0)
Other Operating Expenses (5,548.6) (787.6) (375.5) (99.8) (831.5) 1,966.7  (5,676.3)
Operating Income 736.8  159.6  679.0  65.7  55.7  3.1  1,699.9 
Interest Expense (202.8) (44.1) (120.6) (34.3) (129.3) 32.3  (498.8)
Interest Income 18.7  —  2.4  —  30.3  (33.3) 18.1 
Other Income/(Loss), Net 67.5  7.1  31.1  (0.4) 1,092.1  (1,087.1) 110.3 
Income Tax (Expense)/Benefit (160.2) (29.4) (161.8) (0.1) 62.5  —  (289.0)
Net Income 460.0  93.2  430.1  30.9  1,111.3  (1,085.0) 1,040.5 
Net Income Attributable to Noncontrolling Interests (4.6) —  (2.9) —  —  —  (7.5)
Net Income Attributable to Common Shareholders $ 455.4  $ 93.2  $ 427.2  $ 30.9  $ 1,111.3  $ (1,085.0) $ 1,033.0 
Cash Flows Used for Investments in Plant $ 961.3  $ 351.5  $ 976.2  $ 102.3  $ 178.6  $ —  $ 2,569.9 

(1) On October 9, 2020, Eversource completed the CMA asset acquisition, with Yankee Energy System, Inc. (Yankee parent) as the acquiring entity. Yankee parent is the parent company of Yankee Gas, NSTAR Gas, EGMA and Hopkinton LNG Corp. As a result of the acquisition, in the fourth quarter of 2020, our chief operating decision maker assessed the performance of the Natural Gas Distribution segment including Yankee parent. Previously, Yankee parent was presented within Other and its equity in earnings were eliminated in consolidation. Prior comparative periods were revised to conform to the current period segment presentation.

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24.     ACQUISITION OF ASSETS OF COLUMBIA GAS OF MASSACHUSETTS

On October 9, 2020, Eversource acquired certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts, which was previously doing business as CMA, pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource Inc. (NiSource). The cash purchase price was $1.1 billion, plus a target working capital amount of $69.6 million, which is subject to adjustment to reflect actual working capital as of the closing date that has not yet been finalized. Eversource financed the acquisition through a combination of debt and equity issuances in a ratio that was consistent with our consolidated capital structure. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. EGMA distributes natural gas to approximately 332,000 residential, commercial and industrial customers with over 5,000 miles of natural gas distribution pipeline across more than 60 communities in Massachusetts, adding to the approximately 303,000 natural gas customers that Eversource already serves in Massachusetts.

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

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

Rate Settlement Agreement: On October 7, 2020, the DPU approved a rate settlement agreement with Eversource, EGMA, NiSource, Bay State, the Massachusetts Attorney General's Office, the DOER and the Low-Income Weatherization and Fuel Assistance Program Network, which requested approval of the February 26, 2020 Agreement, as well as a rate stabilization plan, among other items. The settlement agreement included an authorized regulatory ROE of 9.70 percent as of January 1, 2021, a 53.25 percent equity component of its capital structure, and established rate base equal to $995 million as of the closing on October 9, 2020.

The approved rate stabilization plan includes base distribution rate increases of $13 million on November 1, 2021 and $10 million on November 1, 2022. The settlement agreement includes two rate base resets during an eight-year rate plan, occurring on November 1, 2024 and November 1, 2027. The two rate base resets adjust distribution rates to account for capital additions (including the roll-in of GSEP capital additions), depreciation expense, property taxes, and return on rate base for capital additions placed into service through December 31, 2023, for the first rate base reset occurring on November 1, 2024, and through December 31, 2026, for the second rate base reset occurring on November 1, 2027. Notwithstanding the two distribution rate increases, the two rate base reset provisions, and potential adjustments for qualifying exogenous events, EGMA agreed not to file for an increase or redesign of distribution base rates effective prior to November 1, 2028.

The settlement agreement also permits EGMA to seek recovery of both transaction and integration costs as a result of the asset acquisition after December 31, 2026, subject to DPU review and approval, and subject to certain conditions, such as demonstrating savings resulting from the acquisition.

Preliminary Purchase Price Allocation: The allocation of the total purchase price to the estimated fair values of the assets acquired and liabilities assumed has been determined based on the accounting guidance for fair value measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The preliminary allocation of the cash purchase price as of October 9, 2020 is as follows:
(Millions of Dollars)
Current Assets $ 145 
Restricted Cash 57 
PP&E 1,195 
Goodwill 42 
Other Noncurrent Assets, excluding Goodwill 128 
Other Current Liabilities (81)
Other Noncurrent Liabilities (317)
Cash Purchase Price $ 1,169 

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

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. The goodwill reflects the value paid by Eversource primarily for expanding its natural gas infrastructure within its existing jurisdiction. The goodwill resulting from the acquisition has been assigned to the Natural Gas Distribution reporting unit.
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Under the terms of the settlement agreement, a portion of the proceeds of the sale due to NiSource was withheld and used to establish an Energy Relief Fund comprised of two components, an Arrearage Forgiveness Fund and a fund which is restricted for energy efficiency and clean energy measures in the Merrimack Valley. As a result, Eversource funded restricted cash accounts and established a liability totaling $56.8 million on the acquisition date. By December 31, 2020, $15.4 million of the Arrearage Forgiveness Fund was credited back to customers and the remainder was paid back to NiSource. The purchase price included in investing cash outflows on the statement of cash flows of $1.11 billion reflects the payment to NiSource, excluding the restricted cash funds.

Pro Forma Financial Information: The following unaudited pro forma financial information reflects the pro forma combined results of operations of Eversource and the CMA business acquired and reflects the amortization of purchase price adjustments assuming the acquisition had taken place on January 1, 2019. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Eversource. Pro forma net income excludes the impact of assets and liabilities not assumed by Eversource, such as amounts directly associated with the GLI incident, and non-recurring costs associated with the transaction.
For the Years Ended December 31,
(Pro forma amounts in millions, except share amounts) 2020 2019
Operating Revenues $ 9,273  $ 9,103 
Net Income Attributable to Common Shareholders 1,265  909 
Basic EPS 3.73  2.83 
Diluted EPS 3.72  2.82 

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

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

25.    GOODWILL

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

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

Eversource completed the CMA asset acquisition on October 9, 2020, resulting in the addition of approximately $42 million of goodwill, which was allocated to the Natural Gas Distribution reporting unit. On July 31, 2020, Eversource sold its water system and treatment plant that supplies water to the towns of Hingham, Hull and North Cohasset to the town of Hingham, Massachusetts, resulting in a reduction to goodwill of $23.6 million. This goodwill was previously reflected in the Water Distribution reporting unit.

Eversource completed its annual goodwill impairment test for Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units as of October 1, 2020 and determined that no impairment existed. There were no events subsequent to October 1, 2020 that indicated impairment of goodwill. The annual goodwill assessment included an evaluation of the Company's share price and credit ratings, analyst reports, financial performance, cost and risk factors, long-term strategy, growth and future projections, as well as macroeconomic, industry and market conditions.  This evaluation required the consideration of several factors that impact the fair value of the reporting units, including conditions and assumptions that affect the future cash flows of the reporting units. Key considerations include discount rates, utility sector market performance and merger transaction multiples, and internal estimates of future cash flows and net income.  

 The following table presents goodwill by reportable segment:
(Millions of Dollars) Electric
Distribution
Electric
Transmission
Natural Gas
Distribution
Water Distribution Total
Balance as of January 1, 2020 $ 2,544  $ 577  $ 399  $ 907  $ 4,427 
Acquisition of CMA Assets —  —  42  —  42 
Sale of Hingham water system
—  —  —  (23) (23)
Balance as of December 31, 2020 $ 2,544  $ 577  $ 441  $ 884  $ 4,446 

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
No events that would be described in response to this item have occurred with respect to Eversource, CL&P, NSTAR Electric or PSNH.

Item 9A.    Controls and Procedures

Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, is responsible for the preparation, integrity, and fair presentation of the accompanying Financial Statements and other sections of this combined Annual Report on Form 10-K.  Eversource's internal controls over financial reporting were audited by Deloitte & Touche LLP.    

Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, is responsible for establishing and maintaining adequate internal controls over financial reporting.  The internal control framework and processes have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  There are inherent limitations of internal controls over financial reporting that could allow material misstatements due to error or fraud to occur and not be prevented or detected on a timely basis by employees during the normal course of business.  Additionally, internal controls over financial reporting may become inadequate in the future due to changes in the business environment.  Under the supervision and with the participation of the principal executive officer and principal financial officer, an evaluation of the effectiveness of internal controls over financial reporting was conducted based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation under the framework in COSO, management concluded that internal controls over financial reporting at Eversource, CL&P, NSTAR Electric and PSNH were effective as of December 31, 2020.

Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, evaluated the design and operation of the disclosure controls and procedures as of December 31, 2020 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC.  This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Annual Report on Form 10-K.  There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.  The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric 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.

On October 9, 2020, Eversource completed the acquisition of certain assets and liabilities that comprised NiSource’s natural gas distribution business in Massachusetts (formerly Columbia Gas of Massachusetts (CMA)). The natural gas distribution assets acquired from CMA were assigned to EGMA and are part of the natural gas distribution segment. As of December 31, 2020, Eversource management has excluded EGMA from its evaluation of disclosure controls and procedures and management’s report on internal controls over financial reporting.

There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric and PSNH during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Item 9B.    Other Information

No information is required to be disclosed under this item as of December 31, 2020, as this information has been previously disclosed in applicable reports on Form 8-K during the fourth quarter of 2020.


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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

The information in Item 10 is provided as of February 17, 2021, except where otherwise indicated.

Certain information required by this Item 10 is omitted for NSTAR Electric and PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly Owned Subsidiaries.

Eversource Energy

In addition to the information provided below concerning the executive officers of Eversource Energy, incorporated herein by reference is the information to be contained in the sections captioned “Election of Trustees,” “Governance of Eversource Energy” and the related subsections, “Selection of Trustees,” and “Delinquent Section 16(a) Reports” of Eversource Energy’s definitive proxy statement for solicitation of proxies, expected to be filed with the SEC on or about March 26, 2021.

Eversource Energy and CL&P

Each member of CL&P’s Board of Directors is an employee of Eversource Service.  Directors are elected annually to serve for one year until their successors are elected and qualified. CL&P is a wholly owned subsidiary of Eversource Energy.

Set forth below is certain information concerning CL&P’s directors as well as Eversource Energy’s and CL&P’s executive officers:
Name Age Title
James J. Judge 65 Chairman of the Board, President and Chief Executive Officer and a Trustee of Eversource Energy; Chairman and director of CL&P
Philip J. Lembo 65 Executive Vice President and Chief Financial Officer of Eversource Energy and CL&P; director of CL&P
Gregory B. Butler 63 Executive Vice President and General Counsel of Eversource Energy and CL&P; director of CL&P
Christine M. Carmody 1
58 Executive Vice President-Human Resources and Information Technology of Eversource Energy
Joseph R. Nolan, Jr. 1
57 Executive Vice President-Strategy, Customer and Corporate Relations of Eversource Energy
Werner J. Schweiger 61 Executive Vice President and Chief Operating Officer of Eversource Energy; Chief Executive Officer and director of CL&P
Jay S. Buth 51 Vice President, Controller and Chief Accounting Officer of Eversource Energy and CL&P
1 Deemed an executive officer of CL&P pursuant to Rule 3b-7 under the Securities Exchange Act of 1934.

James J. Judge.  Mr. Judge has served as Chairman of the Board, President and Chief Executive Officer of Eversource Energy since May 3, 2017 and as a Trustee since May 4, 2016. Previously, Mr. Judge served as President and Chief Executive Officer of Eversource Energy from May 4, 2016 until May 3, 2017, and as Executive Vice President and Chief Financial Officer of Eversource Energy from April 10, 2012 until May 4, 2016. Mr. Judge has served as Chairman of CL&P since May 4, 2016, and as a director of CL&P since April 10, 2012. Previously, Mr. Judge served as Executive Vice President and Chief Financial Officer of CL&P from April 10, 2012 to May 4, 2016. Based on his experience described above, Mr. Judge has the skills and qualifications necessary to serve as a Trustee of Eversource Energy and as a director of CL&P.

Philip J. Lembo. Mr. Lembo has served as Chief Financial Officer of Eversource Energy and CL&P since May 4, 2016. He previously served as Treasurer of Eversource Energy from April 10, 2012 until May 3, 2017, and as Treasurer of CL&P from April 10, 2012 until March 31, 2017. Mr. Lembo has served as Executive Vice President of Eversource Energy and CL&P since August 8, 2016. Previously, he served as Senior Vice President of Eversource Energy and CL&P from May 4, 2016 until August 8, 2016, and as Vice President of Eversource Energy and CL&P from April 10, 2012 until May 4, 2016. Mr. Lembo has served as a director of CL&P since May 4, 2016. Based on his experience described above, Mr. Lembo has the skills and qualifications necessary to serve as a director of CL&P.

Gregory B. Butler.  Mr. Butler has served as General Counsel of Eversource Energy since May 1, 2001, and of CL&P since March 9, 2006. He has served as Executive Vice President of Eversource Energy and CL&P since August 8, 2016. Previously, Mr. Butler served as Senior Vice President of Eversource Energy from August 31, 2003 to August 8, 2016, and of CL&P from March 9, 2006 until August 8, 2016. He has served as a director of CL&P since April 22, 2009. Based on his experience described above, Mr. Butler has the skills and qualifications necessary to serve as a director of CL&P.

Christine M. Carmody.  Ms. Carmody has served as Executive Vice President-Human Resources and Information Technology of Eversource Energy since August 8, 2016. Previously Ms. Carmody served as Senior Vice President-Human Resources of Eversource Energy from May 4, 2016 until August 8, 2016; and of Eversource Service from April 10, 2012 until August 8, 2016.

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Joseph R. Nolan, Jr.  Mr. Nolan has served as Executive Vice President-Strategy, Customer and Corporate Relations of Eversource Energy since February 5, 2020. Previously Mr. Nolan served as Executive Vice President-Customer and Corporate Relations of Eversource Energy from August 8, 2016 to February 5, 2020. He served as Senior Vice President-Corporate Relations of Eversource Energy from May 4, 2016 until August 8, 2016, and of Eversource Service from April 10, 2012 until August 8, 2016.

Werner J. Schweiger.  Mr. Schweiger has served as Executive Vice President and Chief Operating Officer of Eversource Energy since September 2, 2014, and as Chief Executive Officer of CL&P since August 11, 2014. Mr. Schweiger has served as a director of CL&P since May 28, 2013.  He previously served as President of CL&P from June 2, 2015 until June 27, 2016. Based on his experience described above, Mr. Schweiger has the skills and qualifications necessary to serve as a director of CL&P.

Jay S. Buth.  Mr. Buth has served as Vice President, Controller and Chief Accounting Officer of Eversource Energy and CL&P since April 10, 2012.

There are no family relationships between any director or executive officer and any other trustee, director or executive officer of Eversource Energy or CL&P and none of the above executive officers or directors serves as an executive officer or director pursuant to any agreement or understanding with any other person.  Our executive officers hold the offices set forth opposite their names until the next annual meeting of the Board of Trustees, in the case of Eversource Energy, and the Board of Directors, in the case of CL&P, and until their successors have been elected and qualified.

CL&P obtains audit services from the independent registered public accounting firm engaged by the Audit Committee of Eversource Energy’s Board of Trustees.  CL&P does not have its own audit committee or, accordingly, an audit committee financial expert.  CL&P relies on Eversource Energy’s audit committee and the audit committee financial expert.

CODE OF ETHICS AND CODE OF BUSINESS CONDUCT

Each of Eversource Energy, CL&P, NSTAR Electric, and PSNH has adopted a Code of Ethics for Senior Financial Officers (Chief Executive Officer, Chief Financial Officer and Controller) and the Code of Business Conduct, which are applicable to all Trustees, directors, officers, employees, contractors and agents of Eversource Energy, CL&P, NSTAR Electric and PSNH.  The Code of Ethics and the Code of Business Conduct have both been posted on the Eversource Energy web site and are available at www.eversource.com/Content/general/about/investors/corporate-governance on the Internet.  Any amendments to or waivers from the Code of Ethics and Code of Business Conduct for executive officers, directors or Trustees will be posted on the website.  Any such amendment or waiver would require the prior consent of the Board of Trustees or an applicable committee thereof.

Printed copies of the Code of Ethics and the Code of Business Conduct are also available to any shareholder without charge upon written request mailed to:

Richard J. Morrison
Secretary
Eversource Energy
800 Boylston Street, 17th Floor
Boston, Massachusetts 02199-7050


Item 11. Executive Compensation

Eversource Energy

The information required by this Item 11 for Eversource Energy is incorporated herein by reference to certain information contained in Eversource Energy's definitive proxy statement for solicitation of proxies, which is expected to be filed with the SEC on or about March 26, 2021, under the sections captioned “Compensation Discussion and Analysis,” plus related subsections, and “Compensation Committee Report,” plus related subsections following such Report.

NSTAR ELECTRIC and PSNH

Certain information required by this Item 11 has been omitted for NSTAR Electric and PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly-Owned Subsidiaries.

CL&P

The information in this Item 11 relates solely to CL&P.

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COMPENSATION DISCUSSION AND ANALYSIS

CL&P is a wholly-owned subsidiary of Eversource Energy.  Its board of directors consists entirely of executive officers of Eversource Energy system companies.  CL&P does not have a compensation committee, and the Compensation Committee of Eversource Energy's Board of Trustees determines compensation for the executive officers of CL&P, including their salaries, annual incentive awards and long-term incentive awards. All of CL&P’s “Named Executive Officers,” as defined below, also serve as officers of Eversource Energy and one or more other subsidiaries of Eversource Energy.  Compensation set by the Compensation Committee of Eversource Energy (the Committee) and set forth herein is for services rendered to Eversource Energy and its subsidiaries by such officers in all capacities.

This Compensation Discussion and Analysis (CD&A) provides information about Eversource Energy’s compensation principles, objectives, plans, policies and actions for the Named Executive Officers. The discussion describes the specific components used in Eversource Energy’s compensation programs and approach to executive compensation, how Eversource Energy measures performance, and how Eversource Energy’s compensation principles were applied to compensation awards and decisions that were made by the Compensation Committee for the Named Executive Officers, as presented in the tables and narratives that follow. Given the unprecedented events of the past year, this discussion also describes how Eversource Energy effectively responded to the COVID-19 pandemic to safeguard Eversource Energy’s employees, customers and the communities that Eversource Energy serves, how the Compensation Committee considered the effects of the pandemic in its compensation decisions and how Eversource Energy worked to increase diversity in the workforce and raise awareness of the need for racial justice in our society. While this discussion focuses primarily on 2020 information, it also addresses decisions that were made in prior periods to the extent that these decisions are relevant to the full understanding of Eversource Energy’s compensation programs and the decisions that were made regarding 2020 performance. The CD&A also contains an assessment of performance measured against established 2020 goals and additional accomplishments, the compensation awards made by the Compensation Committee, and other information relating to Eversource Energy’s compensation programs, including:
= Summary of 2020 Accomplishments = Elements of 2020 Compensation
= Pay for Performance Philosophy = 2020 Annual Incentive Program Assessment
= Executive Compensation Governance = Long-Term Incentive Program
= Named Executive Officers = Clawback and No Hedging and No Pledging Policies
= Overview of the Compensation Program = Share Ownership Guidelines and Retention Requirements
= Market Analysis = Other Benefits
= Mix of Compensation Elements = Contractual Agreements
= Risk Analysis of Executive Compensation = Tax and Accounting Considerations
= Results of 2020 Say on Pay Vote = Equity Grant Practices

Summary of 2020 Accomplishments

2020 and the COVID-19 Pandemic

From the beginning of the COVID-19 pandemic, Eversource Energy set out to continue to focus first and foremost on the safety and well-being of Eversource Energy stakeholders, to do for each of the groups noted below what Eversource Energy might be able to do in order to help them navigate through the effects of the pandemic and to assist Eversource Energy customers, employees, the people and organizations who live in and operate in the communities Eversource Energy serves, the society we live in, and you, Eversource Energy shareholders, in navigating the effects of the pandemic. Eversource Energy acted boldly and decisively as COVID-19 emerged as a public health crisis, and immediately implemented many changes to the way Eversource Energy conducts business, while continuing to remain focused on operational and financial performance.

The results and actions taken that Eversource Energy reports in this CD&A relate to 2020 performance in totality, some of which were specifically in response to the pandemic, and which have hopefully made living in a pandemic environment a little more tolerable. These include:

For Eversource Energy customers – Eversource Energy took steps to ensure that any personal contact between Eversource Energy employees (both in the field and those working remotely) and customers was performed safely and in accordance with all public health guidelines to reduce to the greatest extent possible the risk of transmission of the virus. Eversource Energy restored service following a substantial number of storms in a safe and effective manner, instituted a voluntary moratorium on customer shutoffs for non-payment, and offered broad payment and arrearage forgiveness plans to provide assistance from the economic pressures impacting Eversource Energy customers. Eversource Energy also made communicating with the Company easier, including the implementation of a new 24-hour call center, a dedicated team set up to help small business customers apply for COVID-19 related federal assistance, and the continuation of industry-leading energy efficiency programs done by quickly moving to virtual energy audits.

For Eversource Energy’s communities – Eversource Energy continued support to communities through volunteer activity and virtual events, with employees contributing over 26,000 hours to volunteerism, and contributed $8.1 million in sponsoring or supporting the many events noted in this CD&A. Eversource Energy Sustainability accomplishments are making a difference in making Eversource Energy communities a healthier place to live. Please see the disclosures in the 2020 Sustainability/ESG section under the headings Community and Awards.

For society – Beyond the pandemic, 2020 saw a heightened focus on the criticality of racial equity and justice. In response, Eversource Energy increased efforts to raise awareness of the need for social and racial justice along with related efforts to further diversity, equity
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and inclusion in the workplace and workforce and help support the vision for racial justice. Eversource Energy’s racial equity task force, focused town hall discussions, and learning hub on racial and social justice speak to this commitment.

For Eversource Energy’s employees – Eversource Energy responded to the pandemic very quickly, taking the lead to implement work from home practices at the very beginning stage of the crisis, making numerous changes to work practices as a direct result of the pandemic, and continuing career development and company-paid educational opportunities for employees. Over 800 new Eversource Gas Company of Massachusetts employees, formerly Columbia Gas of Massachusetts (Columbia Gas) employees, were successfully on-boarded. No employees, whether from Columbia Gas or otherwise, lost their jobs due to the pandemic. Eversource Energy has also continued open, regular and transparent communications with employees, and has worked in close communication and cooperation with union leadership to keep employees safe and help them continue to grow. The partnership with union leadership has been instrumental and essential in helping to deal with the many challenges of 2020.

The sections within this CD&A titled “2020 Financial and Operational Accomplishments” and “2020 Annual Incentive Program Assessment” provide additional information with respect to some of the other actions taken by Eversource throughout the year in response to the pandemic.

Changes to 2021 Executive Compensation Programs

Due to the hardships experienced by Eversource Energy’s customers and communities as a result of COVID-19 and the extended outages that took place in CL&P’s service territory in 2020 following Storm Isaias, and in spite of excellent overall performance by Eversource Energy’s executives in 2020, the Compensation Committee determined that it would freeze base salaries for the senior executive officers, including the Named Executive Officers, at 2020 levels, rather than provide market based base salary increases. In addition, in Eversource Energy’s engagement sessions with shareholders, Eversource Energy received comments relative to the 50/50 mix of RSUs and Performance Shares in the long-term incentive program. As a result, the Committee revised the Performance Share Program in response to these shareholder comments and to further align Eversource Energy’s compensation programs with the Committee’s pay for performance philosophy, such that 75 percent of the 2021 – 2023 Program’s long-term incentive opportunity will consist of Performance Shares and 25 percent will consist of RSUs.

2020 Performance Assessment – COVID-19

With regard to the performance goals established by the Committee prior to the spread of the virus and whether changes to those goals should be considered as a result of the pandemic, the Committee discussed the established performance goals throughout its 2020 meetings, and concluded that it would not change them, as it determined that despite the additional challenges, the Operating Plan and related performance goals could still be executed under the direction and oversight of Eversource Energy’s Chief Executive Officer and his executive team without revision.

2020 Financial and Operational Accomplishments

In 2020, Eversource Energy continued to outperform its peers financially, strengthened its position as a leader in ESG, and met or exceeded all of the goals set by the Committee, all while keeping Eversource employees and customers safe. The following is a summary of some of the most important accomplishments in 2020:

FINANCIAL PERFORMANCE: 2020 earnings per share equaled $3.55 per share, and non-GAAP earnings per share equaled $3.64; non-GAAP earnings excludes transactional costs relating to the highly successful acquisition in 2020 of the assets of Columbia Gas. 1

1 Non-GAAP EPS presented in this Item 11 excludes the one-time transactional costs of $0.09 per share relating to the acquisition in 2020 of the assets of Columbia Gas. Eversource Energy uses this non-GAAP financial measure to more fully compare and explain 2020 results without including the impact of the transactional costs of the Columbia Gas acquisition. Due to the effect of the acquisition costs on net income attributable to common shareholders, management believes that the non-GAAP presentation is a more meaningful representation of Eversource Energy’s financial performance and provides additional information to readers in analyzing historical and future performance of the business. Non-GAAP financial measures should not be considered as alternatives to Eversource Energy’s consolidated net income attributable to common shareholders.

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DIVIDENDS PAID: The Board of Trustees increased the annual dividend rate by 6.1 percent for 2020 to $2.27 per share, which exceeded the median dividend growth rate of 4.5 percent for the utilities that constitute the Edison Electric Institute Index (EEI Utility Index).

ES-20201231_G3.JPG

SHAREHOLDER RETURN: Eversource Energy’s Total Shareholder Return (TSR) in 2020 was 4.5 percent, compared to negative 1.2 percent for the EEI Index, the 5th highest TSR in the EEI Utility Index of 39 companies. Eversource continued to outperform the EEI Utility Index over the last one-, three-, five- and 10-year periods and the Standard & Poor’s 500 over the last three- and 10-year periods. An investment of $1,000 in Eversource’s common shares for the 10-year period beginning January 1, 2011 was worth $3,726 on December 31, 2020. The following chart represents the comparative total shareholder returns for the periods ended December 31, 2020:

ES-20201231_G4.JPG

STRATEGIC INITIATIVES AND REGULATORY OUTCOMES: Although Eversource Energy faced challenges caused by the restrictions resulting from the pandemic, Eversource completed the acquisition of the assets of Columbia Gas in seven months; the acquisition was immediately accretive to earnings and is expected to be increasingly so in future years. As part of the acquisition regulatory approval process, Eversource successfully reached a positive 8-year rate settlement agreement for the new entity, Eversource Gas Company of Massachusetts. Eversource achieved constructive outcomes in the PSNH and NSTAR Gas subsidiary rate reviews, completed the sale by the Aquarion Water Company of assets located in Hingham, Massachusetts in satisfaction of a predecessor company agreement, and successfully executed several storm cost recovery proceedings in the three states Eversource serves.

CREDIT RATING: Eversource Energy continues to hold an A- level Corporate Credit Rating at Standard & Poor’s. There is no other holding company with a higher credit rating in the EEI Utility Index.

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RELIABILITY PERFORMANCE: Electric System Reliability, measured by months between interruptions, was top decile for the industry in 2020; customer power interruptions were on average 19.2 months apart.

ES-20201231_G5.JPG

RESTORATION PERFORMANCE: The average system outage duration was 64.0 minutes, also top decile for the fastest restoration time.

ES-20201231_G6.JPG

SAFETY: Eversource’s safety performance was 0.7, measured by days away, restricted or transferred (DART) per 100 workers, which continued to outperform the industry in 2020. In addition to the safety performance as measured by DART, the policies and procedures established at the onset of the pandemic contributed significantly to the successful overall safety performance.

ES-20201231_G7.JPG

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GAS EMERGENCY RESPONSE: On-time response to gas customer emergency calls was 99.6 percent, meeting the industry average.

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CUSTOMERS: Eversource continued to add to its customer messaging programs, including those relating to COVID-19, realized all-time highs in both digital messaging and estimated time-to-restore communications, led the industry in the early implementation of customer service termination moratoria, and implemented extended customer forgiveness and payment programs. However, Eversource acknowledged that as a result of Tropical Storm Isaias, which caused extensive, catastrophic damage to the CL&P distribution system and many prolonged outages, its customers and government leaders felt that the performance fell short of their expectations.

CLEAN ENERGY LEADERSHIP: Regarding Eversource’s offshore wind projects, Eversource continued to advance the New London State Pier project in Connecticut, giving the partnership access to the leading offshore wind port in the Northeast; reached a comprehensive settlement for the joint Eversource/Ørsted South Fork project with the Town of East Hampton, New York and the Board of Trustees for South Fork relating to the installation of the onshore transmission facilities to be constructed in those two communities; and submitted Construction and Operating Plans with the U.S. Bureau of Ocean Energy Management for the joint Eversource/Ørsted Revolution Wind and Sunrise Wind projects. In June of 2020, Eversource began construction of a first in the nation community battery storage project at the Provincetown, Massachusetts town transfer station. Eversource’s electric vehicle charging infrastructure program met its targets, Eversource led efforts to expand Massachusetts’ utility scale solar program, and the energy efficiency programs, while slowed by the COVID-19 pandemic, continued to perform at a national leading level as rated by the American Council for an Energy Efficient Economy.

2020 Sustainability/ESG

SUSTAINABILITY: Eversource’s social and environmental accomplishments, which once again in 2020 received widespread recognition, are a measure of the strong commitment to corporate responsibility and are reflected in the high ratings from leading sustainability rating firms. In 2020, Eversource was ranked top quartile within a peer group of comparably sized U.S. utilities whose ESG performance is assessed by the two leading sustainability rating firms. Eversource also continued to take steps to implement and ensure progress towards its industry leading goal to be carbon neutral in their operations by 2030.

COMMUNITY: Despite the challenges of the pandemic, Eversource continued to make a significant impact in the communities it serves through its corporate philanthropy programs and extensive employee volunteer programs. Eversource’s employees devoted 26,000 hours in 2020 to volunteerism in the service territory communities, mostly all under constraints imposed by the pandemic. Eversource’s 2020 charitable giving totaled $8.1 million, including a record amount in contributions by employees to the United Way along with major event lead sponsorships for the Eversource Walk for Children’s Hospital of Boston, Eversource Walk and 5K Run for Easterseals New Hampshire, Mass General Cancer Center/Eversource Every Day Amazing Race, Eversource Hartford Marathon, Travelers Championship and Special Olympics in Connecticut and New Hampshire. Most of these events were held virtually, and many Eversource employees assisted in producing the events to help ensure their success. The Eversource Energy Foundation continues to provide direct support to organizations and large regional initiatives within Eversource’s service territories. In addition, Eversource provided accelerated and targeted community support to COVID-19 relief organizations.

DIVERSITY: Eversource continued to support many programs and agencies that address racial and ethnic disparities in our customers’ communities and beyond. Eversource also continues to develop a workforce that fully reflects the diversity of the people and communities Eversource serves. Eversource’s hiring practices emphasize diversity, and encourage employees to embrace different people, perspectives and experiences in our workplace and within our communities – regardless of their race, color, religion, national origin, ancestry, sex, gender identity, age, disability, marital status, sexual orientation, active military or veteran status. Eversource continued its successful drive to increase workforce diversity; in 2020, 47.6 percent of new hires and promotions into leadership roles were women or people of color. In addition, in response to the social unrest last year, Eversource conducted listening sessions with our business resource groups and established a racial equity task force. Eversource also started a highly attended employee town hall series focused on taking action to advance racial equality and to disrupt racism. In addition, Eversource launched a webinar series on employee resilience and self-care, and created a robust self-service, online communication and learning hub on racial and social justice.

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EMPLOYEES/HUMAN CAPITAL MANAGEMENT: Eversource recognizes that its employees are its most valuable asset. Eversource has developed strategic workplans as part of the annual business and workforce planning process to address immediate and long-range needs to ensure that Eversource acquires, develops and retains excellent talent. Virtual learning and development opportunities were provided to employees, including on-boarding sessions with specific focus on engaging new Eversource Gas Company of Massachusetts employees. No employees, whether from the acquired company Columbia Gas or otherwise, were subject to lay-offs as a result of the pandemic. Interactive engagement and support tools were offered to promote remote worker effectiveness supporting the workforce with business, leadership and technical knowledge. Employee development programs were aligned to the strategic workforce plan to support succession within all levels of the organization. Programs like the Growth Opportunities for Leadership Development and the engineering associate cohort programs promoted educational and professional development opportunities for recent college graduates. Tuition assistance programs, paid internships, co-ops and other pipeline development programs continued to the greatest extent possible to ensure progress in future workforce technical skills and competencies. Through targeted training, development and educational activities, Eversource offered high performers numerous learning experiences to ensure their growth and development as future leaders. Thought provoking stretch assignments, high impact cross-functional team memberships, senior management interaction and exposure, targeted coaching and feedback, and diverse learning experiences that promote interdependent thinking, embrace alternative perspectives, while building teamwork and collaboration represent examples of key components of Eversource’s key talent program. With a strong focus on Diversity, Equity and Inclusion, discussions, programs and activities were offered to provide education and experiences to further emphasize messages of Racial and Social Justice. Additionally, Eversource leveraged educational partnerships in critical trade and technical areas and has developed proactive sourcing strategies to attract experienced workers in highly technical roles in areas like engineering, electric and gas operations, and energy efficiency. As part of this process, Eversource identified critical roles and developed succession plans to ensure Eversource has talent now and for the future. Eversource also provides employees with fair pay, comprehensive benefits, and a variety of field and classroom training opportunities throughout their careers to support their ongoing success on the job.

AWARDS: Eversource continued to receive numerous local and national awards in 2020 recognizing Eversource as a leader and catalyst in the areas of Sustainability and ESG.

Eversource was again ranked in the top 100 of America’s Most Just Companies by FORBES/JUST Capital. The listing recognizes corporate social responsibility and commitment to local communities and celebrates public companies for their positive impact and leadership on priorities such as ethical leadership, environmental impact, customer treatment, fair pay and benefits, equal opportunity and shareholder return.

For the second year in a row, Newsweek magazine ranked Eversource as the #1 energy company in their 2021 list of the Most Responsible Companies. This listing is based on an analysis of a company’s corporate social responsibility, as well as a public survey.

For the third consecutive year, Eversource was selected to be included in the Bloomberg Gender-Equality Index, which recognizes companies who have shown their commitment to advancing women’s equality in the workplace and transparency in gender reporting.

Eversource was included in 3BL Media’s ranking of the top 100 Best Corporate Citizens of 2020 for leading ESG transparency and performance among 1,000 of the largest U.S. public companies.

Eversource was recognized by the U.S. Department of Labor as a HIRE Vets Medallion Award recipient for its commitment to recruiting, employing, and retaining veterans. We are proud to support veteran careers.

The National Organization on Disability (NOD) honored Eversource as a 2020 Leading Disability Employer. Now in its sixth year, the NOD Leading Disability Employer Seal is a recognition of organizations that are leading the way in disability inclusion and tapping into the many benefits of hiring talent who are differently-abled, including high rates of productivity and dedication, and greater employee engagement across the workforce.

Eversource was again selected as a “most honored” company by Institutional Investor magazine in its survey of some 1,500 portfolio managers and investment analysts. Eversource was designated as the #2 utility company in each of the eight company categories, including those related to ESG.

Eversource was one of only four energy companies included in Barron’s 2020 Most Sustainable Companies list. Barron’s based their list on 230 performance indicators that address environmental, social and governance matters.

Achievement of the 2020 performance goals, additional accomplishments and the Compensation Committee’s assessment of Company and executive performance are more fully described in the section below titled “2020 Annual Incentive Program Assessment.” Specific decisions regarding executive compensation based upon the Committee’s assessment of Company and executive performance and market data are also described below.

Pay for Performance Philosophy

The Compensation Committee links the compensation of the executive officers, including the Named Executive Officers, to performance that will ultimately benefit customers, employees, and shareholders. Eversource’s compensation program is intended to attract and retain the best executive talent in the industry, motivate executives to meet or exceed specific stretch financial and operational goals each year, and compensate executives in a manner that aligns compensation directly with performance. Eversource strives to provide executives with base salary, performance-based annual incentive compensation, and performance-based long-term incentive compensation opportunities that are competitive with market practices and that reward excellent performance.
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Executive Compensation Governance

What Eversource DOES:
ü Pay for Performance
ü Share ownership and holding guidelines
ü Balanced incentive metrics
ü Delivery of the majority of incentive compensation opportunity in long-term equity
ü Broad financial and personal misconduct clawback policy relating to incentive compensation
ü Double-trigger change in control vesting provisions
ü Shareholder engagement meetings throughout the year between management and Eversource shareholders that discuss compensation governance
ü For 2021, 75 percent of long-term incentive compensation will be tied to performance
ü 100 percent of long-term incentive compensation paid in equity
ü Independent compensation consultant
ü Annual Say-on-Pay vote
ü Payout limitations on incentive awards
ü Limited executive and Trustee trading window

What Eversource DOESN’T do:
û Tax gross ups in any new or materially amended executive compensation agreements
û Hedging, pledging or similar transactions by executives and Trustees
û Liberal share recycling
û Dividends on equity awards before vesting
û Discounts or repricing of options or stock appreciation rights
û Change in control agreements (since 2010)

The executive share ownership and holding guidelines noted in this CD&A emphasize the importance of aligning management with shareholders. Under the share ownership guidelines, which require Eversource’s Chief Executive Officer to hold shares equal to six times base salary, Eversource requires executives to hold 100 percent of the shares awarded under the Company’s stock compensation program until the share ownership guidelines have been met.

Eversource’s Incentive Plan includes a clawback provision that requires executives and all other participants to reimburse the Company for incentive compensation received, not only if earnings are subsequently required to be restated as a result of noncompliance with accounting rules caused by fraud or misconduct, but also for a willful material violation of Eversource’s Code of Business Conduct or significant breach of a material covenant in an employment agreement. The Plan also imposes limits on awards and on Trustee compensation and prohibits repricing of awards and liberal share recycling.

Eversource prohibits gross ups in all new or materially amended executive compensation agreements.

Eversource has a “no hedging and no pledging” policy that prohibits the purchase of financial instruments or otherwise entering into any transactions that are designed to have the effect of hedging or offsetting any decrease in the market value of its common shares.

Eversource’s employment agreements and incentive plan require a “double-trigger” change in control to accelerate compensation.

Named Executive Officers

The executive officers of CL&P listed in the Summary Compensation Table and whose compensation is discussed in this CD&A are referred to as the “Named Executive Officers” under SEC regulations. For 2020, CL&P’s Named Executive Officers were:

James J. Judge, Chairman, President and Chief Executive Officer of Eversource Energy and Chairman of the Board of CL&P

Philip J. Lembo, Executive Vice President and Chief Financial Officer of Eversource Energy and CL&P

Werner J. Schweiger, Executive Vice President and Chief Operating Officer of Eversource Energy and Chief Executive Officer of CL&P

Joseph R. Nolan, Jr., Executive Vice President - Strategy, Customer and Corporate Relations of Eversource Energy and Eversource Service

Gregory B. Butler, Executive Vice President and General Counsel of Eversource Energy and CL&P

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Overview of Eversource’s Compensation Program

The Role of the Compensation Committee. The Eversource Board of Trustees has delegated to the Compensation Committee overall responsibility for establishing the compensation program for those senior executive officers, whom we refer to in this CD&A as “executives” and whom are deemed to be “officers” under the SEC’s regulations that determine the persons whose compensation is subject to disclosure. In this role, the Committee sets compensation policy and compensation levels, reviews and approves performance goals and evaluates executive performance. Although this CD&A refers principally to compensation for the Named Executive Officers, the same compensation principles and practices apply to all executives. The compensation of Eversource’s Chief Executive Officer is subject to the further review and approval of all of the independent Eversource Trustees.

Elements of Compensation. Total direct compensation consists of three elements: base salary, annual cash incentive awards, and long-term equity-based incentive awards. Indirect compensation is provided through certain retirement, perquisite, severance, and health and welfare benefit programs.

Eversource’s Compensation Objectives. The objectives of Eversource’s compensation program are to attract and retain superior executive talent, motivate executives to achieve annual and long-term performance goals set each year, and provide total compensation opportunities that are competitive with market practices. With respect to incentive compensation, the Committee believes it is important to balance short-term goals, such as producing earnings, with longer-term goals, such as long-term value creation for shareholders, maintaining a strong balance sheet, and being a leader in clean energy and sustainability. The Committee also places great emphasis on operating performance, customer service, safety, sustainability and workforce diversity. Eversource’s compensation program utilizes performance-based incentive compensation to reward individual and corporate performance and to align the interests of executives with Eversource Energy’s customers, employees, and shareholders. The Committee continually increases expectations to motivate executives and employees to achieve continuous improvement in carrying out their responsibilities to customers to deliver energy and water reliably, safely, mindful of the environment and employee well-being, and at a reasonable cost, while providing an above-average total return to Eversource shareholders.

Setting Compensation Levels. To ensure that Eversource achieves its goal of providing market-based total direct compensation levels to attract and retain top quality management, the Committee provides executives with target compensation opportunities approximately equal to median compensation levels for executive officers of companies in the utility industry comparable to Eversource in size. To achieve that goal, the Committee and its independent compensation consultant work together to determine the market values of executive direct and indirect compensation elements by using competitive market compensation data.

The Committee reviews competitive compensation data obtained from utility and general industry surveys and a specific group of peer utility companies. Incumbent compensation levels may be set below the market median for those executives who are new to their roles, while long-tenured, high performing executives may be compensated above median. The review by Pay Governance performed in December 2020 indicated that Eversource’s aggregate executive compensation levels continue to be aligned with median market rates.

Role of the Compensation Consultant. The Committee has retained Pay Governance as its independent compensation consultant. Pay Governance reports directly to the Committee and does not provide any other services to Eversource. With the consent of the Committee, Pay Governance works cooperatively with Eversource’s management to develop analyses and proposals for presentation to the Committee. The Committee generally relies on Pay Governance for peer group market data and information as to market practices and trends to assess the competitiveness of the compensation Eversource pays to executives and to review the Committee’s proposed compensation decisions.

Pay Governance Independence. In February 2021, the Committee assessed the independence of Pay Governance pursuant to SEC and NYSE rules, and concluded that it is independent and that no conflict of interest exists that would prevent Pay Governance from independently advising the Committee. In making this assessment, the Committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities Exchange Act of 1934, as well as the written representations of Pay Governance that Pay Governance does not provide any other services to Eversource, the level of fees received from Eversource as a percentage of Pay Governance’s total revenues, the policies and procedures employed by Pay Governance to prevent conflicts of interest, and whether the individual Pay Governance advisers with whom the Committee consulted own any Eversource Energy common shares or have any business or personal relationships with members of the Committee or the Eversource executives.

Role of Management. The role of Eversource’s management, and specifically the roles of Eversource’s Chief Executive Officer and the Executive Vice President of Human Resources and Information Technology, are to provide current compensation information to the compensation consultant and analyses and recommendations on executive compensation to the Committee based on the market value of the position, individual performance, experience and internal pay equity. Eversource’s Chief Executive Officer also provides recommendations on the compensation for the other Eversource Named Executive Officers. None of the executives makes recommendations that affect their individual compensation.

MARKET ANALYSIS

The Compensation Committee seeks to provide executives with target compensation opportunities using a range that is approximately equal to the median compensation levels for executive officers of utility companies comparable to Eversource. Set forth below is a description of the sources of the compensation data used by the Committee when reviewing 2020 compensation:

Competitive Compensation Survey Data. The Committee reviews compensation information obtained from surveys of diverse groups of utility and general industry companies that represent Eversource’s market for executive officer talent. Utility industry data serve as the primary reference point for benchmarking officer compensation and are based on a defined peer set, as discussed below, while general industry data are derived from compensation consultant surveys and serve as a secondary reference point. General industry data are used for staff positions and are size adjusted to ensure a close correlation between the market data and the Company’s scope of operations.
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The Committee references this information, which it obtains from Pay Governance, to evaluate and determine base salaries and incentive opportunities.

Peer Group Data. In support of executive pay decisions, the Committee consulted with Pay Governance, which provided the Committee with a competitive assessment analysis of Eversource’s executive compensation levels as compared to the 18 peer group companies listed in the table below. This peer group, which the Committee reviews annually, was chosen because these companies are similar to Eversource Energy in terms of size, business model and long-term strategies.

Alliant Energy Corporation Dominion Energy, Inc. Pinnacle West Capital Corporation
Ameren Corporation DTE Energy Company PPL Corporation
American Electric Power Co., Inc. Edison International Public Service Enterprise Group, Inc.
CenterPoint Energy, Inc. Entergy Corporation Sempra Energy
CMS Energy Corp. FirstEnergy Corp. WEC Energy Group, Inc.
Consolidated Edison, Inc. NiSource Inc. Xcel Energy Inc.

The Committee adjusts the target percentages of annual and long-term incentives based on the survey data and recommendations from the Chief Executive Officer, after discussion with the compensation consultant, to ensure that they are approximately equal to competitive median levels.

The Committee periodically reviews the general market for supplemental benefits and perquisites using utility and general industry survey data, including data obtained from companies in the peer group.

MIX OF COMPENSATION ELEMENTS

Eversource targets the mix of compensation for its Chief Executive Officer and its other Named Executive Officers so that the percentages of each compensation element are approximately equal to the competitive median market mix. The mix is heavily weighted toward incentive compensation, and incentive compensation is heavily weighted toward long-term compensation. Since the most senior positions have the greatest responsibility for implementing Eversource’s long-term business plans and strategies, a greater proportion of total compensation is based on performance with a long-term focus.

The Committee determines the compensation for each executive based on the relative authority, duties and responsibilities of the executive. Eversource’s Chief Executive Officer’s responsibilities for the strategic direction and daily operations and management of Eversource are greater than the duties and responsibilities of the other executives. As a result, Eversource’s Chief Executive Officer’s compensation is higher than the compensation of those other executives. Assisted by the compensation consultant, the Committee regularly reviews market compensation data for executive officer positions similar to those held by Eversource’s executives, including its Chief Executive Officer.

The following table sets forth the contribution to 2020 Total Direct Compensation (TDC) of each element of compensation at target, reflected as a percentage of TDC, for the Named Executive Officers. The percentages shown in this table are at target and therefore do not correspond to the amounts appearing in the Summary Compensation Table.

Percentage of TDC at Target
Long-Term Incentives
Base Salary
Annual Incentive (1)
Performance Shares (1)
Named Executive Officer
RSUs (2)
TDC
James J. Judge 14% 18% 34% 34% 100%
Philip J. Lembo 25% 20% 27.5% 27.5% 100%
Werner J. Schweiger 25% 20% 27.5% 27.5% 100%
Joseph R. Nolan, Jr. 25% 20% 27.5% 27.5% 100%
Gregory B. Butler 28% 20% 26% 26% 100%
NEO average, excluding CEO 26% 20% 27% 27% 100%
(1)    The annual incentive compensation element and performance shares under the long-term incentive compensation element are performance-based. Beginning in 2021, the Compensation Committee increased the percentage of Performance Shares in the long-term incentive program from 50 percent to 75 percent for all of the Named Executive Officers. As a result, the percentage of Performance Shares in 2021 will increase from 34 percent of TDC to 51 percent for Mr. Judge, from 27.5 percent of TDC to 41 percent for Messrs. Lembo, Schweiger and Nolan, and from 26 percent of TDC to 39 percent for Mr. Butler.

(2)    Restricted Share Units (RSUs) vest over three years contingent upon continued employment.

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RISK ANALYSIS OF EXECUTIVE COMPENSATION PROGRAM

The overall compensation program includes a mix of compensation elements ranging from a fixed base salary that is not at risk to annual and long-term incentive compensation programs intended to motivate executives and other eligible employees to achieve individual and corporate performance goals that reflect an appropriate level of risk. The fundamental objective of the compensation program is to foster the continued growth and success of Eversource’s business. The design and implementation of the overall compensation program provide the Committee with opportunities throughout the year to assess risks within the compensation program that may have a material effect on Eversource and its shareholders.

The Compensation Committee assesses the risks associated with the executive compensation program on an ongoing basis by reviewing the various elements of incentive compensation. The annual incentive program is designed to ensure an appropriate balance between individual and corporate goals, which were deemed appropriate and supportive of Eversource’s annual business plan. Similarly, the long-term incentive program is designed to ensure that the performance metrics are properly weighted and supportive of Eversource’s strategy. The Committee reviewed the overall compensation program in the context of risks identified in the annual operating plan. The annual and long-term incentive programs were designed to include mechanisms to mitigate risk. These mechanisms include realistic goal setting and discretion with respect to actual payments, in addition to:

A mix of annual and long-term performance awards to provide an appropriate balance of short- and long-term risk and reward horizon;

A variety of performance metrics, including financial, operational, customer service, ESG, diversity and safety goals and other strategic initiatives for annual performance awards to avoid excessive focus on a single measure of performance;

Metrics in Eversource’s long-term incentive compensation program that use earnings per share growth and relative total shareholder return, which are both robust measures of shareholder value and which reduce the risk that employees might be encouraged to pursue other objectives that increase risk or reduce financial performance;

The provisions of Eversource’s annual and long-term incentive programs, which cap awards at 200 percent of target;

Eversource’s expansive clawback provisions on incentive compensation, including clawback for material violations of the Eversource Code of Business Conduct; and

Stock ownership requirements for all executives, including Eversource’s NEOs, and prohibitions on hedging, pledging and other derivative transactions related to Eversource common shares.

Based on these factors, the Compensation Committee and the Board of Trustees believe the overall compensation program risks are mitigated to reduce overall compensation risk.

Results of Eversource's 2020 Say-on-Pay Vote. Eversource provides its shareholders with the required opportunity to cast the annual advisory vote on executive compensation (a Say-on-Pay proposal). At Eversource’s Annual Meeting of Shareholders held on May 6, 2020, 89 percent of the votes cast on the Say-on-Pay proposal were voted to approve the 2019 compensation of the Named Executive Officers, as described in Eversource’s 2020 proxy statement. Say-on-Pay results of the Company, along with utility and general industry peers, are reviewed by the Committee annually to help assess whether Eversource shareholders continue to deem its executives’ compensation to be appropriate. The Committee has and will continue to consider the outcome of Eversource’s s Say-on-Pay votes when making future compensation decisions for the Named Executive Officers.

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ELEMENTS OF 2020 COMPENSATION

Base Salary

Base salary is designed to attract and retain key executives by providing an element of total compensation at levels competitive with those of other executives employed by companies of similar size and complexity in the utility and general industries. In establishing base salary, the Compensation Committee relies on compensation data obtained from independent third-party surveys of companies and from an industry peer group to ensure that the compensation opportunities Eversource offers are capable of attracting and retaining executives with the experience and talent required to achieve its strategic objectives. Adjustments to base salaries are generally made on an annual basis except in instances of promotions.

When setting or adjusting base salaries, the Committee considers annual executive performance appraisals; market pay movement across industries (determined through market analysis); targeted market pay positioning for each executive; individual experience; strategic importance of a position; recommendations of the Chief Executive Officer; and internal pay equity.

Due to the hardships experienced by Eversource’s customers and communities as a result of COVID-19 and the extended outages that took place in 2020 in Connecticut following Storm Isaias, and in spite of excellent performance by the executives in 2020, the Compensation Committee determined that it would freeze base salaries for Eversource’s senior executive officers, including its Named Executive Officers, at 2020 levels, rather than provide market based base salary increases.

Incentive Compensation

Annual incentive and long-term incentive compensation are provided under Eversource’s Incentive Plan, which was approved by its shareholders in 2018. The annual incentive program provides cash compensation intended to reward performance under Eversource’s annual operating plan. The long-term stock-based incentive program is designed to reward demonstrated performance and leadership, motivate future performance, align the interests of the executives with those of shareholders, and retain executives during the term of grants. The annual and long-term programs are designed to strike a balance between Eversource’s short- and long-term objectives so that the programs work in tandem.

In addition to the specific performance goals, the Committee assesses other factors, as well as the executives’ roles and individual performance and then makes annual incentive program awards at the levels and amounts disclosed in this CD&A.

2020 ANNUAL INCENTIVE PROGRAM ASSESSMENT

In early February of 2020, the Committee established the terms of the 2020 Annual Incentive Program. As part of the overall program, and after consulting with Pay Governance, the Committee set target award levels for each of Eversource’s Named Executive Officers that ranged from 70 percent to 125 percent of base salary.

At the February 2020 meeting, the Committee determined that for 2020 it would continue to base 70 percent of the annual incentive performance goals on Eversource’s overall financial performance and 30 percent of the annual performance goals on Eversource’s overall operational performance. The Committee also determined the specific goals that would be used to assess performance, with potential ratings on each goal ranging from zero percent to 200 percent of target. The Committee assigned weightings to each of the goals. For the financial component, the following goals were used: earnings per share, weighted at 60 percent, dividend growth, weighted at 10 percent, and advancement of strategic growth initiatives and regulatory outcomes, weighted at 30 percent. For the operational component, the Committee used the following goals: combined service reliability and restoration goals, weighted at 50 percent, and combined safety ratings, gas service response, diversity promotions and hires of leadership employee positions, and sustainability, customer and clean energy initiatives, weighted at 50 percent.

In establishing the individual annual performance goals, the Committee sets stretch goals for both the Financial and Operational components. Many of the goals use performance ranges, as opposed to threshold or target metrics, whereby the lower end of the performance range does not represent average or less compared to industry peers, or other similar performance benchmarks, but requires performance that exceeds industry standards, peer performance and other benchmarks in order to be met, while achievement at the higher end of the range represents top-of-industry performance. Achieving performance of these stretch goals within the particular range will therefore justify an assessment beyond target.

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2020 Performance Goals

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At the December 2020 meeting of the Committee, Eversource’s management provided an initial review of its 2020 performance, followed in February 2021 by a full assessment of the performance goals, the additional accomplishments noted below under the caption “Additional Factors” and the overall performance of Eversource and its executives. In addition to these meetings, the Committee and the Eversource Board were provided updates during 2020 on corporate performance. At the February 8, 2021 meeting, the Committee determined, based on its assessment of the financial and operational performance goals, to set the level of achievement of combined financial and operational performance goals results at 161 percent, reflecting the strong performance of Eversource and its executive team in executing Eversource’s Operating Plan and adapting quickly to the COVID-19 pandemic to keep its customers and employees safe and to maintain effective operations. In arriving at this determination, the Committee determined that the weighted financial performance goals result was 116 percent and the weighted operational performance goals result was 45 percent. In making the awards, the Committee made its determinations on the results without factoring the pandemic into its deliberations and did not take into account the additional complexities involved in executing the Operating Plan and accomplishing the goals. Eversource’s Chief Executive Officer recommended to the Committee awards for its executives (other than himself) based on his assessment of each of the executive’s individual performance towards achievement of the performance goals and the additional accomplishments of Eversource, together with each of the executive’s contributions to the overall performance of Eversource. The actual awards determined by the Committee were also based on the same criteria.

Financial Performance Goals Assessment

FINANCIAL PERFORMANCE: Eversource’s non-GAAP earnings per share in 2020, which excludes the Columbia Gas asset acquisition transactional costs, increased by 5.5 percent when compared to non-GAAP earnings per share in 2019, and met the established goal of $3.64. Eversource was able to achieve this goal through effective management of the 2020 Operating Plan on a day-by-day basis and by overcoming several challenges to plan achievement, including higher than plan O&M expenses caused primarily by the significant number and severity of storm events and the financial and operational impacts of the COVID-19 pandemic.

In determining that it was appropriate to assess the earnings per share goal based on recurring, non-GAAP earnings, the Committee considered the fact that the one-time transactional costs of the complex Columbia Gas asset acquisition, which were the only costs excluded in the calculation of non-GAAP earnings, were a significant strategic opportunity for Eversource, completed in an accelerated timeframe with constructive regulatory outcomes. The Committee determined the earnings per share goal to have attained a 150 percent performance result.

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DIVIDEND GROWTH: Eversource increased its dividend to $2.27 per share, a 6.1 percent increase from the prior year, significantly above the utility industry’s median dividend growth of 4.5 percent for the EEI Utility Index. The Committee determined this goal to have attained a 160 percent performance result.

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STRATEGIC INITIATIVES AND REGULATORY OUTCOMES: Although Eversource faced challenges caused by the restrictions resulting from the pandemic, it successfully completed the acquisition of the assets of Columbia Gas in seven months; the acquisition was immediately accretive to earnings and is expected to be increasingly so in future years. As part of the acquisition regulatory approval process, Eversource successfully reached a constructive 8-year rate settlement agreement for the new entity, Eversource Gas Company of Massachusetts. Eversource achieved constructive outcomes in the PSNH and NSTAR Gas subsidiary rate reviews, completed the sale by the Aquarion Water Company of assets located in Hingham, Massachusetts in satisfaction of a predecessor company agreement, and successfully executed several storm cost recovery proceedings in the three states Eversource serves. The Committee determined this goal to have attained a 200 percent performance result.

Operational Performance Goals Assessment

RELIABILITY PERFORMANCE: Electric System Reliability, measured by months between interruptions, was top decile in the industry in 2020; customer power interruptions were on average 19.2 months apart. The Committee determined this goal to have attained a 175 percent performance result.

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RESTORATION PERFORMANCE: The average system outage duration was 64.0 minutes, which was in the top decile of the industry for the fastest restoration time. The Committee determined this goal to have attained a 175 percent performance result.

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SAFETY: Eversource’s safety performance was 0.7, measured by days away, restricted or transferred (DART) per 100 workers, which continued to outperform the industry in 2020. In addition to the safety performance as measured by DART, the policies and procedures Eversource established at the onset of the pandemic were and continue to be a significant and successful part of our overall safety performance. The Committee determined this goal to have attained a 150 percent performance result.

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GAS EMERGENCY RESPONSE: On-time response to gas customer emergency calls was 99.6 percent, meeting industry standards. The Committee determined this goal to have attained a 100 percent performance result.

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DIVERSITY: Eversource continued to support many programs and agencies that address racial and ethnic disparities in its customers’ communities and beyond. Eversource also continues to develop a workforce that fully reflects the diversity of the people and communities Eversource serves. Eversource’s hiring practices emphasize diversity, and encourage employees to embrace different people, perspectives and experiences in its workplace and within its communities – regardless of their race, color, religion, national origin, ancestry, sex, gender identity, age, disability, marital status, sexual orientation, active military or veteran status. Eversource continued its successful drive to increase workforce diversity; in 2020, 47.6 percent of new hires and promotions into leadership roles were women or people of color. In addition, in response to the social unrest last year, Eversource conducted listening sessions with its business resource groups and established a racial equity task force. Eversource also started a highly attended employee town hall series focused on taking action to advance racial equality and to disrupt racism. In addition, Eversource launched a webinar series on employee resilience and self-care, and created a robust self-service, online communication and learning hub on racial and social justice. The Committee determined this goal to have attained a 200 percent performance result.

SUSTAINABILITY: Eversource’s goal in 2020 was to be in the 75th percentile performance of a peer group of comparably sized U.S. utilities whose ESG performance is assessed by two leading sustainability rating firms. Eversource’s performance was determined to be at the 85th percentile of the peer group. The Committee determined this goal to have attained a 150 percent performance result.

CUSTOMERS: Eversource continued to add to its customer messaging programs, including those relating to COVID-19, realized all-time highs in both digital messaging and estimated time to restore communications, led the industry in the early implementation of customer service termination moratoria, and implemented extended customer forgiveness and extended payment programs. However, Eversource acknowledged that as a result of Tropical Storm Isaias, which caused extensive, catastrophic damage to CL&P’s distribution system and many prolonged outages, its customers’ and government leaders’ perception was that its performance fell short of their expectations. In recognition of this sentiment, the Committee did not attribute any performance percentage value to the customer goals in its overall assessment to the goals, such that the goal was assessed at zero percent.

CLEAN ENERGY LEADERSHIP: Regarding Eversource’s offshore wind projects, Eversource continued to advance the New London State Pier project in Connecticut, giving the Eversource/Ørsted partnership access to the leading offshore wind port in the Northeast; reached a comprehensive settlement for the joint Eversource/Ørsted South Fork project with the Town of East Hampton, New York and the Board of Trustees for South Fork relating to the installation of the onshore transmission facilities to be constructed in those two communities; and submitted Construction and Operating Plans with the U.S. Bureau of Ocean Energy Management for the joint Eversource/Ørsted Revolution Wind and Sunrise Wind projects. In June of 2020, Eversource began construction of a first in the nation community battery storage project at the Provincetown, Massachusetts town transfer station. Eversource’s electric vehicle charging infrastructure program met its 2020 targets; Eversource led efforts to expand Massachusetts’ utility scale solar program, and Eversource’s energy efficiency programs, while slowed by the COVID-19 pandemic, continued to perform at national leading level as noted by the American Council for an Energy Efficient Economy. The Committee determined this goal to have attained a 125 percent performance result.

2020 Annual Incentive Program Performance Assessments
Financial Performance Goals
Category 2020 Goal Eversource Performance Assessment
Earnings Per Share $3.64 earnings per share Achieved: Non-GAAP earnings per share, excluding only the Columbia Gas acquisition costs, equaled $3.64 per share, an increase of 5.5% over 2019, and exceeded forecasted industry average 150%
Dividend Growth Increase dividend beyond industry average Achieved: Increased dividend to $2.27 per share, a $0.13 increase and 6.1% growth over 2019, exceeding the industry median of 4.5% 160%
Strategic Growth Initiatives Advancement of Key Strategic Projects and Regulatory Outcomes Exceeded: Despite the restrictions resulting from the pandemic, Eversource completed the acquisition of the assets of Columbia Gas in just seven months at a very favorable price, and the acquisition was immediately accretive to earnings and is expected to be increasingly so in future years. Eversource realized constructive outcomes in the PSNH and NSTAR Gas subsidiary rate reviews, successfully completed the divestiture of generation assets in New Hampshire, completed the sale by its Aquarion Water Company of assets located in Hingham, Massachusetts, and executed several incremental cost recovery filings in the three states it serves 200%
Weightings = Earnings Per Share: 60%; Dividend Growth: 10%; Strategic Growth Initiatives: 30%

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Operational Performance Goals
Category 2020 Goal Eversource Performance Assessment
Reliability – Average Months Between Interruptions (MBI) Achieve MBI of within 15.5 to 18.5 months Exceeded: MBI = 19.2 months. Above the high level of the performance goal’s range and in the top decile of the industry peer group 175%
Average Restoration Duration (SAIDI) Achieve SAIDI of 64 to 77 minutes Achieved: SAIDI = 64.0 minutes. At the lowest (best) end of the performance range, and in the top decile of the industry group as measured by recognized industry standards 175%
Safety Rate (Days Away Restricted Time (DART)) 0.5 – 0.9 DART Achieved: 0.7 DART - Within performance range of the goal and exceeding industry peers, with strong performance in responding to the pandemic 150%
Gas Service Response 99.2% - 99.6% on time Achieved: 99.6%; Performance equal to industry average 100%
Diverse Leadership 40% diverse hires or promotions of leadership level Exceeded: 47.6% - Performed well above the goal. Eversource continued support of community efforts that address racial inequality and maintained focus within Eversource of its commitment to advance racial equality 200%
Sustainability Ranking 75th percentile vs. US peer companies Exceeded: At 85th percentile, Eversource outperformed the peer group and is well into the first quartile; numerous recognitions and awards acknowledging its sustainability excellence again in 2020 150%
Transform the Customer Experience Launch new mobile app; increase accuracy of restoration times and customer digital engagement Not Achieved: The “Ways to Save” initiative's targeted messaging and channels have pivoted to assist customers during the pandemic response with activities such as COVID-19 related product offers, employee high bill training, and virtual energy assessments. The estimated restoration time metric outperformed the goal and finished the year at 93%. Digital Customer Engagement finished above target at 88%, supported by enhancements to the Eversource.com Account Overview page, which has increased search engine optimization and driven increased web traffic. However, despite these positive advancements, the Compensation Committee determined that because customers and other stakeholders in Connecticut felt our storm performance was inadequate, this measure was assessed to have not been achieved 0%
Clean Energy Execution Successfully advance and execute clean energy initiatives Achieved: Eversource has made significant progress on advancing its agreement with the New London State Pier redevelopment, which provides its partnership access to the leading offshore wind port in the Northeast and a strategic advantage that permits greater flexibility in installation vessel options. Eversource’s EV program met year end targets and its energy storage initiative is expected to be in service in mid-2021, within the approved MDPU window. Eversource’s energy efficiency programs were impacted by COVID-19, and in response Eversource became the first utility in the nation to conduct virtual home energy audits for customers 125%
Weightings = Reliability: 25%; Restoration: 25%; Safety, Gas Response, Diversity, Sustainability and Key Initiatives: 50%
Performance Goals Assessment
Financial Performance at 166% (weighted 70%) 116%
Operational Performance at 149% (weighted 30%) 45%
Overall Performance 161%
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Additional Factors

The following important financial, strategic, operational, environmental and customer-focused results were also considered by the Committee in assessing overall financial and operational performance, but were not given specific weightings or assigned a specific performance assessment score:

Eversource was again ranked in the top 100 of America’s Most Just companies by FORBES/JUST Capital. The listing recognizes corporate social responsibility and commitment to the local communities and celebrates public companies for their positive impact and leadership on priorities such as ethical leadership, environmental impact, customer treatment, fair pay and benefits, equal opportunity and shareholder return.

Again this year, Newsweek magazine ranked Eversource as the #1 energy company in their 2021 list of the Most Responsible Companies. This listing is based on an analysis of a company’s corporate social responsibility, as well as a public survey.

For the third consecutive year, Eversource was selected to be included in the Bloomberg Gender-Equality Index, which recognizes companies who have shown their commitment to advancing women’s equality in the workplace and transparency in gender reporting.

Eversource was included in 3BL Media’s ranking of the top 100 Best Corporate Citizens of 2020 for leading ESG transparency and performance among 1,000 of the largest U.S. public companies.

Eversource was recognized by the U.S. Department of Labor as a HIRE Vets Medallion Award recipient for its commitment to recruiting, employing, and retaining veterans. We are proud to support veteran careers.

The National Organization on Disability (NOD) honored Eversource as a 2020 Leading Disability Employer. Now in its sixth year, the NOD Leading Disability Employer Seal is a recognition of organizations that are leading the way in disability inclusion and tapping into the many benefits of hiring talent who are differently-abled, including high rates of productivity and dedication, and greater employee engagement across the workforce.

Eversource was one of only four energy companies included in Barron’s 2020 Most Sustainable Companies list. Barron’s bases this list on 230 performance indicators that address environmental, social and governance matters.

Eversource was again selected as a “most honored” company by Institutional Investor magazine in its survey of some 1,500 portfolio managers and investment analysts. Eversource was designated as the #2 utility company in each of the eight company categories, including those related to ESG.

Eversource’s 2020 charitable giving totaled $8.1 million, including major event lead sponsorships for the Eversource Walk for Children’s Hospital of Boston, Eversource Walk and 5K Run for Easterseals New Hampshire, Mass General Cancer Center/Eversource Every Day Amazing Race, Eversource Hartford Marathon, Travelers Championship, and Special Olympics in Connecticut and New Hampshire. Most of these events were held “virtually”, and many Eversource employees assisted in carrying out of these events to help ensure their success.

Individual Executives' Performance Factors Considered by the Committee

It is the Committee’s philosophy to provide incentives for Eversource executives to work together as a highly effective, integrated team to achieve or exceed the financial, operational, safety, customer, sustainability, strategic and diversity goals and objectives. The Committee also reviews and assesses individual executive performance. The Committee based the annual incentive payments on team performance and the Committee’s assessment of each of Eversource’s executive’s individual performance in supporting the performance goals, additional achievements, and overall results of Eversource. With respect to Eversource’s Chief Executive Officer, the Committee and Eversource’s independent Trustees assessed his performance. Based on the recommendations of Eversource’s Chief Executive Officer as to executives other than himself, the Committee assessed the performance of the Named Executive Officers and Eversource to be excellent in totality and approved annual incentive program payments for its Named Executive Officers at levels that ranged from 149 percent to 167 percent of target. These payments reflected the individual and team contributions of each of the Named Executive Officers in achieving the goals and the additional accomplishments and the overall performance of the Company.

In determining Mr. Judge’s annual incentive payment of $2,750,000, which was 161 percent of target and which reflects his and Eversource’s excellent 2020 performance, the Eversource Committee and Board considered the totality of Eversource’s success in accomplishing the goals set by the Committee. The Committee also reviewed the additional accomplishments of Eversource and the superior leadership of Mr. Judge, who again led a very high- performing company to another successful year, including Mr. Judge’s continued emphasis on the importance of both protecting the planet and pushing for racial and social justice while ensuring a focus on the safety of Eversource employees and the public from the very beginning of the pandemic, which he continues to do to this day.

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2020 and 2019 Annual Incentive Program Awards
Named Executive Officer 2020 Award 2019 Award
James J. Judge $ 2,750,000 $ 3,000,000
Philip J. Lembo 950,000 1,000,000
Werner J. Schweiger 950,000 1,050,000
Joseph R. Nolan, Jr. 850,000 774,000
Gregory B. Butler 700,000 740,000

Long-Term Incentive Program

General Discussion and Changes for 2021

Eversource’s long-term incentive program is intended to focus on its longer-term strategic goals and to help retain its executives. A new three-year program commences every year. For the three programs described below, each of Eversource’s executive’s target long-term incentive opportunity consisted of 50 percent Performance Shares and 50 percent RSUs. However, for the 2021 – 2023 Program, Eversource has increased the percentage of total long term incentive opportunity that is provided in performance shares to a mix of 75 percent Performance Shares and 25 percent RSUs in response to shareholder comments that it received at shareholder engagement sessions that suggested that the percentage of performance shares should be increased, and to further align its compensation programs with the Committee’s pay for performance philosophy. Performance Shares are designed to reward long-term achievements as measured against pre-established performance measures. RSUs are designed to provide executives with an incentive to increase the value of the Eversource’s common shares in alignment with shareholder interests, while also serving as a retention component for executive talent. Eversource believes these compensation elements create a focus on continued Company and share price growth to further align the interests of Eversource executives with the interests of Eversource shareholders.

Performance Share Grants

General

Performance Shares are designed to reward future financial performance, measured by long-term earnings growth and shareholder returns over a three-year performance period, therefore aligning executive compensation with performance. Performance Shares are granted as a target number of Eversource Energy common shares. The number of Performance Shares is determined by dividing the target grant value in dollars by the average daily closing prices of Eversource common shares on the New York Stock Exchange for the ten business days preceding the grant date and rounding to the nearest whole share. Until the end of the performance period, the value of dividends that would have been paid with respect to the Performance Shares had the Performance Shares been actual common shares will be deemed to be invested in additional Performance Shares, which remain at risk and do not vest until actual performance for the period is determined.

Performance Shares under the 2020 – 2022 and 2019 – 2021 Programs

For the 2020 – 2022 Program, the Committee determined it would measure performance using: (i) average diluted earnings per share growth (EPSG); and (ii) relative total shareholder return (TSR) measured against the performance of companies that comprise the EEI Index. As in previous years, the Committee selected EPSG and TSR as performance measures because the Committee continues to believe that they are generally recognized as the best indicators of overall corporate performance. The Committee considers it a best practice to use a combination of relative and absolute metrics, with absolute EPS growth serving as a key input to shareholder value and relative TSR serving as the output.

The Committee also determined that for the 2020-2022 Program it would increase the degree of EPSG performance required to achieve a target (100 percent) award from that required under previous years’ Programs, and modified the Program by adding additional levels for which no award of shares would be made.

The number of Performance Shares awarded at the end of the three-year period ranges from zero percent to 200 percent of target, depending on EPSG and relative TSR performance as set forth in the performance matrix below. Performance Share grants are based on a percentage of annualized base salary at the time of the grant and are measured in dollars. The target number of shares under the 2020-2022 Program for the Named Executive Officers ranged from 90 percent to 240 percent of base salary. Vesting at 100 percent of target occurs at various combinations of EPSG and TSR performance. In addition, the value of any performance shares that actually vest may increase or decrease over the vesting period based on Eversource’s share price performance. The number of performance shares granted at target were approved as set forth in the table below. The Committee and the independent members of the Eversource Board determined the Performance Share grants for its Chief Executive Officer. Based on input from Eversource’s Chief Executive Officer, the Committee determined the Performance Share grants for each of its other executive officers, including the other Named Executive Officers.

For the 2019 — 2021 Program, the Committee used the same performance measures of EPSG and TSR and used the same criteria used in the 2018 — 2020 Program.

The performance matrices set forth below describe how the Performance Share payout will be determined under the 2020 – 2022 Long-Term Incentive Programs and how the Performance Share payout was determined under the 2018 – 2020 Program and will be determined under the 2019 - 2021 Program. Three-year average EPSG is cross-referenced with the actual three-year TSR percentile to determine actual performance share payout as a percentage of target,

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Performance Shares are designed to reward future financial performance, measured by long-term earnings growth and shareholder returns over a three-year performance period, therefore aligning management compensation with performance. Performance Shares are granted as a target number of Eversource common shares. The number of Performance Shares is determined by dividing the target grant value in dollars by the average daily closing prices of Eversource common shares on the New York Stock Exchange for the ten business days preceding the grant date and rounding to the nearest whole share. Until the end of the performance period, the value of dividends that would have been paid with respect to the Performance Shares had the Performance Shares been actual common shares will be deemed to be invested in additional Performance Shares, which remain at risk and do not vest until actual performance for the period is determined.

2018 – 2020 and 2019 – 2021 Long-Term Incentive Programs Performance Share Potential Payout
Three-Year
Average
EPS Growth
Three-Year Relative Total Shareholder Return Percentiles
Below
10th
20th 30th 40th 50th 60th 70th 80th 90th Above 90th
9% 110% 120% 130% 140% 150% 160% 170% 180% 190% 200%
8% 100% 110% 120% 130% 140% 150% 160% 170% 180% 190%
7% 90% 100% 110% 120% 130% 140% 150% 160% 170% 180%
6% 80% 90% 100% 110% 120% 130% 140% 150% 160% 170%
5% 70% 80% 90% 100% 110% 120% 130% 140% 150% 160%
4% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150%
3% 40% 50% 70% 80% 90% 100% 110% 120% 130% 140%
2% 20% 40% 60% 70% 80% 90% 100% 110% 120% 130%
1% 10% 40% 60% 70% 80% 90% 100% 110% 120%
0% 20% 30% 50% 70% 80% 90% 100% 110%
Below 0% 10% 20% 30% 40% 50% 60%
2020 — 2022 Long-Term Incentive Program Performance Share Potential Payout
Three-Year
Average
EPS Growth
Three-Year Relative Total Shareholder Return Percentiles
Below
10th
20th 30th 40th 50th 60th 70th 80th 90th Above 90th
9.5% 110% 120% 130% 140% 150% 160% 170% 180% 190% 200%
8.5% 100% 110% 120% 130% 140% 150% 160% 170% 180% 190%
7.5% 90% 100% 110% 120% 130% 140% 150% 160% 170% 180%
6.5% 80% 90% 100% 110% 120% 130% 140% 150% 160% 170%
5.5% 70% 80% 90% 100% 110% 120% 130% 140% 150% 160%
4.5% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150%
3.5% 40% 50% 70% 80% 90% 100% 110% 120% 130% 140%
2.5% 20% 40% 60% 70% 80% 90% 100% 110% 120% 130%
1.5% 10% 40% 60% 70% 80% 90% 100% 110% 120%
0.5% 20% 30% 50% 70% 80% 90% 100% 110%
0.0% 10% 20% 30% 40% 50% 70% 70%
Below 0% 10% 20% 30% 40% 50% 60%

Long-Term Incentive Program Performance Share Grants at Target
Named Executive Officer 2020 — 2022
Performance Share Grant
James J. Judge 35,849
Philip J. Lembo 8,635
Werner J. Schweiger 9,235
Joseph R. Nolan, Jr. 7,616
Gregory B. Butler 6,575

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Results of the 2018 – 2020 Performance Share Program

The 2018 – 2020 Program was completed on December 31, 2020. The actual performance level achieved under the Program was a three-year average adjusted EPS growth of 5.4 percent and a three-year total shareholder return at the 92nd percentile, which, when interpolated in accordance with the criteria established by the Committee, resulted in vesting performance share units at 156 percent of target. 2019 and 2020 non-GAAP earnings per share, which excluded the Northern Pass Transmission Project impairment charge in 2019, as disclosed in Eversource’s 2020 proxy statement CD&A, and the Columbia Gas acquisition transaction costs charge in 2020, were the basis for performance level assessment determined by the Committee at its February 2020 and 2021 meetings. Please see “2020 Annual Incentive Program Assessment – FINANCIAL PERFORMANCE,” above. At its February 8, 2021 meeting, the Committee confirmed that the actual results achieved were calculated in accordance with established performance criteria. The number of Performance Shares awarded to Eversource’s Named Executive Officers were approved as set forth in the table below.

2018 – 2020 Long-Term Incentive Program
Performance Share Awards
Named Executive Officer Performance
Share Award
James J. Judge 83,274
Philip J. Lembo 18,186
Werner J. Schweiger 18,464
Joseph R. Nolan, Jr. 13,172
Gregory B. Butler 14,318

Restricted Share Units (RSUs)

General

Each RSU granted under the long-term incentive program entitles the holder to receive one common share at the time of vesting. All RSUs granted under the long-term incentive program vest in equal annual installments over three years. RSU holders are eligible to receive reinvested dividend units on outstanding RSUs held by them to the same extent that dividends are declared and paid on Eversource common shares. Reinvested dividend equivalents are accounted for as additional RSUs that accrue and are distributed with the common shares issued upon vesting of the underlying RSUs. Common shares, including any additional common shares in respect of reinvested dividend equivalents, are not issued for any RSUs that do not vest.

The Committee determined RSU grants for each Eversource executive officer participating in the long-term incentive program. RSU grants are based on a percentage of annualized base salary at the time of the grant. In 2020, the percentage used for each Eversource Named Executive Officer was based on their position in Eversource and ranged from 90 percent to 240 percent of base salary. The Committee reserves the right to increase or decrease the RSU grant from target for each executive officer under special circumstances. The Committee and all other independent members of the Eversource Board determined the RSU grants for its Chief Executive Officer. Based on input from Eversource’s Chief Executive Officer, the Committee determined the RSU grants for each of the other executive officers, including Eversource’s Named Executive Officers.

All RSUs are granted on the date of the Committee meeting at which they are approved. RSU grants are subsequently converted from a percent of salary into common share equivalents by dividing the value of each grant by the average closing price for Eversource common shares over the ten trading days prior to the date of the grant. RSU grants at 100 percent of target were approved as set forth in the table below.

RSUs Granted
Named Executive Officer 2018 2019 2020
James J. Judge 48,912 46,249 35,849
Philip J. Lembo 10,682 10,103 8,635
Werner J. Schweiger 10,845 10,103 9,235
Joseph R. Nolan, Jr. 7,737 7,623 7,616
Gregory B. Butler 8,410 8,328 6,575

Clawbacks

If Eversource’s earnings were to be restated as a result of noncompliance with accounting rules caused by fraud or misconduct, or if a plan participant engages in a willful material violation of the Eversource Code of Business Conduct or material corporate policy, or the breach of a material covenant in an employment agreement, as determined by the Eversource Board of Trustees, the participant will be required by Eversource’s 2018 Incentive Plan to reimburse Eversource for incentive compensation awards received by them for that year.

No Hedging and No Pledging Policy

Eversource has a long-standing policy prohibiting the purchase of any financial instruments or otherwise entering into transactions designed to have the effect of hedging or offsetting any decrease in the value of its common shares or other equity securities of Eversource or its subsidiaries by its Trustees and executives, including exchange-traded options to purchase or sell securities of Eversource (so-called “puts” and “calls”) or
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financial instruments that are designed to hedge or offset any decrease in the market value of securities of Eversource (including, but not limited to, prepaid variable forward contracts, equity swaps, collars and exchange funds). This policy also prohibits short sales, the holding of any Eversource common shares in a margin account, borrowing shares, selling future securities that establish a position that increases in value as the value of the Eversource’s stock decreases, or pledging Eversource’s common shares. The policy applies to Trustees and executives but not to non-executives and does not apply to broad-based index funds or similar transactions.

Share Ownership Guidelines and Retention Requirements

The Committee has approved share ownership guidelines to further emphasize the importance of share ownership by Eversource officers. As indicated in the table below, the guidelines call for Eversource’s Chief Executive Officer to own common shares equal to six times base salary, executive vice presidents to own a number of common shares equal to three times base salary, senior vice presidents to own common shares equal to two times base salary, and all other officers to own a number of common shares equal to one to one and one half times base salary. Officers and Eversource Trustees may only transact in Eversource Energy common shares during approved trading windows and are subject to continuing compliance with these share ownership guidelines.

Executive Officer Base Salary Multiple
Chief Executive Officer 6
Executive Vice Presidents 3
Operating Company Presidents / Senior Vice Presidents 2
Vice Presidents 1 – 1.5

Eversource requires that its officers attain these ownership levels within five years after promotion. All of Eversource’s officers, including Eversource’s Named Executive Officers, have either satisfied these share ownership guidelines or are expected to satisfy them within the applicable timeframe. Common shares, whether held of record, in street name, or in individual 401(k) accounts, and RSUs satisfy the ownership requirements. Unvested performance shares do not count toward satisfying the ownership guidelines. In addition to these share ownership guidelines noted above, all Eversource officers must hold the net shares awarded under Eversource’s incentive compensation plan until the share ownership guidelines have been met.

Other Benefits

Retirement Benefits

Eversource provides a qualified defined benefit pension program for certain officers, which is a final average pay program subject to tax code limits. Because of such limits, Eversource also maintains a supplemental non-qualified pension program. Benefits are based on base salary and certain incentive payments, which is consistent with the goal of providing a retirement benefit that replaces a percentage of pre-retirement income. The supplemental program compensates for benefits barred by tax code limits, and generally provides (together with the qualified pension program) benefits equal to approximately 60 percent of pre-retirement compensation (subject to certain reductions) for Messrs. Judge, Lembo, Schweiger and Nolan, and approximately 50 percent of such compensation for Mr. Butler. The supplemental program was discontinued in 2012 for newly elected officers.

For certain participants, the benefits payable under the Supplemental Non-Qualified Pension Program differ from those described above. The program benefit payable to Mr. Schweiger is fully vested and is further reduced by benefits he is entitled to receive under previous employers’ retirement plans.

Also see the narrative accompanying the “Pension Benefits” table and accompanying notes for more detail on the above program.

401(k) Benefits

Eversource offers a qualified 401(k) program for all employees, including executives, subject to tax code limits. After applying these limits, the program provides a match of 50 percent of the first eight percent of eligible base salary, up to a maximum of $11,400 per year for Messrs. Judge, Lembo, Schweiger and Nolan. For Mr. Butler, Eversource provides a match of 100 percent of the first three percent of eligible base salary, up to a maximum of $8,550 per year.

Deferred Compensation

Eversource offers a non-qualified deferred compensation program for its executives. In 2020, the program allowed deferral of up to 100 percent of base salary, annual incentives and long-term incentive awards. The program allows participants to select investment measures for deferrals based on an array of deemed investment options (including certain mutual funds and publicly traded securities).

See the Non-Qualified Deferred Compensation Table and accompanying notes for additional details on the above program.

Perquisites

Eversource provides executives with limited financial planning benefits, vehicle leasing and access to tickets to sporting events. The current level of perquisites does not factor into decisions on total compensation.

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Contractual Agreements

Eversource maintains contractual agreements with all of its Named Executive Officers that provide for potential compensation in the event of certain terminations, including termination following a Change in Control. Eversource believes these agreements are necessary to attract and retain high quality executives and to ensure executive focus on Eversource business during the period leading up to a potential Change in Control. The agreements are “double-trigger” agreements that provide executives with compensation in the event of a Change in Control followed by termination of employment due to one or more of the events set forth in the agreements, while still providing an incentive to remain employed with the Company for the transition period that follows.

Under the agreements, certain compensation is generally payable if, during the applicable change in control period, the executive is involuntarily terminated (other than for cause) or terminates employment for “good reason.” These agreements are described more fully in the Tables following this CD&A under “Payments Upon Termination.” The Company has not entered into a Change in Control or employment agreement with any executive since 2010.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code precludes a public company from taking an income tax deduction in any one year for compensation in excess of $1 million payable to its named executive officers who are employed on the last day of the fiscal year, unless certain specific performance goals are satisfied. Until January 1, 2018, there was an exception to the $1 million limitation for performance-based compensation meeting certain requirements. This exception was repealed, effective for taxable years beginning after December 31, 2017 and the limitation on deductibility generally was expanded to include all Named Executive Officers. As a result, compensation paid to Named Executive Officers in excess of $1 million per officer will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of and not modified after November 2, 2017.

The Committee believes that the availability of a tax deduction for forms of compensation should be one of many factors taken into consideration of providing market-based compensation to attract and retain highly qualified executives. The Committee believes it is in Eversource’s best interests to retain discretion to make compensation awards, whether or not deductible.

Eversource has adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation-Stock Compensation. In general, Eversource and the Committee do not consider accounting considerations in structuring compensation arrangements.

Equity Grant Practices

Equity awards noted in the compensation tables are made annually at the February meeting of the Compensation Committee (subject to further approval by all of the independent members of the Eversource Board of Trustees of its Chief Executive Officer’s award) when the Committee also determines base salary, annual incentive opportunities, long-term incentive compensation grants, and annual and long-term performance plan awards. The date of this meeting is chosen at least a year in advance, and therefore awards are not coordinated with the release of material non-public information.

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SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by CL&P's principal executive officer (Mr. Judge), principal financial officer (Mr. Lembo) and the three other most highly compensated executive officers in 2020, determined in accordance with the applicable SEC disclosure rules (collectively, the Named Executive Officers). As explained in the footnotes below, the amounts reflect the economic benefit to each Named Executive Officer of the compensation item paid or accrued on behalf of the Named Executive Officers for the fiscal year ended December 31, 2020 in accordance with such rules. All salaries, annual incentive amounts and long-term incentive amounts shown for each Named Executive Officer were paid for all services rendered to Eversource Energy and its subsidiaries, including CL&P, in all capacities.
Name and
Principal Position
Year Salary
Stock
Awards (1)
Non-Equity
Incentive Plan (2)
Change in
Pension Value
and Non-
Qualified Deferred Earnings (3)
All Other
Compen-
sation (4)
SEC Total
Adjusted
SEC Total (5)
James J. Judge 2020 $ 1,371,615  $ 6,682,612  $ 2,750,000  $ 3,742,215  $ 28,834  $ 14,575,276  $ 10,833,061 
Chairman, President and Chief Executive Officer of Eversource Energy; Chairman of CL&P 2019 1,319,232  6,676,043  3,000,000  8,784,256  26,557  19,806,088  11,021,832 
2018 1,277,078  5,632,217  2,430,000  5,560,877  25,209  14,925,381  9,364,504 
Philip J. Lembo
2020 718,846  1,609,650  950,000  1,248,852  21,985  4,549,333  3,300,481 
Executive Vice President and Chief Financial Officer of Eversource Energy and CL&P 2019 680,579  1,458,368  1,000,000  1,318,800  20,390  4,478,137  3,159,337 
2018 648,271  1,230,032  765,000  1,535,216  21,685  4,200,204  2,664,988 
Werner J. Schweiger 2020 765,885  1,721,496  950,000  2,698,083  20,657  6,156,121  3,458,038 
Executive Vice President and Chief Operating Officer of Eversource Energy and Chief Executive Officer of CL&P
2019 692,694  1,458,368  1,050,000  2,218,536  21,846  5,441,444  3,222,908 
2018 658,271  1,248,802  815,000  538,978  53,896  3,314,947  2,775,969 
Joseph R. Nolan, Jr.
2020 630,962  1,419,699  850,000  2,134,658  18,921  5,054,240  2,919,582 
Executive Vice President-Strategy, Customer and Corporate Relations of Eversource Energy and Eversource Service 2019 589,616  1,100,380  774,000  3,283,296  20,388  5,767,680  2,484,384 
2018 561,540  890,916  720,000  1,193,350  56,084  3,421,890  2,228,540 
Gregory B. Butler 2020 670,292  1,225,646  700,000  1,637,907  15,839  4,249,684  2,611,777 
Executive Vice President and General Counsel of Eversource Energy and CL&P 2019 643,270  1,202,147  740,000  2,948,208  15,518  5,549,143  2,600,935 
2018 618,271  968,412  645,000  634,394  15,143  2,881,220  2,246,826 
(1)    Reflects the aggregate grant date fair value of restricted share units (RSUs) and performance shares granted in each fiscal year, calculated in accordance with FASB ASC Topic 718.

RSUs were granted to each Named Executive Officer in 2020 as long-term compensation, which vest in equal annual installments over three years. Each of the Named Executive Officers was also granted performance shares as long-term incentive compensation. These performance shares will vest based on the extent to which the performance conditions described in the CD&A are achieved as of December 31, 2022. The grant date fair values for the performance shares, assuming achievement of the highest level of both performance conditions, are as follows: Mr. Judge: $5,038,577; Mr. Lembo: $1,213,649; Mr. Schweiger: $1,297,979; Mr. Nolan: $1,070,429; and Mr. Butler: $924,116.

Holders of RSUs and performance shares are eligible to receive dividend equivalent units on outstanding awards to the same extent that dividends are declared and paid on Eversource common shares. Dividend equivalent units are accounted for as additional common shares that accrue and are distributed simultaneously with those common shares that are issued upon vesting of the underlying RSUs and performance shares. No dividends are paid unless and until the underlying shares vest.

(2)    Includes payments to the Named Executive Officers under the 2020 Annual Incentive Program: Mr. Judge: $2,750,000; Mr. Lembo: $950,000; Mr. Schweiger: $950,000; Mr. Nolan: $850,000; and Mr. Butler: $700,000.

(3)    Includes the actuarial increase in the present value from December 31, 2019 to December 31, 2020 of the Named Executive Officers’ accumulated benefits under all of Eversource’s defined benefit pension programs and agreements, determined using interest rate and mortality rate assumptions consistent with those appearing in the footnotes to this Annual Report on Form 10-K. The Named Executive Officer may not be fully vested in such amounts. More information on this topic is set forth in the Pension Benefits table. There were no above-market earnings in deferred compensation value during 2020, as the terms of the Deferred Compensation Plan provide for market-based investments, including Eversource common shares.

(4)    Includes matching contributions allocated by us to the accounts of Named Executive Officers under the 401k Plan as follows: $11,400 for each of Messrs. Judge, Lembo, Schweiger and Nolan, and $8,550 for Mr. Butler. For Mr. Judge, the value shown includes financial planning services valued at $5,000 and $12,434 representing the value in 2020 of a company-owned vehicle provided to Mr. Judge. For Mr. Lembo, the value shown includes financial planning services valued at $5,000 and $5,585 representing the value in 2020 of a company-owned vehicle provided to Mr. Lembo. None of the other Named Executive Officers received perquisites valued in the aggregate in excess of $10,000.

(5)    The amounts in the Adjusted SEC Total column reflect an adjustment to the total compensation reported in the column marked SEC Total. The Adjusted SEC Total subtracts the actuarial change in pension value disclosed in the column titled “Change in Pension Value and Non-Qualified Deferred Earnings” as further described in footnote 3 above in order to reflect compensation earned during the year by the executive without consideration of pension benefit impacts. The amounts in this column differ substantially from, and are not a substitute for, the amounts noted in the SEC Total.
163



GRANTS OF PLAN-BASED AWARDS DURING 2020

The Grants of Plan-Based Awards Table below provides information on the range of potential payouts under all incentive plan awards during the fiscal year ended December 31, 2020. The table also discloses the underlying equity awards and the grant date for equity-based awards. Eversource has not granted any stock options since 2002.

All Other
Stock Awards:
Number of
 Shares
of Stock
or Units
(#) (2)
Grant
Date Fair
Value of
 Stock and
Option Awards
($) (3)
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
Estimated Future Payouts Under
Equity Incentive Plan Awards (1)
  Grant Date Threshold
($)
Target
($)
Maximum
($)
Threshold
($)
Target
(#)
Maximum
(#)
Name
James J. Judge
Annual Incentive (4)
02/05/20 $ 856,500  $ 1,713,000  $ 3,426,000  $ —  $ —  $ —  $ —  $ — 
Long-Term Incentive (5)
02/05/20 —   —   —   —   35,849  71,698  35,849  6,682,612 
Philip J. Lembo
Annual Incentive (4)
02/05/20 288,000 576,000 1,152,000 —   —   —   —   —  
Long-Term Incentive (5)
02/05/20 —   —   —   —   8,635 17,270 8,635 1,609,650
Werner J. Schweiger
Annual Incentive (4)
02/05/20 308,000  616,000  1,232,000  —   —   —   —   —  
Long-Term Incentive (5)
02/05/20 —   —   —   —   9,235  18,470  9,235  1,721,496 
Joseph R. Nolan, Jr.
Annual Incentive (4)
02/05/20 254,000 508,000 1,016,000 —   —   —   —   —  
Long-Term Incentive (5)
02/05/20 —   —   —   —   7,616 15,232 7,616 1,419,699
Gregory B. Butler
Annual Incentive (4)
02/05/20 234,500 469,000 938,000 —   —   —   —   —  
Long-Term Incentive (5)
02/05/20 —   —   —   —   6,575 13,150 6,575 1,225,646
(1)    Reflects the number of performance shares granted to each of the Named Executive Officers on February 5, 2020 under the 2020 – 2022 Long-Term Incentive Program. Performance shares were granted subject to a three-year Performance Period that ends on December 31, 2022. At the end of the Performance Period, Eversource common shares will be awarded based on actual performance results as a percentage of target, subject to reduction for applicable payroll withholding taxes. Holders of performance shares are eligible to receive dividend equivalent units on outstanding performance shares awarded to them to the same extent that dividends are declared and paid on our common shares. Dividend equivalent units are accounted for as additional common shares that accrue and are distributed simultaneously with the number of common shares underlying the performance shares that are actually awarded. No dividends are paid unless and until the underlying shares vest. The Annual Incentive Program did not include an equity component.

(2)    Reflects the number of RSUs granted to each of the Named Executive Officers on February 5, 2020 under the 2020 – 2022 Long-Term Incentive Program. RSUs vest in equal installments on February 5, 2021, 2022 and 2023. We will distribute common shares with respect to vested RSUs on a one-for-one basis following vesting, after reduction for applicable payroll withholding taxes. Holders of RSUs are eligible to receive dividend equivalent units on outstanding RSUs awarded to them to the same extent that dividends are declared and paid on our common shares. Dividend equivalent units are accounted for as additional common shares that accrue and are distributed simultaneously with those common shares actually distributed in respect of the underlying RSUs. No dividends are paid unless and until the underlying shares vest.

(3)    Reflects the grant date fair value, determined in accordance with FASB ASC Topic 718, of RSUs and performance shares granted to the Named Executive Officers on February 5, 2020 under the 2020 – 2022 Long-Term Incentive Program.

(4)    The threshold payment under the Annual Incentive Program is 50 percent of target. The actual payments in 2021 for performance in 2020 are set forth in the Non-Equity Incentive Plan column of the Summary Compensation Table.

(5)    Reflects the range of potential payouts, if any, pursuant to performance share awards under the 2020 – 2022 Long-Term Incentive Program, as described in the CD&A.

164


OUTSTANDING EQUITY GRANTS AT DECEMBER 31, 2020

The following table sets forth RSU and performance share grants outstanding at the end of the fiscal year ended December 31, 2020 for each of the Named Executive Officers. There are no outstanding options.
 
Stock Awards (1)
Number of Shares or
Units of Stock That
Have Not Vested
(#) (2)
Market Value of Shares or
Units of Stock That
Have Not Vested
($) (3)
Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units or Other Rights That Have Not
Vested
(#) (4)
Equity Incentive
Plan Awards:
Market or Payout Value of
Unearned Shares, Units or
Other Rights That Have Not Vested
($) (5)
Name
James J. Judge 87,192 $ 7,542,993 139,057 $ 12,029,804
Philip J. Lembo 19,873 1,719,220 31,200 2,699,097
Werner J. Schweiger 20,549 1,777,662 31,994 2,767,831
Joseph R. Nolan, Jr. 16,008 1,384,824 24,320 2,103,917
Gregory B. Butler 15,680 1,356,448 24,729 2,139,304

(1)    Awards and market values of awards appearing in the table and the accompanying notes have been rounded to whole units.

(2)    A total of 83,765 unvested RSUs vested on February 5, 2021 (Mr. Judge: 46,351; Mr. Lembo: 10,400; Mr. Schweiger: 10,644; Mr. Nolan: 8,106; and Mr. Butler: 8,243). A total of 52,269 unvested RSUs will vest on February 7, 2022 (Mr. Judge: 28,560; Mr. Lembo: 6,514, Mr. Schweiger: 6,719; Mr. Nolan: 5,292 and Mr. Butler: 5,184). A total of 23,266 unvested RSUs will vest on February 6, 2023 (Mr. Judge: 12,281; Mr. Lembo: 2,959; Mr. Schweiger: 3,164; Mr. Nolan: 2,609 and Mr. Butler: 2,253).

(3)    The market value of RSUs is determined by multiplying the number of RSUs by $86.51, the closing price per common share on December 31, 2020, the last trading day of the year.

(4)    Reflects the target payout level for performance shares granted under the 2018 – 2020 Program, the 2019 – 2021 Program and the 2020 – 2022 Program.

The performance period for the 2018 – 2020 Program ended on December 31, 2020. Awards under that program are set forth in the CD&A under the “Results of the 2018 – 2020 Performance Share Program.”

The performance share awards for 2019 – 2021 Program and the 2020 – 2022 Program will be based on actual performance results as a percentage of target, subject to reduction for applicable payroll withholding taxes. As described more fully under “Performance Shares” in the CD&A and footnote (1) to the Grants of Plan-Based Awards table, performance shares will vest following a three-year performance period based on the extent to which the two performance conditions are achieved. Under the 2019 – 2021 Program, a total of 87,012 performance shares (including accrued dividend equivalents) will vest based on the extent to which the two performance conditions described in the CD&A are achieved as of December 31, 2021. Assuming achievement of these conditions at a target level of performance, the amount of the awards would be as follows: Mr. Judge: 48,834; Mr. Lembo: 10,668; Mr. Schweiger: 10,668; Mr. Nolan: 8,049; and Mr. Butler: 8,793. Under the 2020 – 2022 Program, a total of 69,791 performance shares (including accrued dividend equivalents) will vest based on the extent to which the two performance conditions described in the CD&A are achieved as of December 31, 2022. Assuming achievement of these conditions at a target level of performance, the amount of the awards would be as follows: Mr. Judge: 36,842; Mr. Lembo: 8,874; Mr. Schweiger: 9,491; Mr. Nolan: 7,827; and Mr. Butler: 6,757. No dividends are paid unless and until the underlying shares vest.

(5)    The market value is determined by multiplying the number of performance shares in the adjacent column by $86.51, the closing price of Eversource Energy common shares on December 31, 2020, the last trading day of the year.

OPTION EXERCISES AND STOCK VESTED IN 2020

The following table reports amounts realized on equity compensation during the fiscal year ended December 31, 2020. The Stock Awards columns report the vesting of RSU and performance share grants to the Named Executive Officers in 2020.
  Stock Awards
Number of Shares Acquired on Vesting (#) (1)
Value Realized
on Vesting (2)
Name
James J. Judge 130,082 $ 12,341,297
Philip J. Lembo 30,379 2,882,970
Werner J. Schweiger 30,804 2,923,374
Joseph R. Nolan, Jr. 21,257 2,016,830
Gregory B. Butler 24,010 2,278,378

(1)    Includes RSUs and performance shares granted to the Named Executive Officers under the long-term incentive programs, including dividend reinvestment, as follows:
165


Name 2017 Program 2018 Program 2019 Program
James J. Judge 96,929 17,314 15,839
Philip J. Lembo 23,138 3,782 3,459
Werner J. Schweiger 23,506 3,839 3,459
Joseph R. Nolan, Jr. 15,907 2,739 2,611
Gregory B. Butler 18,181 2,977 2,852

In all cases, the distribution of common shares are reduced by that number of shares valued in an amount sufficient to satisfy payroll tax withholding obligations.

(2)    Values realized on vesting of RSUs granted under the 2017 – 2019, 2018 – 2020 and 2019 – 2021 Programs were based on $93.66 per share, the closing price of Eversource Energy common shares on February 14, 2020. Values realized on vesting of performance shares granted under the 2017 – 2019 Program were based on $95.65 per share, the closing price of Eversource common shares on February 20, 2020.

PENSION BENEFITS IN 2020

The Pension Benefits Table shows the estimated present value of accumulated retirement benefits payable to each Named Executive Officer upon retirement based on the assumptions described below. The table distinguishes between benefits available under the qualified pension plan program (QP), the pension equity plan program (PEP), the supplemental pension program (SERP), and the supplemental pension (Excess). See the narrative above in the CD&A under the captions “Other Benefits – Retirement Benefits” and “Contractual Agreements” for more detail on benefits under these plans and our agreements.

The values shown in the Pension Benefits Table for Messrs. Judge, Lembo, Schweiger and Nolan were calculated as of December 31, 2020 based on benefit payments in the form of a lump sum. For Mr. Butler, we assumed a payment of benefits in the form of a contingent annuitant option. Such earned pension program benefit value could otherwise have changed because of the reduction in mortality factors and potentially rising interest rates.

The values shown in this Table for the Named Executive Officers were based on benefit payments on the actual ages or the earliest possible ages for retirement with unreduced benefits for the Named Executive Officers: Mr. Judge: age 60, Mr. Lembo, age: 62, Mr. Schweiger: age 55, Mr. Nolan: age 62 and Mr. Butler: age 62.

In addition, we determined benefits under the qualified pension program using tax code limits in effect on December 31, 2020. For Messrs. Judge, Lembo, Schweiger and Nolan, the values shown reflect actual 2020 salary and annual incentives earned in 2019 but paid in 2020 (per applicable supplemental program rules). For Mr. Butler, the values shown reflect actual 2020 salary and annual incentives earned in 2020 but paid in 2021 (per applicable supplemental program rules).

We determined the present value of benefits at retirement age using the discount rate within a range of 2.48 percent to 2.54 percent under ACS 715-30 pension accounting for the 2020 fiscal year end measurement as of December 31, 2020. This present value assumes no pre-retirement mortality, turnover or disability. However, for the postretirement period beginning at retirement age, we used the 2020 IRS lump sum mortality table for Messrs. Judge, Lembo, Schweiger and Nolan. We used the RP2014 Employee Table Projected Generationally with Scale MP2020 for Mr. Butler. This new mortality table (as published by the Society of Actuaries in 2014) and projection scale were used by the Eversource Pension Plan for year-end 2020 financial disclosure. Additional assumptions appear in the footnotes to this Annual Report on Form 10-K.
Pension Benefits
Number of
Years Credited Service (#)
Present Value
of Accumulated Benefit
During Last Fiscal Year
Name Plan Name
James J. Judge Retirement Plan (QP) 43.33 $ 2,965,694 $ — 
Supplemental Plan (PEP) 43.33 17,973,382 — 
Supplemental Plan (SERP) 20.00 16,191,135 — 
Philip J. Lembo Retirement Plan (QP) 37.17 1,402,800 — 
  Supplemental Plan (PEP) 37.17 6,162,300 — 
Supplemental Plan (SERP) 11.00 228,554
Werner J. Schweiger Retirement Plan (QP) 18.83 651,924 — 
  Supplemental Plan (Excess) 18.83 3,046,192 — 
  Supplemental Plan (SERP) 18.00 10,243,128 — 
Joseph R. Nolan, Jr. Retirement Plan (QP) 35.42 1,084,126 — 
  Supplemental Plan (Excess) 35.42 4,051,276 — 
Supplemental Plan (SERP) 20.00 6,968,644 — 
Gregory B. Butler Retirement Plan (QP) 24.00 1,588,870 — 
Supplemental Plan (Excess) 24.00 6,662,938 — 
Supplemental Plan (Excess) 24.00 5,045,047 — 

166


NONQUALIFIED DEFERRED COMPENSATION IN 2020

The following table reports amounts contributed in 2020, together with aggregate earnings on contributions and withdrawals or distributions on contributions in 2020, under the Eversource deferred compensation program, along with aggregate balances on contributions. See the narrative above in the CD&A under the caption “Other Benefits - Deferred Compensation” for more detail on our non-qualified deferred compensation program.

Executive
Contributions
in Last FY
Registrant
Contributions
in Last FY
Aggregate
Earnings in
in Last FY
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Last FYE (1)
Name
James J. Judge $ —  $ —  $ 385,688 $ —  $ 8,496,104
Philip J. Lembo —  —  228,733 —  1,844,255
Werner J. Schweiger —  —  3,299,340 —  23,106,189
Joseph R. Nolan, Jr. —  —  525,639 —  7,219,258
Gregory B. Butler —  —  1,898 —  29,401
(1)    Includes the total market value of deferred compensation program balances at December 31, 2020, plus the value of vested RSUs or other awards for which the distribution of common shares is currently deferred, based on $86.51, the closing price of Eversource common shares on December 31, 2020, the last trading day of the year. The aggregate balances reflect a significant level of earnings on previously earned and deferred compensation.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The discussion and tables below show compensation payable to each Named Executive Officer who is still an employee of Eversource, in the event of: (i) voluntary termination; (ii) involuntary not-for-cause termination; (iii) termination in the event of death or disability; and (iv) termination following a change in control. No amounts are payable in the event of a termination for cause. The amounts shown assume that each termination was effective as of December 31, 2020, the last business day of the fiscal year.

Generally, a “change in control” means a change in ownership or control effected through (i) the acquisition of 30 percent or more of the combined voting power of common shares or other voting securities (20 percent for Mr. Butler, excluding certain defined transactions); (ii) the acquisition of more than 50 percent of Eversource common shares, excluding certain defined transactions (for Messrs. Judge, Lembo, Schweiger and Nolan); (iii) a change in the majority of the Eversource Board of Trustees, unless approved by a majority of the incumbent Trustees; (iv) certain reorganizations, mergers or consolidations where substantially all of the persons who were the beneficial owners of the outstanding common shares immediately prior to such business combination do not beneficially own more than 50 percent of the voting power of the resulting business entity (excluding in certain cases defined transactions); and (v) complete liquidation or dissolution of Eversource, or a sale or disposition of all or substantially all of the assets of Eversource other than, for Mr. Butler, to an entity with respect to which following completion of the transaction more than 50 percent of common shares or other voting securities is then owned by all or substantially all of the persons who were the beneficial owners of common shares and other voting securities immediately prior to such transaction.

In the event of a change in control, the Named Executive Officers are generally entitled to receive compensation and benefits following either involuntary termination of employment without “cause” or voluntary termination of employment for “good reason” within the applicable period (generally two years following a change in control). The Compensation Committee believes that termination for good reason is conceptually the same as termination “without cause” and, in the absence of this provision, potential acquirers would have an incentive to constructively terminate executives to avoid paying severance. Termination for “cause” generally means termination due to a felony or certain other convictions; fraud, embezzlement, or theft in the course of employment; intentional, wrongful damage to Eversource property; gross misconduct or gross negligence in the course of employment or gross neglect of duties harmful to Eversource; or a material breach of obligations under the agreement. “Good reason” for termination generally exists after assignment of duties inconsistent with executive’s position, a material reduction in compensation or benefits, a transfer more than 50 miles from the executive’s pre-change in control principal business location (or for Messrs. Judge, Lembo, Schweiger and Nolan, an involuntary transfer outside the greater Boston metropolitan area), or requiring business travel to a substantially greater extent than required prior to the change in control.

The summaries above do not purport to be complete and are qualified in their entirety by the actual terms and provisions of the agreements and plans, copies of which have been filed as exhibits to this Annual Report on Form 10-K.
167



Payments Upon Termination

Regardless of the manner in which the employment of a Named Executive Officer terminates, the executive is entitled to receive certain amounts earned during the executive’s term of employment. Such amounts include:

Vested RSUs and certain other vested awards;
Amounts contributed and any vested matching contributions under the deferred compensation program;
Pay for unused vacation; and
Amounts accrued and vested under the pension/supplemental and 401k programs (except in the event of a termination for cause under the supplemental program).

The following table describes additional compensation payable to the Named Executive Officers in the event of voluntary termination, involuntary termination not for cause, termination in the event of death or disability and termination following a change in control. No benefits are provided in the event of termination for cause. See the section above captioned “Pension Benefits in 2020” for information about the pension program, supplemental program and other benefits, and the section captioned “Nonqualified Deferred Compensation in 2020.”



168


POST-EMPLOYMENT COMPENSATION PAYMENTS UPON TERMINATION
Name Type of Payments Voluntary Termination Involuntary Termination
Not for Cause
Termination Upon Death or Disability Termination Following a
Change in Control
James J. Judge
Annual Incentives (1)
$ —  $ —  $ —  $ 1,713,000 
Performance Shares (2)
8,500,235  8,500,235  8,500,235  12,029,804 
RSUs (3)
3,689,057  3,689,057  3,689,057  7,542,993 
Special Retirement Benefit (4)
—  —  —  2,832,835 
Health and Welfare Benefits (5)
—  —  —  107,472 
Perquisites (6)
—  —  —  15,000 
Excise Tax and Gross-ups (7)
—  —  —  5,793,493 
Separation Payment for Liquidated Damages (8)
—  —  —  13,110,000 
Total $ 12,189,292  $ 12,189,292  $ 12,189,292  $ 43,144,597 
Philip J. Lembo
Annual Incentives (1)
$ —  $ —  $ —  $ 576,000 
Performance Shares (2)
1,880,186  1,880,186  1,880,186  2,699,097 
RSUs (3)
827,752  827,752  827,752  1,719,220 
Special Retirement Benefit (4)
—  —  —  2,512,913 
Health and Welfare Benefits (5)
—  —  —  47,192 
Perquisites (6)
—  —  —  10,000 
Separation Payment for Liquidated Damages (8)
—  —  —  3,440,000 
Total $ 2,707,938  $ 2,707,938  $ 2,707,938  $ 11,004,422 
Werner J. Schweiger
Annual Incentives (1)
$ —  $ —  $ —  $ 616,000 
Performance Shares (2)
1,913,179  1,913,179  1,913,179  2,767,831 
RSUs (3)
848,802  848,802  848,802  1,777,662 
Special Retirement Benefit (4)
—  —  —  3,622,473 
Health and Welfare Benefits (5)
—  —  —  96,858 
Perquisites (6)
—  —  —  15,000 
Excise Tax and Gross-ups(7)
—  —  —  144,237 
Separation Payment for Liquidated Damages (8)
—  —  —  5,460,000 
Total $ 2,761,981  $ 2,761,981  $ 2,761,981  $ 14,500,061 
Joseph R. Nolan, Jr.
Annual Incentives (1)
$ —  $ —  $ —  $ 508,000 
Performance Shares (2)
1,420,462  1,420,462  1,420,462  2,103,917 
RSUs (3)
645,146  645,146  645,146  1,384,824 
Special Retirement Benefit (4)
—  —  —  4,057,187 
Health and Welfare Benefits (5)
—  —  —  94,572 
Perquisites (6)
—  —  —  15,000 
Excise Tax and Gross-ups (7)
—  —  —  2,112,808 
Separation Payment for Liquidated Damages (8)
—  —  —  4,227,000 
Total $ 2,065,608  $ 2,065,608  $ 2,065,608  $ 14,503,308 
Gregory B. Butler
Annual Incentives (1)
$ —  $ —  $ —  $ 469,000 
Performance Shares (2)
1,496,608  1,496,608  1,496,608  2,139,304 
RSUs (3)
656,057  656,057  656,057  1,356,448 
Special Retirement Benefit (4)
—  5,599,084  —  5,599,083 
Health and Welfare Benefits (5)
—  25,488  —  38,232 
Perquisites (6)
—  10,000  —  15,000 
Excise Tax and Gross-Ups (7)
—  1,724,948  —  2,231,170 
Separation Payment for Liquidated Damages (8)
—  1,073,000  —  1,073,000 
Separation Payment for Non-Compete Agreement (9)
—  1,073,000  —  2,146,000 
Total $ 2,152,665  $ 11,658,185  $ 2,152,665  $ 15,067,237 

(1)    For Termination Following a Change in Control: Represents target 2020 annual incentive awards as described in the Grants of Plan Based Awards Table.

(2)    For Voluntary Termination and Termination Not For Cause, and Termination Upon Death or Disability: Represents 100 percent of the performance share awards under the 2018 – 2020 Long-Term Incentive Program, 67 percent of the performance share awards under the 2019 – 2021 Long-Term Incentive Program and 33 percent of the performance share awards under the 2020 – 2022 Long-Term Incentive Program. The values were calculated by multiplying the number of RSUs by $86.51, the closing price of Eversource common shares on December 31, 2020, the last trading day of the year. For Termination Following a Change in Control: Represents 100 percent of the performance share awards under each of the three Programs noted in the previous two sentences.

(3)    For Voluntary Termination and Termination Not For Cause, and Termination Upon Death or Disability: Represents values of RSUs granted under our long-term incentive programs that, at year-end 2020, were unvested under applicable vesting schedules. Under these programs, RSUs vest pro rata based on credited service years and age at termination, and time worked during the vesting period. For all, the values were calculated by multiplying the number of RSUs by $86.51, the closing price of Eversource common shares on December 31, 2020, the last trading day of the year. For Termination Following a Change in Control: Represents values of all RSUs granted under our long-term incentive programs that, at year-end 2020, were unvested under applicable vesting schedules, all of which vest in full.
169



(4)    The amount noted in the Involuntary Termination, Not for Cause: Represents for Mr. Butler actuarial present values at year-end 2020 of amounts payable (two years of service) solely under an employment agreement upon termination, which are in addition to amounts due under the pension plan. For Termination Following a Change in Control: Represents actuarial present values at year-end 2020 of amounts payable solely under employment agreements upon termination (which are in addition to amounts due under the pension program). For Messrs. Judge, Schweiger, Nolan and Butler, pension benefits were calculated by adding three years of service (two years for Mr. Lembo). A lump sum of this benefit value is payable to Messrs. Judge, Lembo, Schweiger and Nolan. Pension amounts shown in the table are present values at year-end 2020 of benefits payable upon termination as described with respect to the Pension Benefits Table above.

(5)    The amount noted in the Involuntary Termination, Not for Cause: Represents for Mr. Butler the value of two years’ employer contributions toward active health, long-term disability, and life insurance benefits, plus a payment to offset any taxes thereon. For Termination Following a Change in Control: represents estimated cost to Eversource at year-end 2020 (estimated by consultants) of providing post-employment health and welfare benefits beyond those available to non-executives upon involuntary termination. The amounts shown in the table for Messrs. Judge, Schweiger and Nolan represent the value of three years (two years for Mr. Lembo) of continued health and welfare plan participation. The amounts shown in the table for Mr. Butler represent the value of three years of employer contributions toward active health, long-term disability, and life insurance benefits, plus a payment to offset any taxes on the value of these benefits, less the value of one year of retiree health coverage at retiree rates.

(6)    The amount noted for Involuntary Termination, Not for Cause: Represents the cost to Eversource of reimbursing Mr. Butler for two years of financial planning and tax preparation fees. The amounts noted for Termination Following a Change in Control: Represents the cost to Eversource of reimbursing Messrs. Judge, Schweiger, Nolan and Butler for three years (two years for Mr. Lembo) of financial planning and tax preparation fees.

(7)    For Termination Following a Change in Control: Represents payments made to offset costs associated with certain excise taxes under Section 280G of the Internal Revenue Code. Executives may be subject to certain excise taxes under Section 280G if they receive payments and benefits related to a Termination Following a Change in Control that exceed specified Internal Revenue Service limits. Contractual agreements with the above executives provide for a grossed-up reimbursement of these excise taxes. The amounts in the table are based on the Section 280G excise tax rate of 20 percent, the statutory federal income tax withholding rate of 35 percent, the applicable state income tax rate, and the Medicare tax rate of 1.45 percent.

(8)    For Involuntary Termination, Not for Cause: Represents for Mr. Butler a severance payment (two-times the sum of base salary plus relevant annual incentive award) in addition to any non-compete agreement payment described above. For Termination Following a Change in Control: Represents severance payments in addition to any non-compete agreement payments described in the prior note. For Messrs. Judge, Schweiger and Nolan, this payment equals three-times the sum of base salary plus relevant annual incentive award (two-times the sum for Messrs. Lembo and Butler.) These payments do not replace, offset or otherwise affect the calculation or payment of the annual incentive awards.

(9)    For Involuntary Termination, Not For Cause and Termination Following a Change in Control: Represents payments made under agreements or Eversource programs to Mr. Butler as consideration for agreement not to compete with Eversource following termination of employment, equal to the sum of base salary plus relevant annual incentive award. These payments do not replace, offset or otherwise affect the calculation or payment of the annual incentive awards.

PAY RATIO

Eversource's Chief Executive Officer to median employee pay ratio is calculated pursuant to the requirements of Item 402(u) of Regulation S-K. Eversource identifies a new median employee each year. For 2020, Eversource identified the median employee by reviewing the 2020 total cash compensation of all full-time employees, excluding Eversource’s Chief Executive Officer, who were employed by Eversource and its subsidiaries on December 31, 2020. In Eversource’s assessment of median employee compensation, pay was annualized for those employees who commenced work during 2020. Otherwise, no assumptions, adjustments, or estimates were made with respect to total cash compensation, and the compensation for any full-time employees who were not employed by Eversource at the end of 2020 was not annualized. Eversource believes the use of total cash compensation for all employees is a consistently applied compensation measure, as Eversource does not widely distribute annual equity awards to employees.

After identifying the median employee based on total cash compensation, Eversource calculated the annual total compensation for such employee using the same methodology used for its Named Executive Officers as set forth in the 2020 Summary Compensation Table.

Mr. Judge had 2020 annual total compensation of $14,575,276, as reflected in the Summary Compensation Table. Eversource’s median employee’s annual total compensation for 2020 was $140,054. Eversource’s 2020 Chief Executive Officer to median employee pay ratio is 104 to 1.

170


Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Eversource Energy

In addition to the information below under "Securities Authorized for Issuance Under Equity Compensation Plans," incorporated herein by reference is the information contained in the sections "Common Share Ownership of Certain Beneficial Owners" and "Common Share Ownership of Trustees and Management" of Eversource Energy's definitive proxy statement for solicitation of proxies, expected to be filed with the SEC on or about March 26, 2021.

NSTAR ELECTRIC and PSNH

Certain information required by this Item 12 has been omitted for NSTAR Electric and PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly-Owned Subsidiaries.

CL&P

COMMON SHARE OWNERSHIP OF DIRECTORS AND MANAGEMENT

Eversource Energy owns 100 percent of the outstanding common stock of CL&P.  The table below shows the number of Eversource Energy common shares beneficially owned as of February 10, 2021, by each of CL&P's directors and each Named Executive Officer of CL&P, as well as the number of Eversource Energy common shares beneficially owned by all of CL&P's directors and executive officers as a group.  The table also includes information about restricted share units and deferred shares credited to the accounts of CL&P's directors and executive officers under certain compensation and benefit plans.  No equity securities of CL&P are owned by any of the Trustees, directors or executive officers of Eversource Energy or CL&P.  The address for the shareholders listed below is c/o Eversource Energy, Prudential Center, 800 Boylston Street, Boston, Massachusetts 02199 for Messrs. Judge, Lembo, Nolan and Schweiger; c/o Eversource Energy, 56 Prospect Street, Hartford, Connecticut 06103-2818 for Mr. Butler.
Name of Beneficial Owner
Amount and Nature of Beneficial Ownership (1)(2)(3)
Percent of Class
James J. Judge, Chairman of CL&P 385,135   *
Philip J. Lembo, Executive Vice President and Chief Financial Officer, Director of CL&P 77,846
(4)
*
Werner J. Schweiger, Chief Executive Officer, Director of CL&P 239,377
(5)
*
Gregory B. Butler, Executive Vice President and General Counsel, Director of CL&P 95,619 *
Joseph R. Nolan, Jr., Executive Vice President-Strategy, Customer and Corporate Relations of Eversource Service 113,989 *
All directors and executive officers as a group (7 persons) 985,978
(6)
*

*    Less than 1 percent of Eversource Energy common shares outstanding.

1.    The persons named in the table have sole voting and investment power with respect to all shares beneficially owned by each of them, except as noted below.

2.    Includes restricted share units, deferred restricted share units and/or deferred shares, including dividend equivalents, as to which none of the individuals has voting or investment power, and phantom shares held by executive officers who participate in a deferred compensation plan as follows: Mr. Judge: 201,618 shares; Mr. Lembo: 24,345; Mr. Schweiger: 137,823 shares; Mr. Butler: 19,329 shares; and Mr. Nolan: 80,778 shares.

3.    Includes shares held as units in the 401(k) Plan invested in the Eversource Energy Common Shares Fund over which the holder has sole voting and investment power as follows: Mr. Judge: 27,986 shares; Mr. Lembo: 150 shares; Mr. Schweiger: 737 shares; Mr. Butler: 6,494 shares; and Mr. Nolan: 19,962 shares.

4.    Includes 557 shares held by Mr. Lembo in a custodial account and 125 shares held in a charitable trust over which Mr. Lembo has sole voting and investment power.

5.    Includes 3,196 shares held in a trust of which Mr. Schweiger is the trustee and beneficiary; 437 shares in a trust of which Mr. Schweiger’s spouse is the trustee and beneficiary; and 433 shares held by Mr. Schweiger’s spouse in a custodial account.

6.    Includes 491,852 unissued shares (see Note 2) and 60,465 shares held as units in the 401(k) Plan (see Note 3).

171


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth the number of Eversource Energy common shares issuable under Eversource Energy equity compensation plans, as well as their weighted exercise price, as of December 31, 2020, in accordance with the rules of the SEC:
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)
Weighted-average exercise price of outstanding options, warrants and rights (2)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1))
Equity compensation plans approved by security holders 1,122,023 $— 2,876,601
Equity compensation plans not approved by security holders (3)
Total 1,122,023 2,876,601

(1)    Includes 674,218 common shares for distribution in respect of restricted share units, and 447,805 performance shares issuable at target, all pursuant to the terms of our Incentive Plan.
 
(2)    The weighted-average exercise price does not take into account restricted share units or performance shares, which have no exercise price.

(3)    Securities set forth in this table are authorized for issuance under compensation plans that have been approved by shareholders of Eversource Energy or the former shareholders of NSTAR.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

Eversource Energy

Incorporated herein by reference is the information contained in the sections captioned "Trustee Independence" and "Related Person Transactions" of Eversource Energy's definitive proxy statement for solicitation of proxies, expected to be filed with the SEC on or about March 26, 2021.

NSTAR ELECTRIC and PSNH

Certain information required by this Item 13 has been omitted for NSTAR Electric and PSNH pursuant to Instruction I(2)(c) to Form 10-K, Omission of Information by Certain Wholly-Owned Subsidiaries.

CL&P

Eversource Energy's Code of Ethics for Senior Financial Officers applies to the Senior Financial Officers (Chief Executive Officer, Chief Financial Officer and Controller) of Eversource Energy, CL&P and certain other Eversource Energy subsidiaries.  Under the Code, one's position as a Senior Financial Officer in the company may not be used to improperly benefit such officer or his or her family or friends.  Under the Code, specific activities that may be considered conflicts of interest include, but are not limited to, directly or indirectly acquiring or retaining a significant financial interest in an organization that is a customer, vendor or competitor, or that seeks to do business with the company; serving, without proper safeguards, as an officer or director of, or working or rendering services for an organization that is a customer, vendor or competitor, or that seeks to do business with the company. Waivers of the provisions of the Code of Ethics for Trustees, executive officers or directors must be approved by Eversource Energy's Board of Trustees.  Any such waivers will be disclosed pursuant to legal requirements.

Eversource Energy's Code of Conduct, which applies to all Trustees, directors, officers and employees of Eversource Energy and its subsidiaries, including CL&P, contains a Conflict of Interest Policy that requires all such individuals to disclose any potential conflicts of interest.  Such individuals are expected to discuss their particular situations with management to ensure appropriate steps are in place to avoid a conflict of interest.  All disclosures must be reviewed and approved by management to ensure a particular situation does not adversely impact the individual's primary job and role.

Eversource Energy's Related Persons Transactions Policy is administered by the Corporate Governance Committee of Eversource Energy's Board of Trustees.  The Policy generally defines a "Related Persons Transaction" as any transaction or series of transactions in which (i) Eversource Energy or a subsidiary is a participant, (ii) the aggregate amount involved exceeds $120,000 and (iii) any "Related Persons" has a direct or indirect material interest.  A "Related Persons" is defined as any Trustee or nominee for Trustee, any executive officer, any shareholder owning more than 5 percent of Eversource Energy's total outstanding shares, and any immediate family member of any such person.  Management submits to the Corporate Governance Committee for consideration any Related Persons Transaction into which Eversource Energy or a subsidiary proposes to enter.  The Corporate Governance Committee recommends to the Eversource Energy Board of Trustees for approval only those transactions that are in Eversource Energy's best interests.  If management causes the company to enter into a Related Persons Transaction prior to approval by the Corporate Governance Committee, the transaction will be subject to ratification by the Eversource Energy Board of Trustees.  If the Eversource Energy Board of Trustees determines not to ratify the transaction, then management will make all reasonable efforts to cancel or annul such transaction.

The directors of CL&P are employees of CL&P and/or other subsidiaries of Eversource Energy, and thus are not considered independent.

172


Item 14.    Principal Accountant Fees and Services

Eversource Energy

Incorporated herein by reference is the information contained in the section "Relationship with Independent Auditors" of Eversource Energy's definitive proxy statement for solicitation of proxies, expected to be filed with the SEC on or about March 26, 2021.

CL&P, NSTAR ELECTRIC and PSNH

Pre-Approval of Services Provided by Principal Auditors

None of CL&P, NSTAR Electric and PSNH is subject to the audit committee requirements of the SEC, the national securities exchanges or the national securities associations.  CL&P, NSTAR Electric and PSNH obtain audit services from the independent auditor engaged by the Audit Committee of Eversource Energy's Board of Trustees.  Eversource Energy's Audit Committee has established policies and procedures regarding the pre-approval of services provided by the principal auditors.  Those policies and procedures delegate pre-approval of services to the Eversource Energy Audit Committee Chair provided that such offices are held by Trustees who are "independent" within the meaning of the Sarbanes-Oxley Act of 2002 and that all such pre-approvals are presented to the Eversource Energy Audit Committee at the next regularly scheduled meeting of the Committee.

The following relates to fees and services for the entire Eversource Energy system, including Eversource Energy, CL&P, NSTAR Electric and PSNH.

Fees Billed By Principal Independent Registered Public Accounting Firm

The aggregate fees billed to the Company and its subsidiaries by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the Deloitte Entities), for the years ended December 31, 2020 and 2019 totaled $5,296,414 and $5,641,614, respectively. In addition, affiliates of Deloitte & Touche LLP as noted below provide other accounting services to the Company.

Audit and Non-Audit Fees 2020 2019
Audit Fees (1)
$4,562,000 $4,743,400
Audit Related Fees (2)
732,500 851,300
Tax Fees (3)
45,000
All Other Fees (4)
1,914 1,914
TOTAL $5,296,414 $5,641,614

(1)    Audit fees in 2020 and 2019 consisted of fees related to the audits of financial statements of Eversource Energy and its subsidiaries, reviews of financial statements in the Combined Quarterly reports on Form 10-Q of Eversource Energy and its subsidiaries, consultations with management, regulatory and compliance filings, out of pocket expense reimbursements, and audits of internal controls over financial reporting as of December 31, 2020 and 2019.

(2)    Audit Related Fees were incurred for procedures performed in the ordinary course of business in support of certain regulatory filings, comfort letters, consents, and other costs related to registration statements and financials for the years ended December 31, 2020 and 2019.

(3)    There were no tax fees rendered and no tax fees billed for the year ended December 31, 2020. The tax service fees for the period ended December 31, 2019 were incurred for procedures performed in the ordinary course of business in support of certain federal rules in 2019.

(4)    All Other Fees for the period December 31, 2020 and 2019 were for an annual license for access to an accounting standards research tool.

The Audit Committee pre-approves all auditing services and permitted audit-related or other services (including the fees and terms thereof) to be performed for us by our independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate its authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittees to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting.  During 2020, all services described above were pre-approved by the Audit Committee or its Chair.  

The Audit Committee has considered whether the provision by the Deloitte Entities of the non-audit services described above was allowed under Rule 2-01(c)(4) of Regulation S-X and was compatible with maintaining the independence of the registered public accountants and has concluded that the Deloitte Entities were and are independent of us in all respects.
173


PART IV

Item 15.    Exhibits and Financial Statement Schedules
(a) 1. Financial Statements:  
      The financial statements filed as part of this Annual Report on Form 10-K are set forth under Item 8, "Financial Statements and Supplementary Data."    
  2. Schedules  
    I. Financial Information of Registrant:
Eversource Energy (Parent) Balance Sheets as of December 31, 2020 and 2019
S-1
     
Eversource Energy (Parent) Statements of Income for the Years Ended
December 31, 2020, 2019 and 2018
S-2
     
Eversource Energy (Parent) Statements of Comprehensive Income for the Years Ended
December 31, 2020, 2019 and 2018
S-2
     
Eversource Energy (Parent) Statements of Cash Flows for the Years Ended
December 31, 2020, 2019 and 2018
S-3
    II.
Valuation and Qualifying Accounts and Reserves for Eversource, CL&P, NSTAR Electric and PSNH
for 2020, 2019 and 2018
S-4
      All other schedules of the companies for which inclusion is required in the applicable regulations of the SEC are permitted to be omitted under the related instructions or are not applicable, and therefore have been omitted.  
3.   Exhibit Index E-1

Item 16.     Form 10-K Summary

Not applicable.

174


SCHEDULE I
EVERSOURCE ENERGY (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AS OF DECEMBER 31, 2020 AND 2019
(Thousands of Dollars)
  2020 2019
ASSETS    
Current Assets:    
Cash $ 434  $ 1,469 
Accounts Receivable from Subsidiaries 39,645  25,070 
Notes Receivable from Subsidiaries 996,300  1,376,000 
Prepayments and Other Current Assets 19,043  33,546 
Total Current Assets 1,055,422  1,436,085 
Deferred Debits and Other Assets:  
Investments in Subsidiary Companies, at Equity 15,483,263  13,162,337 
Notes Receivable from Subsidiaries 1,110,400  157,000 
Accumulated Deferred Income Taxes 33,469  27,578 
Goodwill 3,231,811  3,231,811 
Other Long-Term Assets 90,735  92,394 
Total Deferred Debits and Other Assets 19,949,678  16,671,120 
Total Assets $ 21,005,100  $ 18,107,205 
LIABILITIES AND CAPITALIZATION  
Current Liabilities:  
Notes Payable $ 1,054,325  $ 878,584 
Long-Term Debt - Current Portion 473,933  23,933 
Accounts Payable to Subsidiaries 18,424  4,333 
Other Current Liabilities 103,477  62,385 
Total Current Liabilities 1,650,159  969,235 
Deferred Credits and Other Liabilities 163,053  149,637 
Long-Term Debt 5,128,322  4,358,339 
Common Shareholders' Equity:    
Common Shares 1,789,092  1,729,292 
Capital Surplus, Paid in 8,015,663  7,087,768 
Retained Earnings 4,613,201  4,177,048 
Accumulated Other Comprehensive Loss (76,411) (65,059)
Treasury Stock (277,979) (299,055)
Common Shareholders' Equity 14,063,566  12,629,994 
Total Liabilities and Capitalization $ 21,005,100  $ 18,107,205 

See the Combined Notes to Financial Statements in this Annual Report on Form 10-K for a description of significant accounting matters related to Eversource parent, including Eversource common shares information as described in Note 18, "Common Shares," material obligations and guarantees as described in Note 13, "Commitments and Contingencies," and debt agreements as described in Note 8, "Short-Term Debt," and Note 9, "Long-Term Debt."
S-1


SCHEDULE I
EVERSOURCE ENERGY (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(Thousands of Dollars, Except Share Information)
  2020 2019 2018
Operating Revenues $ —  $ —  $ — 
Operating Expenses:      
   Other 28,645  50,100  (6,552)
Operating (Loss)/Income (28,645) (50,100) 6,552 
Interest Expense 160,887  163,937  123,638 
Other Income, Net:      
   Equity in Earnings of Subsidiaries 1,309,630  1,001,526  1,049,748 
   Other, Net 38,546  68,137  47,581 
Other Income, Net 1,348,176  1,069,663  1,097,329 
Income Before Income Tax Benefit 1,158,644  855,626  980,243 
Income Tax Benefit (46,523) (53,427) (52,757)
Net Income $ 1,205,167  $ 909,053  $ 1,033,000 
Basic Earnings per Common Share $ 3.56  $ 2.83  $ 3.25 
Diluted Earnings per Common Share $ 3.55  $ 2.81  $ 3.25 
Weighted Average Common Shares Outstanding:      
   Basic 338,836,147  321,416,086  317,370,369 
   Diluted 339,847,062  322,941,636  317,993,934 

STATEMENTS OF COMPREHENSIVE INCOME
2020 2019 2018
Net Income $ 1,205,167  $ 909,053  $ 1,033,000 
Other Comprehensive (Loss)/Income, Net of Tax:      
   Qualified Cash Flow Hedging Instruments 1,596  1,393  1,756 
   Changes in Unrealized Gains/(Losses) on Marketable Securities 342  1,166  (547)
   Change in Funded Status of Pension, SERP and PBOP Benefit Plans (13,290) (7,618) 5,194 
Other Comprehensive (Loss)/Income, Net of Tax (11,352) (5,059) 6,403 
Comprehensive Income $ 1,193,815  $ 903,994  $ 1,039,403 

See the Combined Notes to Financial Statements in this Annual Report on Form 10-K for a description of significant accounting matters related to Eversource parent, including Eversource common shares information as described in Note 18, "Common Shares," material obligations and guarantees as described in Note 13, "Commitments and Contingencies," and debt agreements as described in Note 8, "Short-Term Debt," and Note 9, "Long-Term Debt."





S-2


SCHEDULE I
EVERSOURCE ENERGY (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 and 2018
(Thousands of Dollars)
  2020 2019 2018
Operating Activities:      
Net Income $ 1,205,167  $ 909,053  $ 1,033,000 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:      
Equity in Earnings of Subsidiaries (1,309,630) (1,001,526) (1,049,748)
Cash Dividends Received from Subsidiaries 485,800  883,000  569,500 
Deferred Income Taxes (4,667) 13,382  20,032 
Other 39,940  19,584  (31,093)
Changes in Current Assets and Liabilities:      
Accounts Receivables from Subsidiaries (14,575) 7,105  (28,716)
Taxes Receivable/Accrued, Net 35,300  (605) (20,207)
Accounts Payable to Subsidiaries 14,091  (4,099) (9,817)
Other Current Assets and Liabilities, Net 21,284  (2,503) 2,553 
Net Cash Flows Provided by Operating Activities 472,710  823,391  485,504 
 
Investing Activities:      
Capital Contributions to Subsidiaries (1,899,340) (1,039,000) (955,700)
Return of Capital from Subsidiaries 80,000  —  530,000 
Increase in Notes Receivable from Subsidiaries (264,300) (218,100) (158,210)
Other Investing Activities (367) (1,799) (1,149)
Net Cash Flows Used in Investing Activities (2,084,007) (1,258,899) (585,059)
Financing Activities:      
Issuance of Common Shares, Net of Issuance Costs 928,992  852,254  — 
Cash Dividends on Common Shares (744,665) (663,239) (640,110)
Issuance of Long-Term Debt 1,550,000  —  1,550,000 
Retirement of Long-Term Debt —  (350,000) (450,000)
(Decrease)/Increase in Notes Payable (170,545) 593,370  (347,810)
Other Financing Activities 46,480  4,001  (12,455)
Net Cash Flows Provided by Financing Activities 1,610,262  436,386  99,625 
Net (Decrease)/Increase in Cash (1,035) 878  70 
Cash - Beginning of Year 1,469  591  521 
Cash - End of Year $ 434  $ 1,469  $ 591 
Supplemental Cash Flow Information:      
Cash Paid/(Received) During the Year for:      
Interest $ 140,694  $ 161,323  $ 118,533 
Income Taxes $ (43,158) $ (63,227) $ (30,239)

See the Combined Notes to Financial Statements in this Annual Report on Form 10-K for a description of significant accounting matters related to Eversource parent, including Eversource common shares information as described in Note 18, "Common Shares," material obligations and guarantees as described in Note 13, "Commitments and Contingencies," and debt agreements as described in Note 8, "Short-Term Debt," and Note 9, "Long-Term Debt."





S-3


SCHEDULE II
EVERSOURCE ENERGY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(Thousands of Dollars)
Column A Column B Column C Column D Column E
    Additions    
    (1) (2)    
Description: Balance as of Beginning of Year Charged to Costs and Expenses Charged to Other
Accounts -
Describe (a)
 Deductions -Describe (b) Balance as of End of Year
Eversource:
         
Reserves Deducted from Assets -          
Reserves for Uncollectible Accounts:          
  2020 $ 224,821  $ 53,461  $ 145,005  $ 64,436  $ 358,851 
  2019 212,723  63,446  57,223  108,571  224,821 
  2018 195,708  61,337  48,671  92,993  212,723 
CL&P:          
Reserves Deducted from Assets -          
Reserves for Uncollectible Accounts:          
  2020 $ 97,348  $ 12,882  $ 71,223  $ 24,006  $ 157,447 
  2019 88,034  15,947  38,935  45,568  97,348 
  2018 78,872  15,831  29,524  36,193  88,034 
NSTAR Electric:          
Reserves Deducted from Assets -          
Reserves for Uncollectible Accounts:          
  2020 $ 75,406  $ 15,293  $ 23,424  $ 22,540  $ 91,583 
  2019 74,516  25,079  12,556  36,745  75,406 
  2018 69,666  22,279  14,971  32,400  74,516 
PSNH:
         
Reserves Deducted from Assets -          
Reserves for Uncollectible Accounts:          
  2020 $ 10,497  $ 5,164  $ 7,692  $ 6,196  $ 17,157 
  2019 11,065  6,726  872  8,166  10,497 
  2018 10,481  6,383  953  6,752  11,065 

(a)    Amounts relate to uncollectible accounts receivables reserved for that are not charged to bad debt expense.  CL&P, NSTAR Electric, NSTAR Gas and Yankee Gas are allowed to recover in rates, amounts associated with certain uncollectible hardship accounts receivable. Management also believes that uncollectible hardship accounts receivable at EGMA will be recoverable in future rates. CL&P, NSTAR Electric, PSNH, NSTAR Gas and EGMA are also allowed to recover uncollectible energy supply costs through regulatory tracking mechanisms. Amounts in this column also include a $24.2 million increase due to the CMA asset acquisition on October 9, 2020 at Eversource, and an increase due to the adoption of the credit loss accounting standard in 2020 of $23.8 million at Eversource, $22.2 million at CL&P, $0.3 million at PSNH, and a decrease of $1.3 million at NSTAR Electric.

(b)    Amounts written off, net of recoveries.  

S-4


EXHIBIT INDEX

Each document described below is incorporated by reference by the registrant(s) listed to the files identified, unless designated with a (*), which exhibits are filed herewith.  Management contracts and compensation plans or arrangements are designated with a (+).

Exhibit
Number        Description

3.    Articles of Incorporation and By-Laws

(A)    Eversource Energy

3.1    Declaration of Trust of Eversource Energy, as amended through May 3, 2017 (Exhibit 3.1, Eversource Form 10-Q filed on May 5, 2017)

(B)    The Connecticut Light and Power Company

3.1    Amended and Restated Certificate of Incorporation (Exhibit 3(i), CL&P Current Report on Form 8-K filed on January 9, 2012, File No. 000-00404)

3.2    By-laws of CL&P, as amended and restated effective September 29, 2014 (Exhibit 3.1, CL&P Current Report on Form 8-K filed October 2, 2014, File No. 000-00404)

(C)    NSTAR Electric Company

3.1    Restated Articles of Organization of NSTAR Electric Company, fka Boston Edison Company (Exhibit 3.1, NSTAR Electric Form 10-Q for the Quarter Ended June 30, 1994 filed August 12, 1994, File No. 001-02301)

3.2    Bylaws of NSTAR Electric Company, as amended and restated effective September 29, 2014 (Exhibit 3.1, NSTAR Electric Current Report on Form 8-K filed October 2, 2014, File No. 000-02301)

(D)    Public Service Company of New Hampshire

3.1    Articles of Incorporation, as amended to May 16, 1991 (Exhibit 3.3.1, 1993 PSNH Form 10-K filed March 25, 1994, File No. 001-06392)

3.2    By-laws of PSNH, as in effect June 27, 2008 (Exhibit 3, PSNH Form 10-Q for the Quarter Ended June 30, 2008 filed August 7, 2008, File No. 001-06392)

4.    Instruments defining the rights of security holders, including indentures

(A)    Eversource Energy

4.1    Indenture between Eversource Energy and The Bank of New York as Trustee dated as of April 1, 2002 (Exhibit A-3, Eversource Energy 35-CERT filed April 16, 2002, File No. 070-09535)

4.1.1    Fifth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of May 1, 2013, relating to $450 million of Senior Notes, Series F, due 2023 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed May 16, 2013, File No. 001-05324)

4.1.2    Sixth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of January 1, 2015, relating to $300 million of Senior Notes, Series H, due 2025 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed January 21, 2015, File No. 001-05324)

4.1.3    Seventh Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of March 7, 2016, relating to $250 million of Senior Notes, Series I, due 2021 and $250 million of Senior Notes, Series J, due 2026 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed March 15, 2016, File No. 001-05324)

4.1.4    Eighth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of March 10, 2017, relating to $300 million of Senior Notes, Series K, Due 2022 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed March 16, 2017, File No. 001-05324)

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4.1.5    Ninth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of October 1, 2017, relating to $450 million of Senior Notes, Series K, due 2022 and $450 million of Senior Notes, Series L, due 2024 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed October 12, 2017, File No. 001-05324)

4.1.6    Tenth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of January 1, 2018, relating to $200 million of Senior Notes, Series I, Due 2021 and $450 million of Senior Notes, Series M, Due 2028 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed January 12, 2018, File No. 001-05324)

4.1.7    Eleventh Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of December 1, 2018, relating to $400 million of Senior Notes, Series N, Due 2023 and $500 million of Senior Notes, Series O, Due 2029 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed December 18, 2018, File No. 001-05324)

4.1.8    Twelfth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of January 1, 2020, relating to $650 million of Senior Notes, Series P, Due 2050 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed January 16, 2020, File No. 001-05324)

4.1.9    Thirteenth Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of August 1, 2020, relating to $300 million aggregate principal amount of Senior Notes, Series Q, Due 2025 and $600 million aggregate principal amount of Senior Notes, Series R, Due 2030 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed August 20, 2020, File No. 001-05324)

4.2    Eversource Energy Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Exhibit 4.3, Eversource Energy Annual Report on Form 10-K filed February 27, 2020, File No. 001-05324)

(B)    The Connecticut Light and Power Company

4.1    Indenture of Mortgage and Deed of Trust between CL&P and Bankers Trust Company, Trustee, dated as of May 1, 1921 (Composite including all twenty-four amendments to May 1, 1967) (Exhibit 4.1, 2017 Eversource 10-K filed on February 26, 2018)

4.1.1    Series D Supplemental Indentures to the Composite May 1, 1921 Indenture of Mortgage and Deed of Trust between CL&P and Bankers Trust Company, dated as of October 1, 1994 (Exhibit 4.2.16, 1994 CL&P Form 10-K filed March 27, 1995, File No. 001-11419)

4.1.2    Series B Supplemental Indenture between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of September 1, 2004 (Exhibit 99.5, CL&P Current Report on Form 8-K filed September 22, 2004, File No. 000-00404)

4.2    Composite Indenture of Mortgage and Deed of Trust between CL&P and Deutsche Bank Trust Company Americas f/k/a Bankers Trust Company, dated as of May 1, 1921, as amended and supplemented by seventy-three supplemental mortgages to and including Supplemental Mortgage dated as of April 1, 2005 (Exhibit 99.5, CL&P Current Report on Form 8-K filed April 13, 2005, File No. 000-00404)

4.2.1    Supplemental Indenture (2005 Series B Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of April 1, 2005 (Exhibit 99.2, CL&P Current Report on Form 8-K filed April 13, 2005, File No. 000-00404)

4.2.2    Supplemental Indenture (2006 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of June 1, 2006 (Exhibit 99.2, CL&P Current Report on Form 8-K filed June 7, 2006, File No. 000-00404)

4.2.3    Supplemental Indenture (2007 Series B Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of March 1, 2007 (Exhibit 99.2, CL&P Current Report on Form 8-K filed March 29, 2007, File No. 000-00404)

4.2.4    Supplemental Indenture (2007 Series D Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of September 1, 2007 (Exhibit 4, CL&P Current Report on Form 8-K filed September 19, 2007, File No. 000-00404)

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4.2.5    Supplemental Indenture (2013 Series A Bond) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of January 1, 2013 (Exhibit 4.1, CL&P Current Report on Form 8-K filed January 22, 2013, File No. 000-00404)

4.2.6    Supplemental Indenture (2014 Series A Bond) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of April 1, 2014 (Exhibit 4.1, CL&P Current Report on Form 8-K filed April 29, 2014, File No. 000-00404)

4.2.7    Supplemental Indenture (2015 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of May 1, 2015 (Exhibit 4.1, CL&P Current Report on Form 8-K filed May 26, 2015, File No. 000-00404)

4.2.8    Supplemental Indenture (2015 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of November 1, 2015 (Exhibit 4.1, CL&P Current Report on Form 8-K filed December 4, 2015, File No. 000-00404)

4.2.9    Supplemental Indenture (2017 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of March 1, 2017 (Exhibit 4.1, CL&P Current Report on Form 8-K filed on March 16, 30017, File No. 000-00404)

4.2.10    Supplemental Indenture (2014 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of August 1, 2017 (Exhibit 4.1, CL&P Current Report on Form 8-K filed August 23, 2017, File No. 000-00404)

4.2.11    Supplemental Indenture (2018 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of March 1, 2018 (Exhibit 4.1, CL&P Current Report on Form 8-K filed April 2, 2018, File No. 000-00404)

4.2.12    Supplemental Indenture (2018 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of March 1, 2019 (Exhibit 4.1, CL&P Current Report on Form 8-K filed on April 4, 2019, File No. 000-00404)

4.2.13    Supplemental Indenture (2017 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of September 1, 2019 (Exhibit 4.1, CL&P Current Report on Form 8-K filed on September 23, 2019, File No. 000-00404)

4.2.14    Supplemental Indenture (2020 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of December 1, 2020 (Exhibit 4.1, CL&P Current Report on Form 8-K filed on December 4, 2020, File No. 000-00404)

4.3    Loan Agreement between Connecticut Development Authority and CL&P (Pollution Control Revenue Refunding Bonds - 2011A Series) dated as of October 1, 2011 (Exhibit 1.1, CL&P Current Report on Form 8-K filed October 28, 2011, File No. 000-00404)

4.4    CL&P Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Exhibit 4.4, Eversource Energy Annual Report on Form 10-K filed February 27, 2020, File No. 001-05324)

(C) NSTAR Electric Company

4.1    Indenture between Boston Edison Company and the Bank of New York (as successor to Bank of Montreal Trust Company) (Exhibit 4.1, 2017 Eversource Form 10-K filed February 26, 2018)

4.1.1    A Form of 5.75% Debenture Due March 15, 2036 (Exhibit 99.2, Boston Edison Company Current Report on Form 8‑K filed March 17, 2006, File No. 001-02301)

4.1.2    A Form of 5.50% Debenture Due March 15, 2040 (Exhibit 99.2, NSTAR Electric Company Current Report on Form 8‑K filed March 15, 2010, File No. 001-02301)

4.1.3    A Form of 2.375% Debenture Due 2022 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed October 18, 2012, File No. 001-02301)

4.1.4    A Form of 4.40% Debenture Due 2044 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed March 13, 2014, File No. 001-02301)

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4.1.5    A Form of 3.25% Debenture due 2025 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed on November 20, 2015, File No. 001-02301)

4.1.6    A Form of 2.70% Debenture due 2026 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed on May, 31, 2016, File No. 001-02301)

4.1.7    Form of 3.20% Debenture due May 15, 2027 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K/A filed on October 12, 2017 File No. 001-02301)

4.1.8    Form of 3.25% Debenture due May 15, 2029 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed on May 23, 2019, File No. 001-02301)

4.1.9    Form of 3.95% Debenture due April 1, 2030 (Exhibit 4, NSTAR Electric Company Current Report on Form 8-K filed on March 26, 2020, File No. 001-02301)

4.2    Amended and Restated Credit Agreement, dated December 8, 2017, by and between NSTAR Electric Company and the Banks named therein, pursuant to which Barclays Bank PLC serves as Administrative Agent and Swing Line Lender (Exhibit 4.2, 2017 Eversource Form 10-K filed on February 26, 2018)

4.3    Indenture between NSTAR Electric Company, as successor to Western Massachusetts Electric Company (WMECO), and The Bank of New York, as Trustee, dated as of September 1, 2003 (Exhibit 99.2, WMECO Current Report on Form 8-K filed October 8, 2003, File No. 000-07624)

4.3.1    Second Supplemental Indenture between NSTAR Electric Company, as successor to WMECO, and The Bank of New York, as Trustee dated as of September 1, 2004 (Exhibit 4.1, WMECO Current Report on Form 8-K filed September 27, 2004, File No. 000-07624)

4.3.2    Fourth Supplemental Indenture between NSTAR Electric Company, as successor to WMECO, and The Bank of New York Trust, as Trustee, dated as of August 1, 2007 (Exhibit 4.1, WMECO Current Report on Form 8-K filed August 20, 2007, File No. 000-07624)

4.3.3    Sixth Supplemental Indenture between NSTAR Electric Company, as successor to WMECO, and The Bank of New York Trust Company, N.A., as Trustee, dated as of September 15, 2011 (Exhibit 4.1, WMECO Current Report on Form 8-K filed September 19, 2011, File No. 000-07624)

4.3.4    Seventh Supplemental Indenture between NSTAR Electric Company, as successor to WMECO, and The Bank of New York Trust Company, N.A., as Trustee, dated as of November 1, 2013 (Exhibit 4.1, WMECO Current Report on Form 8-K filed November 21, 2013, File No. 000-07624)

4.3.5    Eighth Supplemental Indenture between NSTAR Electric Company, as successor to WMECO, and The Bank of New York Trust Company, N.A., as Trustee, dated as of June 1, 2016 (Exhibit 4.1, WMECO Current Report on Form 8-K filed June 29, 2016, File No. 000-07624)

4.4    NSTAR Electric Company Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Exhibit 4.4, Eversource Energy Annual Report on Form 10-K filed February 27, 2020, File No. 001-05324)
    
(D)    Public Service Company of New Hampshire

4.1    First Mortgage Indenture between PSNH and First Fidelity Bank, National Association, New Jersey, now First Union National Bank, Trustee, dated as of August 15, 1978 (Composite including all amendments effective June 1, 2011) (included as Exhibit C to the Eighteenth Supplemental Indenture filed as Exhibit 4.1 to PSNH Current Report on Form 8-K filed June 2, 2011, File No. 001-06392)

4.1.1    Fourteenth Supplemental Indenture between PSNH and Wachovia Bank, National Association successor to First Union National Bank, as successor to First Fidelity Bank, National Association, as Trustee dated as of October 1, 2005 (Exhibit 99.2, PSNH Current Report on Form 8-K filed October 6, 2005, File No. 001-06392)

4.1.2    Eighteenth Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of May 1, 2011 (Exhibit 4.1, PSNH Current Report on Form 8-K filed June 2, 2011 (File No. 001-06392)

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4.1.3    Nineteenth Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of September 1, 2011 (Exhibit 4.1, PSNH Current Report on Form 8-K filed September 16, 2011 (File No. 001-06392)

4.1.4    Twentieth Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of November 1, 2013 (Exhibit 4.1, PSNH Current Report on Form 8-K filed November 20, 2013 (File No. 001-06392)

4.1.5    Twenty-first Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of October 1, 2014 (Exhibit 4.1, PSNH Current Report on Form 8-K filed October 17, 2014 (File No. 001-06392)

4.1.6    Twenty-second Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of June 1, 2019 (Exhibit 4.1, PSNH Current Report on Form 8-K filed on July 3, 2019 (File No. 001-06392)

4.1.7    Twenty-third Supplemental Indenture, between PSNH and U.S. Bank National Association, as Trustee dated as of August 1, 2020 (Exhibit 4.1, PSNH Current Report on Form 8-K filed on August 31, 2020 (File No. 001-06392)

4.2    Series A Loan and Trust Agreement among Business Finance Authority of the State of New Hampshire and PSNH and State Street Bank and Trust Company, as Trustee (Tax Exempt Pollution Control Bonds) dated as of October 1, 2001 (Exhibit 4.3.4, 2001 Eversource Energy Form 10-K filed March 22, 2002, File No. 001-05324)    

(F)    Eversource Energy, The Connecticut Light and Power Company and Public Service Company of New Hampshire

4.1    Amended and Restated Credit Agreement, dated December 8, 2017, by and among Eversource Energy, CL&P, NSTAR Gas, PSNH and Yankee Gas Services Company and the Banks named therein, pursuant to which Bank of America, N.A. serves as Administrative Agent (Exhibit 4.1, 2017 Eversource Form 10-K filed on February 26, 2018)
10.    Material Contracts

(A)    Eversource Energy

10.1    Lease between The Rocky River Realty Company and Eversource Energy Service Company, dated as of July 1, 2008 (Exhibit 10.1, 2017 Eversource Form 10-K filed on February 26, 2018)

*+10.2         Eversource Energy Board of Trustees’ Compensation Arrangement Summary 

+10.3    Eversource Supplemental Executive Retirement Program effective as of January 1, 2015 (Exhibit 10.5, 2015 Eversource Energy Form 10-K filed February 26, 2016, File No. 001-05324)

+10.4    Eversource Energy Deferred Compensation Plan for Executives effective as of January 1, 2014 (Exhibit 10.6, 2015 Eversource Energy Form 10-K filed February 26, 2016, File No. 001-05324)

    +10.4.1    Amendment No 1 to the Eversource Deferred Compensation Plan effective February 7, 2018 (Exhibit 10.6.1, Eversource Energy Annual Report on Form 10-K filed February 27, 2020, File No. 001-05324)

+10.5    NSTAR Excess Benefit Plan, effective August 25, 1999 (Exhibit 10.1 1999 NSTAR Form 10-K/A filed September 29, 2000, File No. 001-14768)

+10.5.1    NSTAR Excess Benefit Plan, incorporating the NSTAR 409A Excess Benefit Plan, as amended and restated effective January 1, 2008, dated December 24, 2008 (Exhibit 10.1.1 2008 NSTAR Form 10-K filed February 9, 2009, File No. 001-14768)

+10.6    Amended and Restated Change in Control Agreement by and between James J. Judge and NSTAR, dated November 15, 2007 (Exhibit 10.9, 2007 NSTAR Form 10-K filed February 11, 2008, File No. 001-14768)

+10.7    Amended and Restated Change in Control Agreement by and between Joseph R. Nolan, Jr. and NSTAR, dated November 15, 2007 (Exhibit 10.13, 2007 NSTAR Form 10-K filed February 11, 2008, File No. 001-14768)

+10.8    Amended and Restated Change in Control Agreement by and between Werner J. Schweiger and NSTAR, dated November 15, 2007 (Exhibit 10.14, 2007 NSTAR Form 10-K filed February 11, 2008, File No. 001-14768)

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+10.9    Amended and Restated Change in Control Agreement by and between Senior Vice President and NSTAR, dated November 15, 2007 (Exhibit 10.15, 2007 NSTAR Form 10-K filed February 11, 2008, File No. 001-14768)

+10.10    Master Trust Agreement between NSTAR and State Street Bank and Trust Company (Rabbi Trust), effective August 25, 1999 (Exhibit 10.5, NSTAR Form 10-Q for the Quarter Ended September 30, 2000 filed November 14, 2000, File No. 001-14768)

+10.11    Currently effective Change in Control Agreement between NSTAR’s Vice Presidents and NSTAR (in form) (Exhibit 10.17, 2009 NSTAR Form 10-K filed February 25, 2010, File No. 001-14768)

*10.12 Credit Agreement, dated as of October 21, 2020, by and among Eversource Energy and Eversource Gas Company of Massachusetts and the Banks named therein, pursuant to which Bank of America, N.A. serves as Administrative Agent and Swing Line Lender

(B)    Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire

10.1    Amended and Restated Form of Service Contract between each of Eversource Energy, CL&P, NSTAR Electric Company and Eversource Energy Service Company dated as of January 1, 2014. (Exhibit 10.1, Eversource Energy Form 10-K filed on February 25, 2014, File No. 001-05324)

10.2    Transmission Operating Agreement between the Initial Participating Transmission Owners, Additional Participating Transmission Owners and ISO New England, Inc. dated as of February 1, 2005 (Exhibit 10.29, 2004 Eversource Energy Form 10-K filed March 17, 2005, File No. 001-05324)

10.2.1    Rate Design and Funds Disbursement Agreement among the Initial Participating Transmission Owners, Additional Participating Transmission Owners and ISO New England, Inc., effective June 30, 2006 (Exhibit 10.22.1, 2006 Eversource Energy Form 10-K filed March 1, 2007, File No. 001-05324)

10.3    Eversource Energy's Third Amended and Restated Tax Allocation Agreement dated as of April 10, 2012, (Exhibit 10.1 Eversource Energy Form 10-Q for Quarter Ended June 30, 2012 filed August 7, 2012, File No. 001-05324)

+10.4    Amended and Restated Incentive Plan Effective January 1, 2009 (Exhibit 10.3, Eversource Energy Form 10-Q for the Quarter Ended September 30, 2008 filed November 10, 2008, File No. 001-05324)

+10.5    2018 Eversource Energy Incentive Plan (Exhibit 99.2, Eversource Energy Current Report on Form 8-K dated May 3, 2018)

+10.6    Trust under Supplemental Executive Retirement Plan dated May 2, 1994 (Exhibit 10.33, 2002 Eversource Energy Form 10-K filed March 21, 2003, File No. 001-05324)

+10.6.1    First Amendment to Trust Under Supplemental Executive Retirement Plan, effective as of December 10, 2002 (Exhibit 10 (B) 10.19.1, 2003 Eversource Energy Form 10-K filed March 12, 2004, File No. 001-05324)

+10.6.2    Second Amendment to Trust Under Supplemental Executive Retirement Plan, effective as of November 12, 2008 (Exhibit 10.12.2, 2008 Eversource Energy Form 10-K filed February 27, 2009, File No. 001-05324)

+10.7    Special Severance Program for Officers of Eversource Energy Companies as of January 1, 2009 (Exhibit 10.2 Eversource Energy Form 10-Q for Quarter Ended September 30, 2008 filed November 10, 2008, File No. 001-05324)

+10.8    Amended and Restated Employment Agreement with Gregory B. Butler, effective January 1, 2009 (Exhibit 10.7, 2008 Eversource Energy 2010 Form 10-K filed February 27, 2009, File No. 001-05324)
        
(C)    Eversource Energy, The Connecticut Light and Power Company, Public Service Company of New Hampshire and NSTAR Electric Company

10.1    Eversource Energy Service Company Transmission and Ancillary Service Wholesale Revenue Allocation Methodology among The Connecticut Light and Power Company, NSTAR Electric Company, Public Service Company of New Hampshire, Holyoke Water Power Company and Holyoke Power and Electric Company Trustee dated as of January 1, 2008 (Exhibit 10.1, Eversource Energy Form 10-Q for the Quarter Ended March 31, 2008 filed May 9, 2008, File No. 001-05324)

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*21.    Subsidiaries of the Registrant

*23.    Consents of Independent Registered Public Accounting Firm

*31.    Rule 13a - 14(a)/15 d - 14(a) Certifications

(A)    Eversource Energy

31    Certification by the Chief Executive Officer of Eversource Energy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1    Certification by the Chief Financial Officer of Eversource Energy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(B)    The Connecticut Light and Power Company

31    Certification by the Chairman of CL&P pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1    Certification by the Chief Financial Officer of CL&P pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(C)    NSTAR Electric Company

31    Certification by the Chairman of NSTAR Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1    Certification by the Chief Financial Officer of NSTAR Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(D)    Public Service Company of New Hampshire

31    Certification by the Chairman of PSNH pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1    Certification by the Chief Financial Officer of PSNH pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*32    18 U.S.C. Section 1350 Certifications

(A)    Eversource Energy

32    Certification by the Chief Executive Officer and Chief Financial Officer of Eversource Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(B)    The Connecticut Light and Power Company

32    Certification by the Chairman and the Chief Financial Officer of CL&P pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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(C)    NSTAR Electric Company

32    Certification by the Chairman and the Chief Financial Officer of NSTAR Electric Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(D)    Public Service Company of New Hampshire

32    Certification by the Chairman and the Chief Financial Officer of PSNH pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*101.INS    Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document

*101.SCH    Inline XBRL Taxonomy Extension Schema

*101.CAL    Inline XBRL Taxonomy Extension Calculation

*101.DEF    Inline XBRL Taxonomy Extension Definition

*101.LAB    Inline XBRL Taxonomy Extension Labels

*101.PRE    Inline XBRL Taxonomy Extension Presentation

*104    The cover page from the Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline XBRL


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EVERSOURCE ENERGY

SIGNATURES

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
       
February 17, 2021 By: /s/ Jay S. Buth
      Jay S. Buth
      Vice President, Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Gregory B. Butler, Philip J. Lembo and Jay S. Buth and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature Title Date
     
/s/ James J. Judge Chairman of the Board, President and February 17, 2021
James J. Judge Chief Executive Officer and a Trustee  
  (Principal Executive Officer)  
     
/s/ Philip J. Lembo Executive Vice President February 17, 2021
Philip J. Lembo and Chief Financial Officer  
  (Principal Financial Officer)  
     
/s/ Jay S. Buth Vice President, Controller February 17, 2021
Jay S. Buth and Chief Accounting Officer  
     
/s/ Cotton M. Cleveland Trustee February 17, 2021
Cotton M. Cleveland    
     
/s/ James S. DiStasio Trustee February 17, 2021
James S. DiStasio    
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Signature Title Date
/s/ Francis A. Doyle Trustee February 17, 2021
Francis A. Doyle    
/s/ Linda Dorcena Forry Trustee February 17, 2021
Linda Dorcena Forry    
/s/ Gregory M. Jones Trustee February 17, 2021
Gregory M. Jones    
/s/ John Y. Kim Trustee February 17, 2021
John Y. Kim    
     
/s/ Kenneth R. Leibler Trustee February 17, 2021
Kenneth R. Leibler    
     
/s/ David H. Long Trustee February 17, 2021
David H. Long    
     
/s/ William C. Van Faasen Trustee February 17, 2021
William C. Van Faasen    
     
/s/ Frederica M. Williams Trustee February 17, 2021
Frederica M. Williams    

E-10


THE CONNECTICUT LIGHT AND POWER COMPANY

SIGNATURES

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
       
February 17, 2021 By: /s/ Jay S. Buth
      Jay S. Buth
      Vice President, Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Gregory B. Butler, Philip J. Lembo and Jay S. Buth and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature Title Date
   
/s/ James J. Judge Chairman and a Director February 17, 2021
James J. Judge (Principal Executive Officer)  
     
/s/ Werner J. Schweiger Chief Executive Officer and a Director February 17, 2021
Werner J. Schweiger    
     
/s/ Philip J. Lembo Executive Vice President and February 17, 2021
Philip J. Lembo Chief Financial Officer and a Director  
  (Principal Financial Officer)  
     
/s/ Gregory B. Butler Executive Vice President and General Counsel February 17, 2021
Gregory B. Butler and a Director  
     
/s/ Jay S. Buth Vice President, Controller February 17, 2021
Jay S. Buth and Chief Accounting Officer  
E-11


NSTAR ELECTRIC COMPANY

SIGNATURES

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
       
February 17, 2021 By: /s/ Jay S. Buth
      Jay S. Buth
      Vice President, Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Gregory B. Butler, Philip J. Lembo and Jay S. Buth and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature Title Date
   
/s/ James J. Judge Chairman and a Director February 17, 2021
James J. Judge (Principal Executive Officer)  
     
/s/ Werner J. Schweiger Chief Executive Officer and a Director February 17, 2021
Werner J. Schweiger    
     
/s/ Philip J. Lembo Executive Vice President and February 17, 2021
Philip J. Lembo Chief Financial Officer and a Director  
  (Principal Financial Officer)  
     
/s/ Gregory B. Butler Executive Vice President and General Counsel February 17, 2021
Gregory B. Butler and a Director  
     
/s/ Jay S. Buth Vice President, Controller February 17, 2021
Jay S. Buth and Chief Accounting Officer  
E-12


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

SIGNATURES

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
       
February 17, 2021 By: /s/ Jay S. Buth
      Jay S. Buth
      Vice President, Controller and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Gregory B. Butler, Philip J. Lembo and Jay S. Buth and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature Title Date
   
/s/ James J. Judge Chairman and a Director February 17, 2021
James J. Judge (Principal Executive Officer)  
     
/s/ Werner J. Schweiger Chief Executive Officer and a Director February 17, 2021
Werner J. Schweiger    
     
/s/ Philip J. Lembo Executive Vice President and February 17, 2021
Philip J. Lembo Chief Financial Officer and a Director  
  (Principal Financial Officer)  
     
/s/ Gregory B. Butler Executive Vice President and General Counsel February 17, 2021
Gregory B. Butler and a Director  
     
/s/ Jay S. Buth Vice President, Controller February 17, 2021
Jay S. Buth and Chief Accounting Officer  





E-13

Exhibit 10.2

SUMMARY OF TRUSTEE COMPENSATION ARRANGEMENTS

The Compensation Committee periodically reviews the compensation of our non-employee Trustees and, when it deems appropriate and upon consultation with the Committee’s independent compensation consultant, recommends adjustments to be approved by the Board of Trustees. The Compensation Committee recommends to the Board compensation for the Trustees based on competitive market practices for both the total value of compensation and the allocation of cash and equity. The Committee uses data obtained from similarly sized utility and general industry companies as guidelines for setting Trustee compensation. The level of Trustee compensation recommended by the Committee and approved by the Board enables us to attract Trustees who have a broad range of backgrounds and experiences.

Each non-employee Trustee serving on January 1 receives a grant under the Company’s Incentive Plan, effective on the tenth business day of such year, consisting of the number of restricted stock units (RSUs) resulting from dividing $160,000 by the average closing price of our common shares as reported on the NYSE for the 10 trading days immediately preceding such date and rounding the resulting amount to the nearest whole RSU. RSUs generally vest on the next business day following the grant. Non-employee Trustees may elect distribution of up to 100 percent of the common shares issuable in respect of such RSUs immediately upon vesting of their RSU grant, subject to satisfaction of the Trustee share ownership guidelines. The distribution of all common shares entitled to be received upon vesting, but not distributed immediately, is deferred until the tenth business day of January of the year following retirement from Board service. Any individual who is elected to serve as a Trustee after January 1 of any calendar year receives an RSU grant prorated from the date of such election and granted on the first business day of the month following such election.


2020 Trustee Compensation
Compensation Element Amount
Annual Cash Retainer $115,000
Annual Stock Retainer $160,000
Board and Committee Attendance Fees None
Annual Lead Trustee Retainer $30,000
Annual Committee Chair Retainer $25,000 Audit Committee
$15,000 Compensation Committee
$15,000 Corporate Governance Committee
$15,000 Finance Committee

Annual cash retainers of $115,000 per Trustee, additional Committee Chair and Lead Trustee cash retainers and annual RSU grants for service on the Board for 2020 based on the amounts above were paid as described in this section.

The share ownership guidelines set forth in the Company’s Corporate Governance Guidelines require each Trustee to attain ownership of a number of common shares equal to a market value of at least five-times the then current annual cash compensation retainer for service on the Board. Trustees are required to hold all shares awarded as annual stock compensation retainers until the guidelines have been met.

Prior to the year earned, each Trustee may irrevocably elect to defer receipt of all or a portion of their cash compensation. Deferred funds are credited with deemed earnings on various deemed investments as permitted by the Company's Deferred Compensation Plan. Deferred cash compensation is payable either in a lump sum or in installments in accordance with the Trustee’s prior election. There were no above-market earnings in deferred compensation value during 2020, as the terms of the Deferred Compensation Plan provide for market-based investments, including Company common shares.

Our Incentive Plan places a limit on the amount of total annual compensation that can be paid to any Trustee. When applicable, we pay travel-related expenses for spouses of Trustees who attend Board functions, but we do not pay tax gross-up payments in connection with any taxes on such expenses, nor do we pay pension benefits to our non-employee Trustees.

Execution Copy
EXHIBIT 10.12
Published CUSIP Numbers: 30040TAE5 (Facility)
30040TAF2 (Revolver)
CREDIT AGREEMENT
dated as of October 21, 2020
by and among
EVERSOURCE ENERGY,
and
EVERSOURCE GAS COMPANY OF MASSACHUSETTS,
as the Borrowers,
BANK OF AMERICA, N.A.,
as Administrative Agent and Swing Line Lender,
and
THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO
BOFA SECURITIES, INC.,
BARCLAYS BANK PLC,
CITIBANK, N.A.,
GOLDMAN SACHS BANK USA,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
TD SECURITIES (USA) LLC,
U.S. BANK NATIONAL ASSOCIATION,
and
WELLS FARGO SECURITIES, LLC,
as Joint Lead Arrangers and Joint Bookrunners,
BARCLAYS BANK PLC,
as Syndication Agent,
and
CITIBANK, N.A.,
Cover Page to Credit Agreement (Eversource Energy; Eversource Gas Company of Massachusetts)
CHAR1\1750271v11


GOLDMAN SACHS BANK USA,
MIZUHO BANK, LTD.,
MUFG BANK, LTD.,
TD BANK, N.A.,
U.S. BANK NATIONAL ASSOCIATION,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents
Cover Page to Credit Agreement (Eversource Energy; Eversource Gas Company of Massachusetts)
CHAR1\1750271v11


TABLE OF CONTENTS
Section Title Page
ARTICLE IDEFINITIONS AND ACCOUNTING TERMS
§–1.01
Defined Terms 1
§–1.02
Other Interpretive Provisions 22
§–1.03
Accounting Terms 23
§–1.04
Rounding 24
§–1.05
Times of Day 24
§–1.06
Rates 24
ARTICLE IITHE COMMITMENTS AND BORROWINGS
§–2.01
Revolving Commitments 24
§–2.02
Borrowings, Conversions and Continuations of Loans 24
§–2.03
Swing Line Loans 26
§–2.04
Prepayments 28
§–2.05
Termination or Reduction of Aggregate Revolving Commitments 29
§–2.06
Repayment of Loans; Term Out Option 29
§–2.07
Interest 30
§–2.08
Fees 31
§–2.09
Computation of Interest and Fees 31
§–2.10
Evidence of Debt 32
§–2.11
Payments Generally; Administrative Agent’s Clawback 32
§–2.12
Sharing of Payments by Lenders 34
§–2.13
Cash Collateral 34
§–2.14
Defaulting Lenders 35
§–2.15
Additional Revolving Commitments 36
ARTICLE IIITAXES, YIELD PROTECTION AND ILLEGALITY
§–3.01
Taxes 37
§–3.02
Illegality 41
§–3.03
Inability to Determine Rates 42
§–3.04
Increased Costs; Reserves on Eurodollar Rate Loans 44
§–3.05
Compensation for Losses 46
§–3.06
Mitigation Obligations; Replacement of Lenders 46
§–3.07
Survival 46
ARTICLE IV — [RESERVED]
ARTICLE VCONDITIONS PRECEDENT TO BORROWINGS
§–5.01
Conditions of Initial Borrowings 47
§–5.02
Conditions to all Borrowings 48
ARTICLE VIREPRESENTATIONS AND WARRANTIES
§–6.01
Existence, Qualification and Power 49
Table of Contents to Credit Agreement (Eversource Energy; Eversource Gas Company of Massachusetts)
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§–6.02
Authorization; No Contravention 49
§–6.03
Governmental Authorization; Other Consents 49
§–6.04
Binding Effect 49
§–6.05
Financial Statements; No Material Adverse Effect 49
§–6.06
Litigation 50
§–6.07
No Default 50
§–6.08
Ownership of Property; Liens 50
§–6.09
Environmental Compliance 50
§–6.10
Insurance 50
§–6.11
Taxes 51
§–6.12
ERISA Compliance 51
§–6.13
Subsidiaries 51
§–6.14
Use of Proceeds; Margin Regulations; Investment Company Act 52
§–6.15
Disclosure 52
§–6.16
Compliance with Laws 52
§–6.17
Solvency 52
§–6.18
Taxpayer Numbers and Other Information 52
§–6.19
Sanctions Concerns; Anti-Corruption Laws 52
§–6.20
Affected Financial Institutions 53
§–6.21
Beneficial Ownership Regulation 53
ARTICLE VIIAFFIRMATIVE COVENANTS
§–7.01
Financial Statements 53
§–7.02
Certificates; Other Information 54
§–7.03
Notices 56
§–7.04
Payment of Taxes 56
§–7.05
Preservation of Existence, Etc. 56
§–7.06
Maintenance of Properties 56
§–7.07
Maintenance of Insurance 57
§–7.08
Compliance with Laws 57
§–7.09
Books and Records 57
§–7.10
Inspection Rights 57
§–7.11
Use of Proceeds 57
§–7.12
Further Assurances 57
§–7.13
Conduct of Business 57
§–7.14
Governmental Approvals 58
§–7.15
Anti-Corruption Laws 58
ARTICLE VIIINEGATIVE COVENANTS
§–8.01
Liens 58
§–8.02
Fundamental Changes 59
§–8.03
Change in Nature of Business 60
§–8.04
Transactions with Affiliates and Insiders 60
2
CHAR1\1750271v11


§–8.05
Use of Proceeds 61
§–8.06
Consolidated Indebtedness to Capitalization Ratio 61
§–8.07
Compliance with ERISA 61
§–8.08
Interests in Nuclear Plants 61
§–8.09
Financing Agreements 61
§–8.10
Sanctions 61
§–8.11
Anti-Corruption Laws 61
ARTICLE IXEVENTS OF DEFAULT AND REMEDIES
§–9.01
Events of Default 62
§–9.02
Remedies Upon Event of Default 63
§–9.03
Application of Funds 64
ARTICLE XADMINISTRATIVE AGENT
§–10.01
Appointment and Authority 64
§–10.02
Rights as a Lender 64
§–10.03
Exculpatory Provisions 65
§–10.04
Reliance by Administrative Agent 66
§–10.05
Delegation of Duties 66
§–10.06
Resignation of Administrative Agent 66
§–10.07
Non-Reliance on the Administrative Agent, the Joint Lead Arrangers and the Other Lenders 67
§–10.08
No Other Duties; Etc. 68
§–10.09
Administrative Agent May File Proofs of Claim 68
§–10.10
Lender ERISA Representations 68
ARTICLE XIMISCELLANEOUS
§–11.01
Amendments, Etc. 69
§–11.02
Notices and Other Communications; Facsimile Copies 71
§–11.03
No Waiver; Cumulative Remedies; Enforcement 73
§–11.04
Expenses; Indemnity; and Damage Waiver 73
§–11.05
Payments Set Aside 74
§–11.06
Successors and Assigns 75
§–11.07
Treatment of Certain Information; Confidentiality 78
§–11.08
Set-off 79
§–11.09
Interest Rate Limitation 80
§–11.10
Counterparts; Integration; Effectiveness 80
§–11.11
Survival of Representations and Warranties 80
§–11.12
Severability 80
§–11.13
Replacement of Lenders 80
§–11.14
Governing Law; Jurisdiction; Etc. 81
§–11.15
Waiver of Right to Trial by Jury 82
§–11.16
Electronic Execution 82
§–11.17
USA Patriot Act; Beneficial Ownership Regulation 83
§–11.18
No Advisory or Fiduciary Relationship 83
3
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§–11.19
Pro Rata Shares of Obligations of Borrowers 83
§–11.20
Limitation of Liability 83
§–11.21
Acknowledgement and Consent to Bail-In of Affected Financial Institutions 84
§–11.22
Acknowledgement Regarding any Supported QFCs 84

Schedules to Credit Agreement:
Schedule 2.01 Revolving Commitments and Applicable Percentages
Schedule 6.11 Tax Sharing Agreements
Schedule 6.13 Subsidiaries
Schedule 6.18 Taxpayer and Organizational Identification Numbers; Legal Name; State of Formation; Principal Place of Business
Schedule 8.01 Liens Existing on the Closing Date
Schedule 11.02 Certain Addresses for Notices
Exhibits to Credit Agreement:
Exhibit 2.02(a)
[Form of] Revolving Loan Notice
Exhibit 2.04(b)
[Form of] Swing Line Loan Notice
Exhibit 2.05
[Form of] Prepayment Notice
Exhibit 2.06(b)
[Form of] Term Out Option Exercise Notice
Exhibits 2.11(a)–1
[Forms of] Revolving / Term Out Note
Exhibit 2.11(a)–2
[Form of] Swing Line Note
Exhibit 3.01(e)–1-4
[Form of] U.S. Tax Compliance Certificates
Exhibit 7.02(a)
[Form of] Compliance Certificate
Exhibit 11.06(b)
[Form of] Assignment and Assumption

4
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 21, 2020 (the “Closing Date”), by and among EVERSOURCE ENERGY, a voluntary association and Massachusetts business trust organized under the laws of the Commonwealth of Massachusetts (“Eversource”), EVERSOURCE GAS COMPANY OF MASSACHUSETTS, a Massachusetts corporation (“Eversource Gas”), the Lenders (as defined herein) from time to time party hereto, and BANK OF AMERICA, N.A., as Administrative Agent and Swing Line Lender.
R E C I T A L S
WHEREAS, the Borrowers have requested that the Lenders provide Five-Hundred Fifty Million Dollars ($550,000,000) in revolving credit facilities for the purposes set forth herein, and the Lenders are willing to do so on the terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, each of the parties hereto hereby covenants and agrees as follows:
A G R E E M E N T
ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS
Section 1.01        Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
Administrative Agent” means Bank of America, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
Administrative Agents Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as the Administrative Agent may from time to time notify the Borrowers and the Lenders.
Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
Affected Financial Institution” shall mean: (a) any EEA Financial Institution; or (b) any UK Financial Institution.
Affiliate” means, with respect to any specified Person, another Person that directly, or indirectly through one (1) or more intermediaries, Controls, or is Controlled by or is under common Control with, the Person specified.
Agency Fee Letter” means that certain letter agreement, dated as of September 25, 2020, by and between Eversource and Bank of America.
Aggregate Revolving Commitments” means the Revolving Commitments of all the Lenders. The aggregate principal amount of the Aggregate Revolving Commitments in effect on the Closing Date is Five-Hundred Fifty Million Dollars ($550,000,000).
Credit Agreement (Eversource Energy; Eversource Gas Company of Massachusetts)
CHAR1\1750271v11


Agreement” has the meaning specified in the introductory paragraph hereto.
Applicable Margin” means:
(a)    at all times that are prior to the Conversion Effective Date (or, in the event that the Term Out Option is not exercised, at all times during the term of this Agreement), with respect to all Revolving Loans, all Swing Line Loans and the Facility Fee, determined with respect to each Borrower for any such date of determination, the following percentages per annum specified in the table immediately below, based upon the Reference Rating of the applicable Borrower:
Pricing Level Reference Rating Eurodollar Rate Loans Base Rate Loans Facility Fee
1
≥ A+ / A1 1.025% 0.025% 0.100%
2
A / A2 1.125% 0.125% 0.125%
3
A- / A3 1.225% 0.225% 0.150%
4
BBB+ / Baa1 1.300% 0.300% 0.200%
5
BBB / Baa2 1.500% 0.500% 0.250%
6
≤ BBB- / Baa3 1.700% 0.700% 0.300%
; and
(b)    at all times that are on or after the Conversion Effective Date, in the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b) and the Conversion Effective Date has occurred, with respect to all Term Out Loans, determined with respect to each Borrower for any such date of determination, the following percentages per annum specified in the table immediately below, based upon the Reference Rating of the applicable Borrower:
Pricing Level Reference Rating Eurodollar Rate Loans Base Rate Loans
1
≥ A+ / A1 1.125% 0.125%
2
A / A2 1.250% 0.250%
3
A- / A3 1.375% 0.375%
4
BBB+ / Baa1 1.500% 0.500%
5
BBB / Baa2 1.750% 0.750%
6
≤ BBB- / Baa3 2.000% 1.000%
Any increase or decrease in the Applicable Margin resulting from a change in any Reference Rating shall take effect at the time of such change in such Reference Rating. For purposes of the foregoing: (A) in the case of a split in the Reference Ratings of one (1) level, the higher level shall apply; (B) in the case of a split in the Reference Ratings of more than one (1) level, the Reference Rating that is one (1) level lower than the higher level shall apply; and (C) if there is no Reference Rating, then Pricing Level 6 shall apply.
Applicable Percentage” means, with respect to any Lender, as of any date of determination (a) prior to the Conversion Effective Date (or, in the event that the Term Out Option is not exercised, at all times during the term of this Agreement), the percentage (carried out to the ninth (9th) decimal place) of the Aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time, subject to adjustment as provided in Section 2.14, and (b) on or after the Conversion Effective Date, the percentage (carried out to the ninth (9th) decimal place) of the aggregate Outstanding Amount of the Term Out Loans held by such Lender at such time; provided, that, if (A) the commitment of each Lender to make Revolving Loans has been terminated in its entirety pursuant to Section 9.02, or (B) the Aggregate Revolving Commitments have otherwise expired or been terminated (except pursuant to Section 2.06(b)), then the Applicable Percentage of each Lender shall be



determined based on the Applicable Percentage of such Lender most recently in effect prior to such termination or expiration, as the case may be, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
Approved Fund” means any Fund that is administered or managed by: (a) a Lender; (b) an Affiliate of a Lender; or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Assignee Group” means two (2) or more Eligible Assignees that are Affiliates of one another, or two (2) or more Approved Funds managed by the same investment advisor, as the case may be.
Assignment and Assumption” means an assignment and assumption entered into by and between a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit 11.06(b) or any other form (including, without limitation, electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.
Audited Financial Statements” means the audited consolidated balance sheet of Eversource and its Subsidiaries for the fiscal years ended December 31, 2017, December 31, 2018 and December 31, 2019, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Eversource, including the notes thereto, audited by independent public accountants of recognized national standing and prepared in conformity with GAAP.
Availability Period” means, with respect to the Revolving Commitments for each Borrower, the period from, and including, the Closing Date to, but excluding, the earliest to occur of: (a) the Revolving Loan Maturity Date; (b) the Conversion Effective Date (in the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b)); and (c) the date of termination in full of the remaining unused portion of the Aggregate Revolving Commitments pursuant to Section 2.05.
AWCCT” means Aquarion Water Company of Connecticut, a Connecticut corporation.
Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
Bail-In Legislation” shall mean: (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing Law for such EEA Member Country from time to time which is described in the applicable EU Bail-In Legislation Schedule; and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act of 2009 (as amended from time to time), and any other Law applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions, or any affiliates of any of the foregoing (other than through liquidation, administration, or other insolvency proceedings).
Bank of America” means Bank of America, N.A., and its successors.
Bankruptcy Code” shall mean Title 11 of the U.S. Code entitled “Bankruptcy”, or any successor statute.
Barclays” means Barclays Bank PLC, and its successors.
Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the rate of interest in effect for such day as publicly



announced from time to time by Bank of America as its “prime rate”, and (c) the Eurodollar Rate for an Interest Period of one (1) month plus one percent (1.00%); provided, that, notwithstanding anything to the contrary in the foregoing, if the Base Rate shall, at any time, be less than one-fourth of one percent (0.25%), then the Base Rate shall be deemed to be one-fourth of one percent (0.25%) for all purposes of this Agreement and each other Loan Document. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.03 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
Base Rate Loan” means a Loan that bears interest based on the Base Rate.
Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation” means 31 C.F.R. §–1010.230.
Benefit Plan” means any of: (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA; (b) a “plan” as defined in, and subject to, Section 4975 of the Code; or (c) any Person whose assets include (for purposes of ERISA Section 3(42), or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. §–1841(k)) of such party.
BofA Securities” means BofA Securities, Inc., and its successors.
Borrower” and “Borrowers” shall mean each of Eversource and (subject to the last sentence of Section 2.05(a)) Eversource Gas.
Borrower Materials” has the meaning specified in Section 7.02.
Borrower Secured Debt” has the meaning specified in the definition of “Reference Ratings” below.
Borrower Sublimit” means, with respect to each Borrower, at any time during the Availability Period, the amount set forth opposite such Borrower’s name below:
Borrower Borrower Sublimit
Eversource $550,000,000
Eversource Gas $300,000,000
Each Borrower Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments. For purposes of clarity, in the event that any Borrower merges with or into another entity and is not the surviving Person, dissolves, or otherwise ceases to have a legal existence, then the Borrower Sublimit with respect to such Borrower shall no longer exist, and the Borrower Sublimits of the remaining Borrowers shall be unaffected by the elimination of such Borrower Sublimit; provided, that, (i) if a Borrower merges with, or liquidated into, another Borrower, the Borrower Sublimit of the surviving Borrower shall be increased by the amount of the Borrower Sublimit of the merged or liquidated Borrower on terms, and subject to limitations, reasonably satisfactory to the Lenders; and (ii) in no event shall a Borrower Sublimit exceed the Aggregate Revolving Commitments.



Borrower Unsecured Debt” has the meaning specified in the definition of “Reference Ratings” below.
Borrowing” means each of the following: (a) a borrowing of Swing Line Loans pursuant to Section 2.03; and (b) a borrowing consisting of simultaneous Loans of the same Type, and, in the case of Eurodollar Rate Loans, having the same Interest Period, made by each of the Lenders pursuant to Section 2.01.
Business Day” means any day, other than a Saturday, a Sunday or any other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located or in New York, New York; provided, that, if such day relates to any Eurodollar Rate Loan, then such day is also a London Banking Day.
Cash Collateralize” means to pledge and deposit with, or deliver to, the Administrative Agent, for the benefit of the Administrative Agent or the Swing Line Lender (as applicable) and the Lenders, as collateral for Obligations in respect of Swing Line Loans or obligations of Lenders to fund participations in respect of Swing Line Loans, cash or deposit account balances, or, if the Swing Line Lender benefitting from such collateral shall agree in its sole discretion, other credit support, in each case of the foregoing, pursuant to documentation in form and substance reasonably satisfactory to: (a) the Administrative Agent; and (b) the Swing Line Lender. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
Certifying Officer” has the meaning specified in Section 7.02(b).
Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty, or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case of this clause (ii), pursuant to Basel III, shall, in each case of the foregoing clauses (i) and (ii), be deemed to be a “Change in Law”, regardless of the date enacted, adopted, implemented or issued.
Change of Control” means the occurrence of any of the following events:
(a)    with respect to Eversource:
(i)    any “person” or “group” (as such terms are used in Section 13(d) and Section 14(d) of the Securities Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) either: (A) becomes the “beneficial owner” (as defined in Rule 13d–3 and Rule 13d–5 under the Securities Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50.0%) of the Equity Interests of Eversource entitled to vote for trustees of Eversource (or equivalent governing body of Eversource) on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or (B) obtains the power (whether or not exercised) to elect a majority of Eversource’s trustees; or



(ii)    the board of trustees of Eversource shall not consist of a majority of Continuing Trustees; provided, that, for purposes of this definition of “Change of Control”, the term “Continuing Trustees” means trustees of Eversource on the Closing Date and each other trustee of Eversource, if such other trustee’s nomination for election to the board of trustees of Eversource is recommended by a majority of the then-Continuing Trustees;
(b)    with respect to Eversource Gas, at any time that Eversource Gas is a Borrower, Eversource shall cease to own and control, of record and beneficially, free and clear of all Liens except for Liens permitted under Section 8.01, one hundred percent (100.0%) of the outstanding Equity Interests in Eversource Gas entitled to vote (currently exercisable, in the case of any preferred Equity Interests) for the election of directors;
(c)    with respect to Eversource, at any time that Eversource Gas is a Borrower, Eversource shall cease to own and control, of record and beneficially, free and clear of all Liens except for Liens permitted under Section 8.01, at least eighty-five percent (85.0%) of the outstanding Equity Interests in Eversource Gas entitled to vote (currently exercisable, in the case of any preferred Equity Interests) for the election of directors; or
(d)    with respect to any Borrower, such Borrower shall cease to own and control, of record and beneficially, free and clear of all Liens except for Liens permitted under Section 8.01, at least eighty-five percent (85.0%) of the outstanding Equity Interests that are entitled to vote (currently exercisable, in the case of any preferred Equity Interests) for the election of directors of any Principal Subsidiary.
CL&P” means The Connecticut Light and Power Company, a Connecticut corporation.
Closing Date” has the meaning specified in the introductory paragraph hereto.
Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. §–1 et seq.).
Compliance Certificate” has the meaning specified in Section 7.02(b).
Consolidated Capitalization” means, with respect to any Borrower as of any date of determination, the sum of (a) the Consolidated Indebtedness of such Borrower, plus (b) the aggregate of the par value of, or stated capital represented by, the outstanding shares of all classes of common and preferred shares of such Borrower and its Subsidiaries, excluding from such calculation, however, amounts identified as “Accumulated Other Comprehensive Income (Loss)” in the financial statements of the Borrowers set forth in the Borrowers’ Report on SEC Form 10–K or SEC Form 10–Q, as the case may be, most recently filed with the SEC prior to the date of such determination, plus (c) the consolidated surplus of such Borrower and its Subsidiaries, paid-in, earned and other capital, if any, in each case of the foregoing clauses (a) through (c), as determined on a consolidated basis in accordance with GAAP.
Consolidated Indebtedness” means Indebtedness of any Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding from such calculation, however, in the case of Refinancing Indebtedness, any amounts as to which any Borrower or its Subsidiaries have: (a) in accordance with the terms of the applicable agreements relating to such Indebtedness, and on or prior to the date of incurring such Refinancing Indebtedness, sent to the holders of the Indebtedness to be refinanced, or their trustee, as applicable, a notice of redemption; and (b) within fourteen (14) calendar days after the incurrence of such Refinancing Indebtedness, segregated with the trustee therefor, or with such other financial institution as may be acceptable to the Administrative Agent, in accordance with the terms of the applicable agreements relating to such Indebtedness, sufficient funds to redeem such Indebtedness and fully discharge such Borrower’s obligations with respect thereto.



Consolidated Indebtedness to Capitalization Ratio” means, for any Borrower, as of any date of determination, the ratio of: (a) the Consolidated Indebtedness of such Borrower; to (b) the Consolidated Capitalization of such Borrower.
Contractual Obligation” means, as to any Person, any provision of any security issued by such Person, or of any agreement, instrument or other undertaking to which such Person is a party, or by which it or any of its property is bound.
Control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote ten percent (10.0%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
Conversion Effective Date” has the meaning specified in Section 2.06(b).
Covered Entity” shall mean any of the following: (a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §–252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §–47.3(b); and (c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §–382.2(b).
Covered Party” shall have the meaning set forth in Section 11.22.
Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Default Rate” means an interest rate equal to (a) the Base Rate, plus (b) the Applicable Margin, if any, applicable to Base Rate Loans, plus (c) two percent (2.00%) per annum; provided, that, with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus two percent (2.00%) per annum, in each case of the foregoing clauses (a) through (c), to the fullest extent permitted by applicable Laws.
Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§–252.81, 47.2 or 382.1, as applicable.
Defaulting Lender” means any Lender, as determined by the Administrative Agent, that (a) has failed to perform any of its funding obligations hereunder, including in respect of its Revolving Loans or participations in respect of Swing Line Loans, within three (3) Business Days of the date required to be funded by it hereunder, unless (other than in respect of fundings of participations of Swing Line Loans) such Lender notifies the Administrative Agent and the applicable Borrower in writing that such failure is the result of such Lender’s good faith determination that one (1) or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the applicable Borrower or the Administrative Agent that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect with respect to its funding obligations hereunder (unless (other than in respect of fundings of participations of Swing Line Loans) such writing or public statement, as the case may be, relates to such Lender’s obligation to fund a Loan hereunder and



states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), or under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by the Administrative Agent, to confirm, in a manner satisfactory to the Administrative Agent, that it will comply with its funding obligations hereunder (provided, that, such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the applicable Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors, or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, (iii) taken any action in furtherance of, or otherwise indicated its consent to, approval of or acquiescence in, any such proceeding or appointment, or (iv) become the subject of a Bail-In Action; provided, that, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interests in that Lender, or any direct or indirect parent company thereof, by a Governmental Authority, so long as such ownership interest does not result in, or provide such Lender with, immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets, or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Such Lender shall cease to be a Defaulting Lender when the provisions of Section 2.14(b) shall have been satisfied.
Designated Jurisdiction” means any country, region or territory, to the extent that such country, region or territory is the subject of any Sanction.
Disclosure Documents” means, for each of the Borrowers and each Principal Subsidiary, as applicable: (a) such Person’s Annual Report on SEC Form 10–K for the fiscal year of such Person ended December 31, 2019; (b) such Person’s Quarterly Report on SEC Form 10–Q for the fiscal quarter of such Person ended June 30, 2020; and (c) such Person’s Current Reports on SEC Form 8–K (if any) that are filed after December 31, 2019 but prior to the Closing Date.
Dollar” and “$” mean lawful money of the United States.
Domestic Subsidiary” means any Subsidiary that is organized under the Laws of any state of the United States or the District of Columbia.
DPU” means the Massachusetts Department of Public Utilities, and any successor agency thereto.
EEA Financial Institution” shall mean: (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority; (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition; or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described the foregoing clauses (a) or (b) and is subject to consolidated supervision with its parent.
EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
EEA Resolution Authority” shall mean any public administrative authority, or any Person entrusted with public administrative authority, of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 11.06(b)(ii) and Section 11.06(b)(iv) (subject to such consents, if any, as may be required under Section 11.06(b)(ii)).



Environmental Laws” means any and all federal, state, local, foreign and other applicable statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any of the Borrowers, or any of their respective Subsidiaries directly or indirectly resulting from, or based upon: (a) violation of any Environmental Law; (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials; (c) exposure to any Hazardous Materials; (d) the release, or threatened release, of any Hazardous Materials into the environment; or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into, or exchangeable for, shares of capital stock of (or other ownership or profit interests in) such Person, or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or non-voting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
ERISA” means the Employee Retirement Income Security Act of 1974 (29 U.S.C. §–18 et seq.).
ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with any Borrower within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).
ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, or the treatment of a Pension Plan amendment as a termination under Sections 4041 of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition that constitutes grounds under Section 4042(a)(1)–(a)(3) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan, or a plan in endangered or critical status within the meaning of Section 430, Section 431 and Section 432 of the Internal Revenue Code or Section 303, Section 304 and Section 305 of ERISA, in a manner that would affect a Borrower’s ability to perform its Obligations hereunder; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate in a manner that would affect a Borrower’s ability to perform its Obligations hereunder.
EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
Eurodollar Rate” means, for any Interest Period with respect to any Borrowing, the rate per annum determined by the Administrative Agent to be the London interbank offered rate, as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for a period that



is equal in length to such Interest Period) (“LIBOR”), as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) (the “LIBO Rate”), determined as of approximately 11:00 a.m. (London, England time) on the date that is two (2) Business Days prior to the date of commencement of such Interest Period, for deposits (for delivery on the first (1st) day of such Interest Period) with a term equivalent to such Interest Period in Dollars; provided, that, notwithstanding anything to the contrary in the foregoing, if the Eurodollar Rate shall, at any time, be less than one-fourth of one percent (0.25%), then the Eurodollar Rate shall be deemed to be one-fourth of one percent (0.25%) for all purposes of this Agreement and each other Loan Document.
Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.
Event of Default” has the meaning specified in Section 9.01.
Eversource” has the meaning specified in the introductory paragraph hereto.
Eversource Gas” has the meaning specified in the introductory paragraph hereto.
Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by, or on account of, any obligation of any Borrower hereunder: (a) Taxes imposed on, or measured by, its overall income (however denominated), and franchise (and similar) Taxes imposed on it (in lieu of income Taxes), (i) by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized, or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, or (ii) as a result of a present or former connection between such recipient and the jurisdiction of the Governmental Authority imposing such Tax (other than a connection arising solely from such recipient having executed, delivered, become a party to, perform its obligations under, received a payment under, received or perfected a security interest under, or engaged in any other transaction pursuant to, or enforced under, any Loan Document); (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which such Borrower is located; (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by such Borrower under Section 11.13), any United States withholding Tax that is required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office or changes its place of organization), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment) or change in its place of organization, as the case may be, to receive additional amounts from such Borrower with respect to such withholding Tax pursuant to Section 3.01(a)(i) or Section 3.01(c); (d) Taxes attributable to such recipient’s failure or inability to comply with Section 3.01(e); and (e) any U.S. federal withholding taxes imposed under FATCA.
Facility Fee” has the meaning set forth in Section 2.08(a).
Facility Percentage” means, with respect to each Borrower, at any time during the Availability Period, the percentage equal to the quotient of: (a) the Borrower Sublimit of such Borrower; divided by (b) sum of all Borrower Sublimits for all Borrowers (after giving effect to any reduction of any Borrower Sublimits as provided in Section 2.05). As of the Closing Date, the Facility Percentage of each Borrower is as set forth in the below table:
Borrower
Facility Percentage (%)
Eversource
64.705882353%
Eversource Gas
35.294117647%
Total:
100.000000000%



provided, that, if, for any reason, at any time after the Closing Date, Eversource Gas ceases to be a “Borrower” under this Agreement, the Facility Percentage for Eversource shall be adjusted accordingly by the Administrative Agent without any further action or consent of any other party hereto or to any other Loan Document.
FATCA” means Section 1471 through Section 1474 of the Internal Revenue Code, as in effect as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any applicable intergovernmental agreements, treaties or conventions implementing any of the foregoing, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreements, treaties or conventions.
Federal Funds Rate” means, for any day, the rate per annum calculated by the FRBNY based on such day’s federal funds transactions by depository institutions (as determined in such manner as the FRBNY shall set forth on its public website from time to time) and published on the next succeeding Business Day by the FRBNY as the federal funds effective rate; provided, that, if, at any time, the Federal Funds Rate, as so determined, would be less than zero (0.00%), such rate shall be deemed to be zero (0.00%) for all purposes of this Agreement and each other Loan Document.
Fee Letters” means, collectively, the Joint Fee Letter and the Agency Fee Letter.
FERC” means the U.S. Federal Energy Regulatory Commission, or any successor agency thereto.
Financing Agreements” has the meaning specified in Section 8.09.
First Mortgage Indentures” means: (a) in the case of CL&P, that certain Indenture of Mortgage and Deed of Trust, dated as of May 1, 1921, given by CL&P to Deutsche Bank Trust Company Americas, as successor trustee, as previously and hereafter amended and supplemented from time to time; (b) in the case of Yankee Gas, that certain Indenture of Mortgage and Deed of Trust, dated as of July 1, 1989, given by Yankee Gas to The Bank of New York Mellon, as successor trustee, as in effect on the date hereof and as amended and supplemented from time to time; (c) in the case of AWC–CT, (i) that certain Indenture of Mortgage, dated as of June 1, 1924, given by AWC–CT (as successor in interest to Bridgeport Hydraulic Company) to City Trust Company, as trustee, as amended and supplemented from time to time, and (ii) that certain Indenture of Mortgage, dated as of May 1, 1968, given from AWC–CT (as successor in interest to Greenwich Water Company) to The Fidelity Bank, NA, as trustee, as amended and supplemented from time to time; (d) in the case of PSNH, that certain First Mortgage Indenture, dated as of August 15, 1978, given by PSNH to U.S. Bank National Association, as successor trustee, as previously and hereafter amended and supplemented from time to time; and (e) in the case of NSTAR Gas, that certain Indenture of Trust and First Mortgage, dated as of February 1, 1949, given by NSTAR Gas (formerly known as Commonwealth Gas Company, formerly known as Worcester Gas Light Company), as amended and supplemented from time to time.
Foreign Lender” means any Lender that is not a U.S. Person.
FRB” means the Board of Governors of the Federal Reserve System of the United States.
FRBNY” shall mean the Federal Reserve Bank of New York (or any successor).
FRBNYs Website” shall mean the website of the FRBNY accessible at (as of the Closing Date) https://www.newyorkfed.org, or any successor source.
Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans, other than Swing Line Loans as



to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding, or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, consistently applied and as in effect from time to time.
Governmental Approval” means any authorization, consent, approval, license, permit, certificate, exemption of, or filing or registration with, any governmental authority or other legal regulatory body (including, without limitation, the SEC, FERC, the U.S. Nuclear Regulatory Commission, the Connecticut Public Utility Regulatory Authority, the New Hampshire Public Utilities Commission and the DPU) required in connection with: (a) the execution, delivery or performance of any Loan Document; or (b) the nature of any Borrower’s or any Subsidiary’s business as conducted or the nature of the property owned or leased by it.
Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including the Financial Conduct Authority, the Prudential Regulatory Authority and any supra-national bodies such as the European Union or the European Central Bank).
Hazardous Materials” means all explosive or radioactive substances or wastes, and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, and all other substances or wastes of any nature identified as hazardous, dangerous or toxic and regulated pursuant to any Environmental Law.
Indebtedness” of any Person means, as of any date, without duplication: (a) all obligations of such Person for borrowed money, or for the deferred purchase price of property or services other than trade accounts payable; (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments (excluding Stranded Cost Recovery Obligations that are non-recourse to such Person); (c) all obligations of such Person upon which interest charges are customarily paid; (d) all obligations under leases that shall have been, or should be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee; (e) liabilities in respect of unfunded vested benefits incurred under any Multiemployer Plan that is reasonably likely to result in a direct obligation of any Borrower to pay money; (f) reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers acceptances, surety or other bonds, and similar instruments that are not cash collateralized; (g) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, up to the greater of (i) the extent of the book value of any such asset so pledged, and (ii) the amount of any liability of such Person for any deficiency; and (h) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to above.
Indemnified Taxes” means: (a) Taxes, other than Excluded Taxes imposed on, or with respect to, any payment made by, or on account of, any obligation of any Borrower under any Loan Document; and (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.
Indemnitees” has the meaning specified in Section 11.04(b).



Information” has the meaning specified in Section 11.07.
Interest Payment Date” means: (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan, and (i) the Revolving Loan Maturity Date, in the event that the Term Out Option has not been exercised in accordance with Section 2.06(b), and (ii) the Term Out Maturity Date, in the event that the Term Out Option has been exercised in accordance with Section 2.06(b), provided, that, if any Interest Period for a Eurodollar Rate Loan exceeds three (3) months, the respective dates that fall every three (3) calendar months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June, September and December, and (i) the Revolving Loan Maturity Date, in the event that the Term Out Option has not been exercised in accordance with Section 2.06(b), and (ii) the Term Out Maturity Date, in the event that the Term Out Option has been exercised in accordance with Section 2.06(b).
Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed, or converted to or continued as, a Eurodollar Rate Loan, as the case may be, and ending on the date one (1), two (2), three (3) or six (6) months thereafter (in each case, subject to availability), as selected by the applicable Borrower in its Revolving Loan Notice, or such other period that is twelve (12) months or less requested by the applicable Borrower and consented to by all of the applicable Lenders, provided, that:
(a)    any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case, such Interest Period shall end on the next preceding Business Day;
(b)    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c)    no Interest Period with respect to any Revolving Loan or any Term Out Loan shall extend beyond (i) the Revolving Loan Maturity Date, in the event that the Term Out Option has not been exercised in accordance with Section 2.06(b), and (ii) the Term Out Maturity Date, in the event that the Term Out Option has been exercised in accordance with Section 2.06(b).
Interim Financial Statements” means the unaudited consolidated balance sheet of Eversource and its Subsidiaries for the fiscal quarter ended June 30, 2020, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter of Eversource, prepared in conformity with GAAP (subject to the absence of footnotes and to normal year-end audit adjustments).
Internal Revenue Code” means the Internal Revenue Code of 1986.
Internal Revenue Service” means the U.S. Internal Revenue Service, or any successor agency.
Investment Company Act” means the Investment Company Act of 1940 (15 U.S.C. §§–80a-1, 80a-64 et seq.).
ISDA” means the International Swaps and Derivatives Association, Inc., or any successor thereto.
ISDA Definitions” means the 2006 ISDA Definitions published by ISDA, as amended and/or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by ISDA.



Joint Fee Letter” means that certain letter agreement, dated as of September 25, 2020, by and among Eversource, Eversource Gas, Bank of America, Barclays and BofA Securities.
Joint Lead Arrangers” means, collectively, BofA Securities, Barclays, Citigroup Global Markets Inc., Goldman Sachs Bank USA, Mizuho Bank, Ltd., MUFG Bank, Ltd., TD Securities (USA) LLC, U.S. Bank National Association, and Wells Fargo Securities, LLC, each in their capacities as joint lead arrangers and joint bookrunners, in each case of the foregoing, together with their respective successors and assigns.
Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case of the foregoing, having the force of law.
Lenders” means each of the Persons identified as a “Lender” on the signature pages hereto and their respective successors and assigns, and, as the context requires, includes the Swing Line Lender.
Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.
LIBO Rate” has the meaning specified in the definition of “Eurodollar Rate” above.
LIBOR Replacement Rate” has the meaning specified in Section 3.03(a)(i).
LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).
LIBOR Successor Rate” has the meaning specified in Section 3.03(a)(i).
LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definitions of “Base Rate” and “Interest Period” in this Section 1.01, timing and frequency of determining rates and making payments of interest, and other technical, administrative or operational matters (including, for the avoidance of doubt, changes to the definition of “Business Day” in this Section 1.01, timing of any Request(s) for Borrowing and/or Prepayment Notices, and the length of lookback periods) as may be appropriate, in the discretion of the Administrative Agent in consultation with Eversource, to reflect the adoption and implementation of such LIBOR Successor Rate, and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible, or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Documents).
Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, easement, right-of-way or other encumbrance on title to real property, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing).



Loan” means an extension of credit by a Lender to any Borrower under Article II, in the form of a Revolving Loan, a Term Out Loan or a Swing Line Loan.
Loan Documents” means, collectively, this Agreement (including the Schedules and Exhibits hereto), each Note, and any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.13 of this Agreement.
London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
Material Adverse Effect” means, with respect to any Borrower: (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties or financial condition of such Borrower and its Subsidiaries, taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under the Loan Documents, or of the ability of such Borrower to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against such Borrower of any Loan Document to which it is a party.
Moodys” means Moody’s Investors Service, Inc., and any successor thereto.
Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes, or is obligated to make, contributions, or, during the preceding five (5) plan years, has made, or been obligated to make, contributions.
Multiple Employer Plan” means a Plan that has two (2) or more contributing sponsors (including, without limitation, any Borrower or any ERISA Affiliate), at least two (2) of whom are not under common control, as such plan is described in Section 4064 of ERISA.
Non-Consenting Lender” has the meaning set forth in Section 11.13.
Note” or “Notes” means the Revolving / Term Out Notes and/or the Swing Line Note, individually or collectively, as appropriate.
NSTAR Electric” means NSTAR Electric Company, a Massachusetts corporation.
NSTAR Gas” means NSTAR Gas Company, a Massachusetts corporation.
Obligations” means, without duplication, all of the several but not joint obligations of the Borrowers to the Lenders and the Administrative Agent, whenever arising, under this Agreement, any Notes or any of the other Loan Documents.
OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
Organization Documents” means: (a) with respect to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.



Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. For the avoidance of doubt, “Other Taxes” shall not include any Excluded Taxes.
Outstanding Amount” means, with respect to any Loans on any date, the aggregate outstanding principal amount thereof, after giving effect to any borrowings and prepayments or repayments of any Loans occurring on such date.
Participant” has the meaning specified in Section 11.06(d).
Participant Register” has the meaning specified in Section 11.06(d).
Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Pub. L. §–107–56).
PBGC shall mean the U.S. Pension Benefit Guaranty Corporation, as referred to and defined in ERISA, and any successor entity performing similar functions.
Pension Funding Rules” means the rules of the Internal Revenue Code and ERISA regarding minimum required contributions (including any installment payment thereof) with respect to Pension Plans and set forth in Section 412, Section 430, Section 431, Section 432 and Section 436 of the Internal Revenue Code and Section 302, Section 303, Section 304 and Section 305 of ERISA.
Pension Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA) (including, without limitation, a Multiple Employer Plan or a Multiemployer Plan) that is maintained, or is contributed to, by any Borrower and any ERISA Affiliate, or with respect to which any Borrower or ERISA Affiliate has any liability, and is either covered by Title IV of ERISA or is subject to minimum funding standards under Section 412 of the Internal Revenue Code.
Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
Plan” means any “employee benefit plan” (as defined in Section 3(3) of ERISA) (including, without limitation, a Pension Plan), maintained for employees of any Borrower or ERISA Affiliate, or any such Plan to which any Borrower or ERISA Affiliate is required to contribute on behalf of any of its employees.
Platform” has the meaning specified in Section 7.02.
Pre-Adjustment Successor Rate” has the meaning specified in Section 3.03(a)(i).
Prepayment Notice” means a notice of prepayment pursuant to Section 2.04(a), which shall be substantially in the form of Exhibit 2.05 or such other form as may be reasonably approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer.
Principal Subsidiary” means: (a) each of Eversource Gas, NSTAR Electric, NSTAR Gas, CL&P, PSNH, AWC–CT and Yankee Gas; (b) each Subsidiary of a Borrower that, during any fiscal quarter of such Borrower, represents, with respect to such Borrower and its Subsidiaries, taken as a whole, at least (i) ten percent (10.0%) of such Borrower’s consolidated assets (calculated as an average of such consolidated assets over the preceding four (4) fiscal quarters), and (ii) ten percent (10.0%) of such Borrower’s consolidated net income (or loss) (calculated as a sum of such net income (or loss) over the preceding four (4) fiscal quarters),



whether such Subsidiary is owned, directly or indirectly, by such Borrower; and (c) any Person deemed to be a “Principal Subsidiary” pursuant to Section 8.02.
PSNH” means Public Service Company of New Hampshire, a New Hampshire corporation.
PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
Public Lender” has the meaning specified in Section 7.02.
QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. §–5390(c)(8)(D).
QFC Credit Support” shall have the meaning set forth in Section 11.22.
Recipient” means the Administrative Agent, any Lender, or any other recipient of any payment to be made by, or on account of, any obligation of any Borrower hereunder.
Reference Ratings” means, (A) with respect to Eversource, the rating(s) assigned by S&P and/or Moody’s to the long-term senior unsecured, non-credit enhanced debt (the “Borrower Unsecured Debt”) of Eversource, and (B) with respect to Eversource Gas, the rating(s) assigned by S&P and/or Moody’s to the Borrower Unsecured Debt of Eversource Gas; provided, that:
(a)    with respect to Eversource:
(i)    if neither S&P nor Moody’s maintains a rating on the Borrower Unsecured Debt of Eversource, whether because no such Borrower Unsecured Debt is outstanding or otherwise, then, in such circumstance, the “Reference Ratings” for Eversource shall, for all purposes of this Agreement and the other Loan Documents, be, and be deemed to be, those certain Reference Ratings set forth in Pricing Level 6 of the applicable table in effect at such time set forth in the definition of “Applicable Margin” above; and
(b)    with respect to Eversource Gas:
(i)    if neither S&P nor Moody’s maintains a rating on the Borrower Unsecured Debt of Eversource Gas, whether because no such Borrower Unsecured Debt is outstanding or otherwise, then, in such circumstance, the “Reference Ratings” for Eversource Gas shall, for all purposes of this Agreement and the other Loan Documents, be determined (subject to the proviso to this clause (b)(i)) based on the rating(s) assigned by S&P and/or Moody’s to the long-term senior secured debt (the “Borrower Secured Debt”) of Eversource Gas; provided, that, in such circumstance, the “Reference Ratings” for Eversource Gas shall be, and be deemed to be, the ratings that are one (1) rating category lower than such assigned Borrower Secured Debt rating(s) by S&P or Moody’s (e.g., a Borrower Secured Debt rating of “AA-” or “Aa3” shall, in such circumstance, yield a corresponding Reference Rating of “A+” or “A1”, as applicable, and a Borrower Secured Debt rating of “A-” or “A3” shall, in such circumstance, yield a corresponding Reference Rating of “BBB+” or “Baa1”, as applicable; and
(ii)    if (A) neither S&P nor Moody’s maintains a rating on the Borrower Unsecured Debt of Eversource Gas, whether because no such Borrower Unsecured Debt is outstanding or otherwise, and (B) neither S&P nor Moody’s maintains a rating on the Borrower Secured Debt of Eversource Gas, then, in such circumstance, the “Reference Ratings” for Eversource Gas shall, for all purposes of this Agreement and the other Loan Documents, be based on such



Borrower’s long-term corporate/issuer rating(s) as maintained by S&P and/or Moody’s, if such rating(s) exist.
Refinancing Indebtedness” means Consolidated Indebtedness incurred for the purpose of refinancing existing Consolidated Indebtedness.
Register” has the meaning specified in Section 11.06(c).
Regulation U” shall mean Regulation U of the FRB, as the same may be in effect from time to time, and any successor regulations.
Regulation X” shall mean Regulation X of the FRB, as the same may be in effect from time to time, and any successor regulations.
Regulatory Assets” means, with respect to Eversource Gas, NSTAR Electric, NSTAR Gas, CL&P, PSNH, AWC–CT, Yankee Gas or any other Subsidiary of a Borrower, an intangible asset established by statute, regulation or regulatory order or similar action of a utility regulatory agency having jurisdiction over such Person or such Subsidiary, and included in the rate base of such Person or such Subsidiary, with the intention that such asset be amortized by rates over time.
Related Adjustment” means, in the context of determining any LIBOR Successor Rate, the first (1st) relevant available alternative set forth in the alphabetic order below that can be determined by the Administrative Agent with respect to such LIBOR Successor Rate: (a) the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the relevant Pre-Adjustment Successor Rate (taking into account the applicable Interest Period, Interest Payment Date or payment period for interest calculated hereunder and/or the tenor thereto, as applicable), and which adjustment or method (i) is published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion, or (ii) solely with respect to Term SOFR, if not currently published, which was previously so recommended for Term SOFR and published on an information service acceptable to the Administrative Agent; or (b) the spread adjustment that would apply (or has previously been applied) to the fallback rate for a derivative transaction referencing the ISDA Definitions (taking into account the applicable Interest Period, Interest Payment Date or payment period for interest calculated hereunder and/or the tenor thereto, as applicable).
Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, consultants, service providers and representatives of such Person and of such Person’s Affiliates.
Relevant Governmental Body” shall mean the FRB and/or the FRBNY, or a committee officially endorsed or convened by the FRB and/or the FRBNY, or any successor thereto.
Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) calendar day notice period has been waived.
Request for Borrowing” means: (a) with respect to a Borrowing, conversion or continuation of Revolving Loans, a Revolving Loan Notice; and (b) with respect to a Swing Line Loan, a Swing Line Loan Notice.
Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than fifty percent (50.0%) of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided, that, the amount of any participation in any Swing Line Loan that such Defaulting Lender has failed to fund that have not been



reallocated to, and funded by, another Lender shall be deemed to be held by the Lender that is the Swing Line Lender in making such determination.
Removal Effective Date” has the meaning provided in Section 10.06(b).
Resignation Effective Date” has the meaning provided in Section 10.06(a).
Resolution Authority” shall mean an EEA Resolution Authority, or, with respect to any UK Financial Institution, a UK Resolution Authority.
Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller (or other officer of substantially equivalent title and authority as any of the foregoing) of a Borrower, and, solely for purposes of the delivery of certificates pursuant to Section 5.01, the secretary or any assistant secretary (or other officer of substantially equivalent title and authority) of a Borrower. Any document delivered hereunder that is signed by a Responsible Officer of a Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower.
Revolving Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to any Borrower pursuant to Section 2.01, and (b) purchase participations in Swing Line Loans, in an aggregate principal amount, at any one time outstanding, not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as the case may be, as such amount may be adjusted from time to time in accordance with this Agreement.
Revolving Loan” has the meaning specified in Section 2.01.
Revolving Loan Notice” means a notice of (a) a Borrowing of Revolving Loans, (b) a conversion of Revolving Loans from one (1) Type to the other, or (c) a continuation of Eurodollar Rate Loans, in each case of the foregoing, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit 2.02(a) or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the applicable Borrower.
Revolving Loan Maturity Date” means the earlier to occur of: (a) October 20, 2021; or (b) such earlier date on which the Loans become due and payable pursuant to the terms of this Agreement.
Revolving Credit Exposure” means, as to any Lender at any time, the sum of: (a) the aggregate Outstanding Amount of such Lender’s Revolving Loans at such time; plus (b) such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time.
Revolving / Term Out Note” has the meaning specified in Section 2.10(a).
S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and any successor thereto.
Sanctions” means any international economic sanction administered or enforced by the U.S. government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.
Scheduled Unavailability Date” has the meaning specified in Section 3.03(a)(B).



SEC” means the U.S. Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Securities Exchange Act” means the Securities Exchange Act of 1934 (15 U.S.C. §–78a et seq.).
Solvent” or “Solvency” means, with respect to any Person as of a particular date, that, on such date: (a) such Person is able to pay its debts and other liabilities, including contingent obligations as they mature; (b) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital; (c) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; and (d) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
SOFR” means, with respect to any Business Day, the secured overnight financing rate published for such day by the FRBNY, as the administrator of the benchmark (or a successor administrator), on the FRBNY’s Website at approximately 8:00 a.m. (New York, New York time) on the immediately succeeding Business Day, and, in each such case, that has been selected or recommended by the Relevant Governmental Body.
Stranded Cost Recovery Obligations” means, with respect to any Person, such Person’s obligations to make principal, interest or other payments to the issuer of stranded cost recovery bonds pursuant to a loan agreement or similar arrangement whereby the issuer has loaned the proceeds of such bonds to such Person.
Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Voting Stock is, at the time of determination, beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one (1) or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrowers.
Supported QFC” shall have the meaning set forth in Section 11.22.
Swap Contract” means: (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement; and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement, but excluding in all instances obligations under default service and standard offer power supply agreements entered into in the ordinary course of business.
Swap Obligation” shall mean, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.



Swap Termination Value” means, in respect of any one (1) or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts: (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s); and (b) for any date prior to the date referenced in the foregoing clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one (1) or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
Swing Line Lender” means Bank of America, in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
Swing Line Loan” has the meaning specified in Section 2.03(a).
Swing Line Loan Notice” means a notice of a Borrowing of Swing Line Loans pursuant to Section 2.03(b), which shall be substantially in the form of Exhibit 2.04(b) or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer.
Swing Line Note” has the meaning specified in Section 2.10(a).
Swing Line Sublimit” means an amount equal to the lesser of: (a) Twenty-Five Million Dollars ($25,000,000); and (b) the Aggregate Revolving Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments.
Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan, or similar off-balance sheet financing arrangement whereby the arrangement is considered borrowed money indebtedness for tax purposes but is classified as an operating lease, or does not otherwise appear on a balance sheet under GAAP.
Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Term Out Exercise Date” has the meaning specified in Section 2.06(b).
Term Out Fee” has the meaning specified in Section 2.08(b).
Term Out Loans” has the meaning specified in Section 2.06(b).
Term Out Option” has the meaning specified in Section 2.06(b).
Term Out Maturity Date” means, in the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b) and the Conversion Effective Date has occurred, the earlier to occur of: (a) the date that is three-hundred sixty-five (365) calendar days after the Conversion Effective Date; or (b) such earlier date on which the Loans become due and payable pursuant to the terms of this Agreement.
Term SOFR” means the forward-looking term rate for any period that (a) is approximately (as determined by the Administrative Agent) as long as any of the Interest Period options set forth in the definition of “Interest Period” above, (b) is based on SOFR, and (c) has been selected or recommended by the Relevant Governmental Body, in each such case, as published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion.



Threshold Amount” means Fifty Million Dollars ($50,000,000).
Total Credit Exposure” means, as to any Lender at any time, the unused Revolving Commitments and Revolving Credit Exposure of such Lender at such time.
Total Revolving Outstandings” means, at any time during the Availability Period, the aggregate Outstanding Amount of: (a) all Revolving Loans at such time; and (b) all Swing Line Loans at such time.
Type” means, with respect to any Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.
UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
United States” and “U.S.” mean the United States of America.
U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Internal Revenue Code.
U.S. Special Resolution Regime” shall have the meaning set forth in Section 11.22.
U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(III).
Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
Write-Down and Conversion Powers” shall mean: (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule; and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution, or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it, or to suspend any obligation in respect of that liability, or any of the powers under that Bail-In Legislation that are related or ancillary to any of those powers.
Yankee Gas” means Yankee Gas Services Company, a Connecticut corporation.
Section 1.02        Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a)    The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be



deemed to be followed by the phrase “, without limitation,”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. In computation of periods of time from a specified date to a later specified date, unless otherwise specified, the word “from” shall mean “from, and including,”, and the word “to” shall mean “to, but excluding”. In addition, unless the context requires otherwise:
(i)    any definition of, or reference to, any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as it was originally executed, or as it may from time to time be amended, restated, amended and restated, supplemented, increased, extended, refinanced, renewed, replaced, and/or otherwise modified in writing, as applicable (subject to any restrictions on such amendments, restatements, amendments and restatements, supplements, increases, extensions, refinancings, renewals, replacements, and/or other written modifications set forth herein);
(ii)    any reference in any Loan Document to any Person shall be construed to include such Person’s successors and permitted assigns;
(iii)    the words “hereto”, “herein”, “hereof” and “hereunder”, and words of similar import, when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety, and not to any particular provision hereof or thereof;
(iv)    all references in a Loan Document to Articles, Sections, Exhibits and/or Schedules shall be construed to refer to Articles, Sections, Exhibits and/or Schedules, as applicable, to or of the Loan Document in which such references appear;
(v)    all references contained in a Section to clauses or definitions occurring “above” or “below” shall refer to the applicable clause of, or definition set forth in, such Section, and all general references contained in a Section or clause thereof to “the above” or “the below” shall refer, collectively, to all provisions of such Section or clause, as applicable, occurring prior to or after, as applicable, the occurrence of such general reference;
(vi)    any definition of, or reference to, any Law shall include all statutory and regulatory rules, regulations, orders and provisions consolidating, amending, replacing, and/or interpreting such Law, and any definition of, or reference to, any Law shall, unless otherwise specified, refer to such Law as amended, modified, and/or supplemented from time to time; and
(vii)    the words “asset” and “property” shall be construed to have the same meaning and effect, and to refer to any and all real and personal, tangible and intangible assets and/or properties, including, without limitation, cash, securities, accounts and contract rights.
(b)    Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(c)    Any reference in any Loan Document to a merger, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder or thereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).



Section 1.03        Accounting Terms.
(a)    Generally. Except as otherwise specifically prescribed herein, all accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements; provided, that, calculations of attributable Indebtedness under any Synthetic Lease or the implied interest component of any Synthetic Lease shall be made by the Borrowers in accordance with accepted financial practice and consistent with the terms of such Synthetic Lease.
(b)    Changes in GAAP. If, at any time, any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein, (ii) the Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP, and (iii) all liability amounts shall be determined excluding any liability relating to any operating lease, all asset amounts shall be determined excluding any right-of-use assets relating to any operating lease, all amortization amounts shall be determined excluding any amortization of a right-of-use asset relating to any operating lease, and all interest amounts shall be determined excluding any deemed interest  comprising a portion of fixed rent payable under any operating lease, in each case of the foregoing, to the extent that such liability, asset, amortization or interest, as the case may be, pertains to an operating lease under which the covenantor or a member of its consolidated group is the lessee and would not have been accounted for as such under GAAP as in effect on December 31, 2015
(c)    FASB ASC 825 and FASB ASC 470–20. Notwithstanding anything to the contrary in the foregoing, for purposes of determining compliance with any covenant (including, without limitation, the computation of any financial covenant) contained herein, Indebtedness of the Borrowers and their Subsidiaries shall be deemed to be carried at one hundred percent (100.0%) of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470–20 on financial liabilities shall be disregarded.
Section 1.04        Rounding. Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one (1) place more than the number of places by which such ratio is expressed herein, and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.05        Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
Section 1.06        Rates. The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to, the administration, submission, or any other matter related to the rates specified in the definition of “Eurodollar Rate” in Section 1.01, or with respect to any comparable or successor rate thereto.
ARTICLE II.




THE COMMITMENTS AND Borrowings
Section 2.01        Revolving Commitments. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Revolving Loan”) to each Borrower, in Dollars, from time to time on any Business Day during the Availability Period, in an aggregate amount not to exceed, at any time outstanding, the amount of such Lender’s Revolving Commitment; provided, that, after giving effect to any Borrowing of Revolving Loans, (a) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, (b) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Revolving Commitment, and (c) the Total Revolving Outstandings of any Borrower shall not exceed such Borrower’s Borrower Sublimit. Within the limits of each Lender’s Revolving Commitment, and subject to the other terms and conditions hereof, each Borrower may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans, or a combination thereof, as further provided herein; provided, that, notwithstanding anything to the contrary in the foregoing, all Borrowings made on the Closing Date shall be made as Base Rate Loans.
Section 2.02        Borrowings, Conversions and Continuations of Loans.
(a)    Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the applicable Borrower’s irrevocable notice to the Administrative Agent, which may be given by: (i) a Revolving Loan Notice; or (ii) telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. on: (A) the date that is three (3) Business Days prior to the requested date of any Borrowing of, or conversion to or continuation of, Eurodollar Rate Loans, or of any conversion of Eurodollar Rate Loans to Base Rate Loans prior to the end of the applicable Interest Period; and (B) the requested date of any Borrowing of Base Rate Loans. Each telephonic notice by a Borrower pursuant to this clause (a) must be confirmed promptly by delivery to the Administrative Agent of a Revolving Loan Notice. Each Borrowing of, or conversion to or continuation of, Eurodollar Rate Loans shall be in a minimum principal amount of Five Million Dollars ($5,000,000), or a whole multiple of One Million Dollars ($1,000,000) in excess thereof. Except as provided in Section 2.03(c), each Borrowing of, or conversion to, Base Rate Loans shall be in a minimum principal amount of Five Million Dollars ($5,000,000), or a whole multiple of One Million Dollars ($1,000,000) in excess thereof. Each Revolving Loan Notice and each telephonic notice shall specify: (I) whether the applicable Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans; (II) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day); (III) the principal amount of Loans to be borrowed, converted or continued, as the case may be; (IV) the Type of Loans to be borrowed, or to which existing Loans are to be converted; and (V) if applicable, the duration of the Interest Period with respect thereto. If a Borrower fails to specify a Type of a Loan in a Revolving Loan Notice, or if a Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If a Borrower requests a Borrowing of, or conversion to or continuation of, Eurodollar Rate Loans in any Revolving Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one (1) month.
(b)    Following receipt of a Revolving Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and, if no timely notice of a conversion or continuation is provided by the applicable Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans as described in the foregoing clause (a). In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent, in immediately available funds, at the Administrative Agent’s Office by not later than 1:00 p.m. on the Business Day specified in the applicable Revolving Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 5.02 (and, if such Borrowing is the initial Borrowing, Section 5.01), the Administrative Agent shall



make all funds so received available to the applicable Borrower in like funds as received by the Administrative Agent, either by (i) crediting the account of such Borrower on the books of Bank of America with the amount of such funds, or (ii) wire transfer of such funds, in each case of the foregoing clauses (b)(i) and (b)(ii), in accordance with instructions provided to (and acceptable to) the Administrative Agent by such Borrower.
(c)    Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of the applicable Interest Period for such Eurodollar Rate Loan. During the existence of a Default with respect to any Borrower, no Loans may be requested as, or converted to or continued as, Eurodollar Rate Loans with respect to such Borrower without the consent of the Required Lenders.
(d)    The Administrative Agent shall promptly notify the Borrowers and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon the determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrowers and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.
(e)    After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than eight (8) Interest Periods in effect with respect to all Loans.
Section 2.03        Swing Line Loans.
(a)    Swing Line Facility. Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.03, shall make loans (each such loan, a “Swing Line Loan”) to each Borrower, in Dollars, from time to time on any Business Day during the Availability Period, in an aggregate amount not to exceed, at any time outstanding, the amount of the Swing Line Sublimit; provided, that, (i) after giving effect to any Swing Line Loan, (A) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, (B) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Revolving Commitment, and (C) the Total Revolving Outstandings of any Borrower shall not exceed such Borrower’s Borrower Sublimit, and (ii) no Borrower shall use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, each Borrower may borrow under this Section 2.03, prepay under Section 2.04, and reborrow under this Section 2.03. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed, and hereby irrevocably and unconditionally agrees, to purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of: (I) such Lender’s Applicable Percentage; times (II) the amount of such Swing Line Loan.
(b)    Borrowing Procedures. Each Borrowing of Swing Line Loans shall be made upon the applicable Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by: (i) a Swing Line Loan Notice; or (ii) telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent by not later than 2:00 p.m. on the requested borrowing date, and shall specify: (A) the amount to be borrowed, which shall be in a minimum principal amount of Five-Hundred Thousand Dollars ($500,000) and integral multiples of One-Hundred Thousand Dollars ($100,000) in excess thereof; and (B) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a Swing Line Loan Notice. Promptly after receipt by the Swing Line Lender of any Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swing Line Loans (I) directing the Swing Line Lender not to



make such Swing Line Loan as a result of the limitations set forth in the foregoing proviso clause (a)(i), or (II) that one (1) or more of the applicable conditions specified in Article V is not then satisfied, then, in any such case of the foregoing clauses (b)(I) or (b)(II), subject to the terms and conditions hereof, the Swing Line Lender will, by not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the applicable Borrower.
(c)    Refinancing of Swing Line Loans.
(i)    The Swing Line Lender, at any time in its sole discretion, may request, on behalf of the applicable Borrower (which hereby irrevocably requests and authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Revolving Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the conditions set forth in Section 5.02 (other than the delivery of a Revolving Loan Notice); provided, that, after giving effect to such Borrowing, the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments. The Swing Line Lender shall furnish the applicable Borrower with a copy of the applicable Revolving Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Revolving Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office by not later than 1:00 p.m. on the date specified in such Revolving Loan Notice, whereupon, subject to the below clause (c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the applicable Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii)    If, for any reason, any Swing Line Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with the foregoing clause (c)(i), the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan, and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to the foregoing clause (c)(i) shall be deemed payment in respect of such participation.
(iii)    If any Lender fails to make available to the Administrative Agent, for the account of the Swing Line Lender, any amount required to be paid by such Lender pursuant to the foregoing provisions of this clause (c) by the time specified in the foregoing clause (c)(i), then the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount, with interest thereon for the period from, and including, the date such payment is required to, and including, the date on which such payment is immediately available to the Swing Line Lender, at a rate per annum equal to the greater of (A) the Federal Funds Rate, and (B) a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (c)(iii) shall be conclusive absent manifest error.
(iv)    Each Lender’s obligation to make Revolving Loans, or to purchase and fund risk participations in Swing Line Loans, pursuant to this clause (c) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (A) any setoff, counterclaim, recoupment, defense, or other right that such Lender may have against the Swing Line Lender, any Borrower, or any other Person for any reason whatsoever, (B) the occurrence or continuance of a



Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, that, notwithstanding anything to the contrary in the foregoing, each Lender’s obligation to make Revolving Loans pursuant to this clause (c) is subject to the conditions set forth in Section 5.02. No such purchase or funding of risk participations shall relieve, or otherwise impair, the obligation of any Borrower to repay Swing Line Loans, together with interest as provided herein.
(d)    Repayment of Participations.
(i)    At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.
(ii)    If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from, and including, the date of such demand to, and including, the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause (d) shall survive the payment in full of the Obligations and the termination thereof.
(e)    Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the applicable Borrower for interest on the Swing Line Loans. Until each Lender funds its Revolving Loans that are Base Rate Loans or risk participation pursuant to this Section 2.03 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be payable solely for the account of the Swing Line Lender.
(f)    Payments Directly to Swing Line Lender. Each Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
Section 2.04        Prepayments.
(a)    Voluntary Prepayments.
(i)    Revolving Loans and Term Out Loans. Each Borrower may, upon delivery of a Prepayment Notice from such Borrower to the Administrative Agent, voluntarily prepay Revolving Loans (from time to time prior to the Conversion Effective Date, or, in the event that the Term Out Option is not exercised, at any time during the term of this Agreement) or Term Out Loans (from time to time on or after the Conversion Effective Date, in the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b) and the Conversion Effective Date has occurred), in whole or in part, without premium or penalty; provided, that, (A) such Prepayment Notice must be received by the Administrative Agent by not later than 11:00 a.m. on (I) the date that is three (3) Business Days prior to any date of prepayment of any Eurodollar Rate Loans (prior to the end of an applicable Interest Period), and (II) the date of prepayment of any Base Rate Loans, (B) any such prepayment of Eurodollar Rate Loans shall be in a minimum principal amount of Two Million Dollars ($2,000,000), or a whole multiple of One Million Dollars ($1,000,000) in excess thereof (or, if less, the entire principal amount thereof then outstanding), and (C) any prepayment of Base Rate Loans shall be in a minimum principal amount of One Million Dollars ($1,000,000), or a whole multiple of Five-Hundred Thousand Dollars ($500,000) in excess thereof (or, if less, the entire principal amount thereof



then outstanding). Each such Prepayment Notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such Prepayment Notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such Prepayment Notice is given by a Borrower, such Borrower shall make such prepayment, and the payment amount specified in such Prepayment Notice shall be due and payable, on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.14, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.
(ii)    Swing Line Loans. Each Borrower may, upon delivery of a Prepayment Notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time during the Availability Period, voluntarily prepay Swing Line Loans, in whole or in part, without premium or penalty; provided, that, (A) such Prepayment Notice must be received by the Swing Line Lender and the Administrative Agent by not later than 1:00 p.m. on the date of the prepayment, and (B) any such prepayment shall be in a minimum principal amount of Five-Hundred Thousand Dollars ($500,000), or a whole multiple of One-Hundred Thousand Dollars ($100,000) in excess thereof (or, if less, the entire principal thereof then outstanding). Each such Prepayment Notice shall specify the date and amount of such prepayment. If such Prepayment Notice is given by a Borrower, such Borrower shall make such prepayment, and the payment amount specified in such Prepayment Notice shall be due and payable, on the date specified therein.
(b)    Mandatory Prepayments of Loans.
(i)    Revolving Commitments. If, for any reason, (A) the Total Revolving Outstandings, at any time during the Availability Period, exceed the Aggregate Revolving Commitments then in effect, or (B) the Total Revolving Outstandings of any Borrower, at any time during the Availability Period, exceed such Borrower’s Borrower Sublimit, then, in any such case of the foregoing clauses (b)(i)(A) or (b)(i)(B), the applicable Borrower or Borrowers shall immediately prepay Revolving Loans and/or the Swing Line Loans in an aggregate amount equal to such excess.
(ii)    Application of Mandatory Prepayments. All amounts required to be paid pursuant to the foregoing clause (b)(i) shall be applied ratably to Revolving Loans and Swing Line Loans. Within the parameters of the applications set forth above, prepayments shall be applied, (A) first, to Base Rate Loans, and (B) then, to Eurodollar Rate Loans, in direct order of Interest Period maturities. All prepayments under this clause (b) shall be subject to Section 3.05, but otherwise without premium or penalty, and shall be accompanied by interest on the principal amount prepaid through the date of prepayment.
Section 2.05        Termination or Reduction of Aggregate Revolving Commitments.
(a)    Optional Reductions. The Borrowers, or any Borrower individually, shall have the right, at any time during the Availability Period, upon at least three (3) Business Days’ prior notice to the Administrative Agent, to terminate in whole or, upon same day notice, from time to time to permanently reduce, (i) ratably in part, the unused portion of the Aggregate Revolving Commitments, or (ii) the Borrower Sublimit of such Borrower, without ratably reducing the unused portion of the Aggregate Revolving Commitments; provided, that, (A) each partial reduction shall be in a minimum aggregate amount of Five Million Dollars ($5,000,000), or an integral multiple of One Million Dollars ($1,000,000) in excess thereof, with each such notice of termination or reduction being irrevocable, and (B) if, after giving effect to any such reduction, the Swing Line Sublimit or any Borrower Sublimit exceeds the amount of the Aggregate Revolving Commitments, such sublimit shall be automatically reduced by the amount of such excess. Any Aggregate Revolving Commitment reduced or terminated pursuant to this Section 2.05 may not be reinstated. Notwithstanding anything to the contrary in the



foregoing or otherwise in this Agreement or any other Loan Document, in the event that Eversource Gas, at any time during the Availability Period, (I) terminates its right to obtain Revolving Loans, and (II) has otherwise repaid all of its Obligations, Eversource Gas shall no longer be, or be deemed to be, a “Borrower” hereunder.
(b)    Notice. The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Swing Line Sublimit, any Borrower’s Borrower Sublimit, or the Aggregate Revolving Commitments under this Section 2.05. Upon any reduction of the Aggregate Revolving Commitments, the Revolving Commitment of each Lender shall be reduced by such Lender’s Applicable Percentage of such reduction amount. All fees in respect of the Aggregate Revolving Commitments accrued until the effective date of any termination of the Aggregate Revolving Commitments shall be paid on the effective date of such termination.
Section 2.06        Repayment of Loans; Term Out Option.
(a)    Revolving Loans. Unless the Term Out Option has been exercised by the Borrowers in accordance with the below clause (b) and the Conversion Effective Date has occurred, each Borrower shall repay to the Lenders, on the Revolving Loan Maturity Date, the aggregate principal amount of all Revolving Loans outstanding on such date.
(b)    Term Out Option. So long as (I) no Default or Event of Default then exists or would result from such election or conversion, (II) all representations and warranties of each Borrower contained in Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, are true and correct, in all material respects, on, and as of, the date of such election (other than any representation and warranty that is expressly qualified by materiality, in which case, such representation and warranty shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct, in all material respects (other than any representation and warranty that is expressly qualified by materiality, in which case, such representation and warranty shall be true and correct in all respects), as of such earlier date (and except that, for purposes of this clause (b), the representations and warranties contained in Section 6.05(a) and Section 6.05(b) shall be deemed to refer to the most recent statements furnished pursuant to Section 7.01(a) and Section 7.01(b), respectively), the Borrowers shall have the option, at any time on or prior to the date that is five (5) Business Days prior to the Revolving Loan Maturity Date, to elect (the date of such election being referred to herein as the “Term Out Exercise Date”) to convert all (but not part) of the Outstanding Amount of all Revolving Loans of each Borrower into a separate term loan (each, a “Term Out Loan”; and collectively, the “Term Out Loans”) of the same Outstanding Amount on such date, by: (i) providing (A) irrevocable written notice of such election to the Administrative Agent, substantially in the form of Exhibit 2.06(b) (or such other form as approved by the Administrative Agent), by not later than 11:00 a.m. on the date that is five (5) Business Days prior to the date of such conversion as specified in such notice (such date of conversion, the “Conversion Effective Date”), and (B) to the Administrative Agent, on the Conversion Effective Date, a certificate, signed by a Responsible Officer of each Borrower, certifying that, on the Conversion Effective Date, each of the conditions set forth in the foregoing clauses (b)(I) and (b)(II) are satisfied; and (ii) repaying or paying, as the case may be, on the Conversion Exercise Date substantially concurrently with the delivery of the certificate referred to in the foregoing clause (b)(i)(B) (A) to the Swingline Lender, the principal amount of each Swing Line Loan outstanding on the Conversion Exercise Date in accordance with the below clause (c)(ii)(B), and (B) to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, the Term Out Fee. In the event that the conversion option described in this clause (b) (referred to herein as the “Term Out Option”) has been exercised in accordance with this clause (b), each Borrower shall repay to the Lenders the aggregate principal amount of the Term Out Loan of such Borrower outstanding on the Term Out Maturity Date. Immediately upon the conversion of the aggregate Outstanding Amount of all Revolving Loans of each Borrower to the Term Out Loan for such Borrower on the Conversion Effective Date, the Aggregate Revolving Commitments shall automatically and irrevocably terminate.



(c)    Swing Line Loans. Each Borrower shall repay to the Swingline Lender the principal amount of each Swing Line Loan on the earlier to occur of: (i) the date that is one (1) Business Day after the date of demand therefor by the Swing Line Lender; and (ii) in the event that the Term Out Option (A) has not been exercised by the Borrowers in accordance with Section 2.06(b), the Revolving Loan Maturity Date, and (B) has been exercised by the Borrowers in accordance with Section 2.06(b), the Conversion Effective Date.
Section 2.07        Interest.
(a)    Subject to the provisions of clause (b) below: (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period, at a rate per annum equal to the sum of (A) the Eurodollar Rate for such Interest Period, plus (B) the Applicable Margin; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date, at a rate per annum equal to (A) the Base Rate, plus (B) the Applicable Margin; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date, at a rate per annum equal to (A) the Base Rate, plus (B) the Applicable Margin.
(b)    
(i)    If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, all outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, to the fullest extent permitted by applicable Laws.
(ii)    If any amount (other than principal of any Loan) is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then, upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, to the fullest extent permitted by applicable Laws.
(iii)    Accrued and unpaid interest on past due amounts (including, without limitation, interest on past due interest) shall be due and payable upon demand.
(c)    Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.08        Fees.
(a)    Facility Fee. Each Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, a facility fee (the “Facility Fee”) at a rate per annum equal to the product of: (i) the Facility Fee rate in effect for such Borrower at such time, as specified in the definition of “Applicable Margin” in Section 1.01; times (ii) such Borrower’s Facility Percentage; times (iii) the Aggregate Revolving Commitments. The Facility Fee for each Borrower shall accrue at all times during the Availability Period, including at any time during which one (1) or more of the conditions set forth in Article V is not met, and shall be due and payable quarterly in arrears on (A) the last Business Day of each March, June, September and December occurring during the Availability Period, commencing with the first (1st) such date to occur after the Closing Date, and (B) in the event that the Term Out Option (I) has not been exercised by the Borrowers in accordance with Section 2.06(b), on the Revolving Loan Maturity Date, or (II) has been exercised by the Borrowers in accordance with Section 2.06(b), on the Conversion Effective Date; provided, that, each Defaulting Lender shall be entitled to receive fees payable under this clause (a) for any period during which that Lender is a Defaulting Lender only to extent allocable to the outstanding principal amount of the Loans funded



by it. The Facility Fee shall be calculated quarterly in arrears, and, if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For the avoidance of doubt, the Facility Fee shall not accrue on or after the Conversion Effective Date in the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b).
(b)    Term Out Fee. In the event that the Term Out Option has been exercised by the Borrowers in accordance with Section 2.06(b), on the Conversion Effective Date, each Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, a term out fee (the “Term Out Fee”) in an amount equal to the product of: (i) one percent (1.00%); times (ii) the Outstanding Amount of all Revolving Loans of such Borrower to be converted to the Term Out Loan for such Borrower pursuant to the Term Out Option.
(c)    Fee Letters. Each Borrower shall pay to BofA Securities, Barclays and the Administrative Agent, for their own respective accounts, fees in the amounts and at the times specified in any applicable Fee Letters. Such fees shall be fully earned when paid and shall be non-refundable for any reason whatsoever.
Section 2.09        Computation of Interest and Fees. All computations of interest for Base Rate Loans determined by reference to clause (b) of the definition of “Base Rate” in Section 1.01 shall be made on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. All other computations of fees and interest (including, without limitation, computations of interest for Base Rate Loans determined by reference to clauses (a) and (c) of the definition of “Base Rate” in Section 1.01) shall be made on the basis of a 360-day year and the actual number of days elapsed (which, for purposes of clarity, results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan, or such portion, is paid; provided, that, any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one (1) calendar day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
Section 2.10        Evidence of Debt.
(a)    The Borrowings made by each Lender shall be evidenced by one (1) or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Borrowings made by the Lenders to each Borrower and the interest and payments thereon. Any failure to so record, or any error in doing so, shall not, however, limit, or otherwise affect, the obligation of any Borrower hereunder to pay any amount owing with respect to the Loans. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the applicable Borrower shall execute and deliver to such Lender (through the Administrative Agent) a promissory note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each such promissory note shall: (i) in the case of Revolving Loans or Term Out Loans, be in the form of Exhibit 2.11(a)–1 (a “Revolving / Term Out Note”); and (ii) in the case of Swing Line Loans, be in the form of Exhibit 2.11(a)–2 (a “Swing Line Note”). Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
(b)    In addition to the accounts and records referred to in the foregoing clause (a), each Lender and the Administrative Agent shall maintain, in accordance with its usual practice, accounts or records evidencing the purchases and sales by such Lender of participations in Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any



Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
Section 2.11        Payments Generally; Administrative Agent’s Clawback.
(a)    General. All payments to be made by any Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by any Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office, in Dollars and in immediately available funds, by not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. on such specified date shall be deemed to be received on the next succeeding Business Day, and any applicable interest or fee shall continue to accrue. Subject to the definition of “Interest Period” in Section 1.01, if any payment to be made by any Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(b)    
(i)    Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender, prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 p.m. (noon) on the date of such Borrowing), that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of any Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with, and at the time required by, Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not, in fact, made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent, forthwith on demand, such corresponding amount in immediately available funds, with interest thereon for each day from, and including, the date on which such amount is made available to the applicable Borrower to, but excluding, the date of payment to the Administrative Agent, at: (A) in the case of a payment to be made by such Lender, the greater of (I) the Federal Funds Rate, and (II) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation; and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii)    Payments by Borrowers; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the applicable Borrower, prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder, that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith, and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the applicable Borrower has not,



in fact, made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent, forthwith on demand, the amount so distributed to such Lender in immediately available funds, with interest thereon for each day from, and including, the date on which such amount is distributed to it to, but excluding, the date of payment to the Administrative Agent, at the greater of: (A) the Federal Funds Rate; and (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the applicable Borrower with respect to any amount owing under this clause (b) shall be conclusive, absent manifest error.
(c)    Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the applicable Borrower by the Administrative Agent because the conditions to the applicable Borrowing set forth in Article V are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d)    Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans, to fund participations in Swing Line Loans, and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation, or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation, or to make its payment under Section 11.04(c).
(e)    Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner, or to constitute a representation by any Lender that it has obtained, or will obtain, the funds for any Loan in any particular place or manner.
Section 2.12        Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of, or interest on, any of the Loans made by it, or the participations in Swing Line Loans held by it (excluding any amounts applied by the Swing Line Lender to outstanding Swing Line Loans) resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon that is greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and sub-participations in Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of, and accrued interest on, their respective Loans and other amounts owing to them, provided, that:
(i)    if any such participations or sub-participations are purchased and all, or any portion, of the payment giving rise thereto is recovered, such participations or sub-participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii)    the provisions of this Section 2.12 shall not be construed to apply to (A) any payment made by, or on behalf of, any Borrower pursuant to, and in accordance with, the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section 2.13, or (C) any payment obtained by a Lender as consideration for the assignment of, or sale of a participation in, any of its Loans or sub-participations Swing Line Loans to any assignee or participant, other than an assignment to any Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.12 shall apply).



Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of setoff and counterclaim with respect to such participation, as fully as if such Lender were a direct creditor of such Borrower, in the amount of such participation.
Section 2.13        Cash Collateral.
(a)    Certain Credit Support Events. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent or the Swing Line Lender, each Borrower shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.14(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
(b)    Grant of Security Interest. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at the Administrative Agent. Each Borrower, and, to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent and the Lenders (including the Swing Line Lender), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to the below clause (c). If, at any time, the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, each Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.
(c)    Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.13, Section 2.03, or Section 2.14 in respect of Swing Line Loans shall be held and applied in satisfaction of the specific Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation), and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided herein.
(d)    Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, that, (A) that Cash Collateral furnished by, or on behalf of, a Borrower shall not be released during the continuance of a Default or an Event of Default (and, following application as provided in this Section 2.13, may be otherwise applied in accordance with Section 9.03), and (B) the Person providing Cash Collateral and the Swing Line Lender may agree that Cash Collateral shall not be released, but instead held to support future anticipated Fronting Exposure or other obligations.
Section 2.14        Defaulting Lenders.
(a)    Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i)    Waivers and Amendment. The Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 11.01.



(ii)    Reallocation of Payments. Any payment of principal, interest, fees or other amount received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 11.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows, (A) first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder, (B) second, to the payment, on a pro rata basis, of any amounts owing by that Defaulting Lender to the Swing Line Lender hereunder, (C) third, if so determined by the Administrative Agent or requested by the Swing Line Lender, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Swing Line Loan, (D) fourth, as any Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, (E) fifth, if so determined by the Administrative Agent and each Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement, (F) sixth, to the payment of any amounts owing to the Lenders, the Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement, (G) seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Borrower as a result of any judgment of a court of competent jurisdiction obtained by such Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement, and (H) eighth, to that Defaulting Lender, or as otherwise directed by a court of competent jurisdiction; provided, that, if (I) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share, and (II) such Loans were made at a time when the conditions set forth in Section 5.02 were satisfied or waived, such payment shall be applied solely to the pay the Loans of all non-Defaulting Lenders, on a pro rata basis, prior to being applied to the payment of any Loans of that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender, or to post Cash Collateral pursuant to this clause (a)(ii), shall be deemed paid to, and redirected by, that Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)    Certain Fees. The Defaulting Lender shall not be entitled to receive any Facility Fee pursuant to Section 2.08(a) for any period during which such Lender is a Defaulting Lender (and no Borrower shall be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender).
(iv)    Reallocation of Applicable Percentages to Reduce Fronting Exposure. During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Swing Line Loans pursuant to Section 2.03, the “Applicable Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Revolving Commitment of that Defaulting Lender; provided, that, each such reallocation (A) shall be given effect only if, as of the date on which the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists, and (B) does not cause the aggregate Revolving Credit Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Revolving Commitment.
(b)    Defaulting Lender Cure. If each Borrower, the Administrative Agent and the Swing Line Lender agree in writing, in their sole discretion, that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, whereupon, as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that



portion of outstanding Loans of the other Lenders, or take such other actions as the Administrative Agent may determine to be necessary, to cause the Revolving Loans and funded and unfunded participations in Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to the foregoing clause (a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided, that, (i) no adjustments will be made retroactively with respect to fees accrued or payments made by, or on behalf of, any Borrower while that Lender was a Defaulting Lender, and (ii) except to the extent otherwise expressly agreed by the affected parties and subject to Section 11.24, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
Section 2.15        Additional Revolving Commitments. Eversource may, at any time and from time to time (i) prior to the Term Out Exercise Date, in the event that the Term Out Option is exercised by the Borrowers in accordance with Section 2.06(b), and (ii) during the term of this Agreement, in the event that the Term Out Option is not exercised by the Borrowers in accordance with Section 2.06(b), in each case of the foregoing clauses (i) and (ii), upon prior written notice by Eversource to the Administrative Agent, increase the Aggregate Revolving Commitments (but not the Swing Line Sublimit or any Borrower Sublimit) by a maximum aggregate amount of up to One-Hundred Million Dollars ($100,000,000) with additional Revolving Commitments from any existing Lender with a Revolving Commitment or new Revolving Commitments from any other Person selected by Eversource and acceptable to the Administrative Agent and the Swing Line Lender (or a combination of the foregoing); provided, that:
(a)    any such increase shall be in a minimum principal amount of Ten Million Dollars ($10,000,000), and in integral multiples of Five Million Dollars ($5,000,000) in excess thereof;
(b)    no Default or Event of Default shall exist and be continuing at the time of any such increase, or would result from any Borrowing on the day of any such increase;
(c)    no existing Lender shall be under any obligation to increase its Revolving Commitment, and any such decision as to whether to increase its Revolving Commitment shall be in such Lender’s sole and absolute discretion;
(d)    any new Lender shall join this Agreement by executing such joinder documents required by the Administrative Agent and/or any existing Lender electing to increase its Revolving Commitment shall have executed a commitment agreement satisfactory to the Administrative Agent;
(e)    any existing Lender or any new Lender providing a portion of the increase in Revolving Commitments shall be reasonably acceptable to the Administrative Agent and the Swing Line Lender; and
(f)    as a condition precedent to such increase, Eversource shall deliver to the Administrative Agent: (i) a certificate of each Borrower, dated as of the date of such increase (in sufficient copies for each Lender), executed by a Responsible Officer of the applicable Borrower, (A) certifying and attaching the resolutions adopted by such Borrower approving, or consenting to, such increase, and (B) in the case of Eversource, certifying that, before and after giving effect to such increase, the representations and warranties contained in Article VI and the other Loan Documents are true and correct, in all material respects, on, and as of, the date of such increase, except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they are true and correct, in all material respects, as of such earlier date (and except that, for purposes of this Section 2.15, the representations and warranties contained in Section 6.05(a) and Section 6.05(b) shall be deemed to refer to the most recent statements furnished pursuant to Section 7.01(a) and Section 7.01(b), respectively); (ii) legal opinions and other documents reasonably requested by the Administrative Agent; and (iii) (A) upon the reasonable request of any Lender, Eversource shall have provided to such



Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act, and (B) any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered, to each Lender that so requests, a Beneficial Ownership Certification in relation to such Borrower.
Each Borrower shall prepay any Loans owing by it and outstanding on the date of any such increase (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Loans ratable with any revised Revolving Commitments arising from any non-ratable increase in the Revolving Commitments under this Section 2.15.
ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY
Section 3.01        Taxes.
(a)    Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.
(i)    Any and all payments by, or on account of, any obligation of any Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the Administrative Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Borrower, then the Administrative Agent or such Borrower shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to clause (e) below.
(ii)    If any Borrower or the Administrative Agent shall be required by the Internal Revenue Code to withhold or deduct any Taxes, including both U.S. Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to clause (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Internal Revenue Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Borrower shall be increased as necessary so that, after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01), the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(iii)    If any Borrower or the Administrative Agent shall be required, by any applicable Laws other than the Internal Revenue Code, to withhold or deduct any Taxes from any payment, then (A) such Borrower or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to clause (e) below, (B) such Borrower or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Borrower shall be increased as necessary so that, after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01), the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.



(b)    Payment of Other Taxes by the Borrowers. Without limiting the provisions of the foregoing clause (a), the Borrowers shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c)    Tax Indemnifications.
(i)    Without limiting the provisions of the foregoing clauses (a) or (b), but without duplication, each of the Borrowers shall, and does hereby, severally indemnify each Recipient, and shall make payment in respect thereof within ten (10) calendar days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on, or attributable to, amounts payable under this Section 3.01) payable or paid by such Recipient, or required to be withheld or deducted from a payment to such Recipient, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent, on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. Each of the Borrowers shall, and does hereby, severally indemnify the Administrative Agent, and shall make payment in respect thereof within ten (10) calendar days after demand therefor, for any amount that a Lender, for any reason, fails to pay indefeasibly to the Administrative Agent as required pursuant to clause (c)(ii) below.
(ii)    Each Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within ten (10) calendar days after demand therefor, (A) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but solely to the extent that any Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes, and without limiting the obligation of the Borrowers to do so), (B) the Administrative Agent and the Borrowers, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.06(d) relating to the maintenance of a Participant Register, and (C) the Administrative Agent and the Borrowers, as applicable, against any Excluded Taxes attributable to such Lender, in each case of the foregoing clauses (c)(ii)(A) through (c)(ii)(C), that are payable or paid by the Administrative Agent or a Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (c)(ii).
(d)    Evidence of Payments. Upon request by any Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by any Borrower or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01, such Borrower shall deliver to the Administrative Agent, or the Administrative Agent shall deliver to the applicable Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment, or other evidence of such payment reasonably satisfactory to the applicable Borrower or the Administrative Agent, as the case may be.
(e)    Status of Lenders; Tax Documentation.
(i)    Any Lender that is entitled to an exemption from, or reduction of, withholding Tax with respect to payments made under any Loan Document shall deliver to each Borrower and the Administrative Agent, at the time or times reasonably requested by such Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by such Borrower or



the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by any Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by such Borrower or the Administrative Agent as will enable such Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the two (2) immediately preceding sentences, the completion, execution and submission of such documentation (other than such documentation set forth in clauses (e)(ii)(A), (e)(ii)(B) and (e)(ii)(D) below) shall not be required if, in the Lender’s reasonable judgment, such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense, or would materially prejudice the legal or commercial position of such Lender; provided, that, this sentence shall not apply to documentation described in clause(e)(ii)(C) below if such documentation is in substance essentially equivalent to, and not materially more onerous to provide than, the documentation set forth in clauses (e)(ii)(A), (e)(ii)(B) or (e)(ii)(D) below.
(ii)    Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person:
(A)    any Lender that is a U.S. Person shall deliver to such Borrower and the Administrative Agent, on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent), executed copies of Internal Revenue Service Form W–9, certifying that such Lender is exempt from U.S. federal backup withholding Tax;
(B)    any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient), on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent), whichever of the following is applicable (together with any required schedules and attachments):
(I)    in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party: (1) with respect to payments of interest under any Loan Document, executed copies of Internal Revenue Service Form W–8BEN or W–8BEN–E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty; and (2) with respect to any other applicable payments under any Loan Document, Internal Revenue Service Form W–8BEN or W–8BEN–E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II)    executed copies of Internal Revenue Service Form W–8ECI;
(III)    in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code: (1) a certificate, substantially in the form of Exhibit 3.01(e)–1, to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of such Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”); and (2) executed copies of Internal Revenue Service Form W–8BEN or W–8BEN–E; or



(IV)    to the extent a Foreign Lender is not the beneficial owner, executed copies of Internal Revenue Service Form W–8IMY, accompanied by Internal Revenue Service Form W–8ECI, Internal Revenue Service Form W–8BEN or W–8BEN–E, a U.S. Tax Compliance Certificate, substantially in the form of Exhibit 3.01(e)–2 or Exhibit 3.01(e)–3, Internal Revenue Service Form W–9, and/or other certification documents from each beneficial owner, as applicable; provided, that, if the Foreign Lender is a partnership and one (1) or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate, substantially in the form of Exhibit 3.01(e)–4, on behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent that it is legally entitled to do so, deliver to such Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient), on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable Law as a basis for claiming exemption from, or a reduction in, U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit such Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D)    if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to such Borrower and the Administrative Agent, at the time or times prescribed by Law and at such time or times reasonably requested by such Borrower or the Administrative Agent, such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by such Borrower or the Administrative Agent as may be necessary for such Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA, or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (e)(ii)(D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii)    Each Lender agrees that, if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify each applicable Borrower and the Administrative Agent in writing of its legal inability to do so.
(f)    Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for, or otherwise pursue, on behalf of a Lender, or have any obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Borrower, or with respect to which any Borrower has paid additional amounts pursuant to this Section 3.01, it shall pay to such Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by a Borrower under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that, such Borrower, upon the request



of the Recipient, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event that the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (f), in no event will the applicable Recipient be required to pay any amount to any Borrower pursuant to this clause (f) the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This clause (f) shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to any Borrower or any other Person.
(g)    Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Aggregate Revolving Commitments, and the repayment, satisfaction or discharge of all other Obligations.
Section 3.02        Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to each applicable Borrower through the Administrative Agent, (a) any obligation of such Lender to make or continue Eurodollar Rate Loans, or to convert Base Rate Loans to Eurodollar Rate Loans, shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case of the foregoing, until such Lender notifies the Administrative Agent and each applicable Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice: (i) each such Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans; and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall, during the period of such suspension, compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, each applicable Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amount required pursuant to Section 3.05.
Section 3.03        Inability to Determine Rates.
(a)    Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrowers or the Required Lenders notify the Administrative Agent (with, in the case of such notification by the Required Lenders, a copy to the Borrowers) that the Borrowers or the Required Lenders (as the case may be) have determined, that:



(A)    adequate and reasonable means do not exist for ascertaining LIBOR for any Interest Period hereunder or any other tenors of LIBOR, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis, and such circumstances are unlikely to be temporary; or
(B)    the administrator of the LIBOR Screen Rate, or a Governmental Authority having jurisdiction over the Administrative Agent or over such administrator, has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans; provided, that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent that will continue to provide LIBOR after such specific date (such specific date, the “Scheduled Unavailability Date”); or
(C)    the administrator of the LIBOR Screen Rate, or a Governmental Authority having jurisdiction over such administrator, has made a public statement announcing that all Interest Periods and other tenors of LIBOR are no longer representative; or
(D)    syndicated loans currently being executed, or that include language similar to that contained in this Section 3.03, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR;
then, in any such case of:
(i)    the foregoing clauses (a)(A) through (a)(C), on a date and time determined by the Administrative Agent (any such date, the “LIBOR Replacement Date”), which date shall (I) be at the end of an Interest Period or on the relevant Interest Payment Date, as applicable, for interest calculated hereunder, and (II) occur reasonably promptly upon the occurrence of any of the events and/or circumstances described in the foregoing clauses (a)(A) through (a)(C) and, solely with respect to the events or circumstances described in the foregoing clause (a)(B), by no later than the Scheduled Unavailability Date, LIBOR will be replaced hereunder and under each other Loan Document with (subject to the proviso to this clause (a) below) the first (1st) available alternative set forth in the roman numeric order of the sub-clauses immediately below, for any payment period for interest calculated that can be determined by the Administrative Agent, in any such case of the foregoing, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “LIBOR Successor Rate”; and any such rate before giving effect to the Related Adjustment, the “Pre-Adjustment Successor Rate”):
(I)    Term SOFR, plus the Related Adjustment; and
(II)    SOFR, plus the Related Adjustment; and
(ii)    the foregoing clause (a)(D), the Borrower and the Administrative Agent may amend this Agreement solely for the purpose of replacing LIBOR under this Agreement and under each other Loan Document in accordance with the definition of “LIBOR Successor Rate” in the foregoing clause (a)(i), and such amendment will become effective at 5:00 p.m. on the date that is five (5) Business Days after the date of which the Administrative Agent shall have notified all Lenders and the Borrower of the occurrence of the events and/or circumstances described in the foregoing clause (a)(D), unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to the implementation of a LIBOR Successor Rate pursuant to this clause (a);



provided, that, if the Administrative Agent determines that Term SOFR has become available, is administratively feasible for the Administrative Agent, and would have been identified as the Pre-Adjustment Successor Rate in accordance with the foregoing if it had been so available at the time that the LIBOR Successor Rate then in effect was so identified, and the Administrative Agent notifies each Borrower and each Lender of such availability, then, from and after the beginning of the applicable Interest Period, relevant Interest Payment Date or payment period for interest calculated, in each case of the foregoing, commencing no less than thirty (30) calendar days after the date of such notice: (1) the Pre-Adjustment Successor Rate shall be Term SOFR; and (2) the LIBOR Successor Rate shall be Term SOFR plus the relevant Related Adjustment.
(b)    The Administrative Agent will promptly (in one (1) or more notices) notify each Borrower and each Lender of: (i) any occurrence of any of the events, periods or circumstances described in any of the foregoing clauses (a)(A) through (a)(C); (ii) a LIBOR Replacement Date; and (iii) the LIBOR Successor Rate.
(c)    Any LIBOR Successor Rate shall be applied in a manner consistent with market practice; provided, that, to the extent that such market practice is not administratively feasible for the Administrative Agent, such LIBOR Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
(d)    Notwithstanding anything to the contrary herein or in any other Loan Document, if, at any time, any LIBOR Successor Rate, as determined in accordance with this Section 3.03, would (but for the adjustment described in this clause (d)) be less than one-fourth of one percent (0.25%), the LIBOR Successor Rate shall be deemed to be one-fourth of one percent (0.25%) for all purposes of this Agreement and each other Loan Document.
(e)    In connection with the implementation of a LIBOR Successor Rate, the Administrative Agent shall have the right to make LIBOR Successor Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such LIBOR Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided, that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such LIBOR Successor Rate Conforming Change(s) to the Borrowers and the Lenders reasonably promptly after such amendment becomes effective.
(f)    If any of the events and/or circumstances described in any of the foregoing clauses (a)(A) through (a)(C) have occurred with respect to the LIBOR Successor Rate then in effect, then the successor rate thereto shall be determined in accordance with the definition of “LIBOR Successor Rate” in the foregoing clause (a)(i).
(g)    Notwithstanding anything to the contrary herein or in any other Loan Document, (i) after any such determination by the Administrative Agent or receipt by the Administrative Agent of any such notice described in the foregoing clause (a), in each case of the foregoing, in respect of the occurrence of any such events and/or circumstances described in any of the foregoing clauses (a)(A) through (A)(C), if the Administrative Agent determines that none of the LIBOR Successor Rates is available on or prior to the LIBOR Replacement Date, (ii) if any of the events and/or circumstances described the foregoing clause (a)(D) have occurred, but none of the LIBOR Successor Rates is available, or (iii) if any of the events and/or circumstances described in the foregoing clauses (a)(A) through (a)(C) have occurred with respect to the LIBOR Successor Rate then in effect and the Administrative Agent determines that none of the LIBOR Successor Rates is available, then, in any such case of the foregoing clauses (g)(i) through (g)(iii), the Administrative Agent and the Borrowers may amend this Agreement solely for the purpose of replacing LIBOR, or any then current LIBOR Successor Rate, in accordance with this Section 3.03 at the end of any Interest Period, relevant Interest Payment Date or payment period for interest calculated hereunder, as applicable, with another alternate benchmark rate, giving due consideration to any evolving or then-existing convention for similar U.S. dollar denominated



syndicated credit facilities for such alternative benchmarks, and, in any such case of the foregoing clauses (g)(i) through (g)(iii), including any Related Adjustments and any other mathematical and/or other adjustments to such benchmark, giving due consideration to any evolving or then-existing convention for similar U.S. dollar denominated syndicated credit facilities for such benchmarks, which adjustment(s), or method(s) for calculating such adjustment(s), shall be published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustment(s) shall constitute a LIBOR Successor Rate. Any such amendment shall become effective at 5:00 p.m. on the date that is five (5) Business Days after the date on which the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrowers, unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
(h)    If, at the end of any Interest Period, relevant Interest Payment Date or payment period for interest calculated hereunder, (A) no LIBOR Successor Rate has been determined in accordance with the foregoing clauses (a) through (g), and (B) either (I) any of the events and/or circumstances described in either of the foregoing clauses (a)(A) or (a)(C) have occurred and continue to exist, or (II) the Scheduled Unavailability Date has occurred (as the case may be), then, in any such case of the foregoing, the Administrative Agent will promptly so notify each Borrower and each Lender. Thereafter, (i) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended (to the extent of the affected Eurodollar Rate Loans, Interest Periods, Interest Payment Dates or payment periods), and (ii) the Eurodollar Rate component of the Base Rate (described in clause (c) of the definition of “Base Rate” in Section 1.01) shall no longer be utilized in determining the Base Rate, in each case of the foregoing clauses (h)(i) and (h)(ii), until the LIBOR Successor Rate has been determined in accordance with the foregoing clauses (a) through (g). Upon receipt of such notice, any Borrower may revoke any pending request by such Borrower for a Borrowing of, or conversion to or continuation of, Eurodollar Rate Loans (to the extent of the affected Eurodollar Rate Loans, Interest Periods, Interest Payment Dates or payment periods) or, failing that, such Borrower will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (h)(ii)) in the amount specified therein.
Section 3.04        Increased Costs; Reserves on Eurodollar Rate Loans.
(a)    Generally. If any Change in Law shall:
(i)    impose, modify, or deem applicable any reserve, special deposit, compulsory loan, insurance charge, or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by clause (e) below);
(ii)    subject any Lender to any Tax of any kind whatsoever with respect to this Agreement or any Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (in each case, except for Indemnified Taxes and Excluded Taxes); or
(iii)    impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing, converting or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount), then, upon request of such Lender, each Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.



(b)    Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has, or would have, the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Revolving Commitments of such Lender or the Loans made by, or participations in Swing Line Loans held by, such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then, from time to time, each applicable Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company, as the case may be, for any such reduction suffered.
(c)    Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in the foregoing clauses (a) or (b), and delivered to each applicable Borrower shall be conclusive absent manifest error. Such Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) calendar days after receipt thereof.
(d)    Delay in Requests. Any failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation, provided, that, no Borrower shall be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender notifies such Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (provided, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
(e)    Reserves on Eurodollar Rate Loans. Each Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual cost of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination and shall be conclusive and binding), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Revolving Commitments or the funding of the Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five (5) decimal places) equal to the actual costs allocated to such Revolving Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive and binding), which, in each case of the foregoing, shall be due and payable on each date on which interest is payable on such Loan; provided, that, each Borrower shall have received, at least ten (10) calendar day’s prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice at least ten (10) calendar days prior to the relevant Interest Payment Date, such additional interest shall be due and payable on the date that is ten (10) calendar days after the date of receipt of such notice.
(f)    Payment Obligations. Payment obligations of the Borrowers under this Section 3.04 shall be subject to Section 11.19.
Section 3.05        Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for, and hold such Lender harmless from, any loss, cost or expense incurred by it as a result of:



(a)    any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b)    any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan, other than a Base Rate Loan, on the date or in the amount notified by such Borrower; or
(c)    any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by any Borrower pursuant to Section 11.13;
including any loss (other than any loss of anticipated profits) or expense arising from the liquidation or redeployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Each Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by any Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. Payment obligations of the Borrowers under this Section 3.05 shall be subject to Section 11.19.
Section 3.06        Mitigation Obligations; Replacement of Lenders.
(a)    If any Lender requests compensation under Section 3.04, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment: (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or Section 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable; and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to pay its all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b)    If any Lender requests compensation under Section 3.04, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrowers may replace such Lender in accordance with Section 11.13.
Section 3.07        Survival. All of each Borrower’s obligations under this Article III shall survive termination of the Aggregate Revolving Commitments, repayment of all other Obligations, and resignation of the Administrative Agent.
ARTICLE IV.

[RESERVED]
ARTICLE V.

CONDITIONS PRECEDENT TO BORROWINGS



Section 5.01        Conditions of Initial Borrowings. This Agreement shall become effective upon, and the obligation of each Lender to make Loans to any Borrower hereunder on the Closing Date is subject to, satisfaction of each of the following conditions precedent:
(a)    Loan Documents. Receipt by the Administrative Agent of executed counterparts of this Agreement and a Note for each Lender that has requested a Note, each properly executed by a Responsible Officer of each Borrower and, in the case of this Agreement, by each Lender.
(b)    Opinions of Counsel. Receipt by the Administrative Agent of favorable opinions of legal counsel to the Borrowers, addressed to the Administrative Agent and each Lender, dated as of the Closing Date, and in form and substance reasonably satisfactory to the Administrative Agent.
(c)    Financial Statements. The Administrative Agent shall have received: (i) the Audited Financial Statements; and (ii) the Interim Financial Statements.
(d)    No Material Adverse Change. Since December 31, 2019, there has been no event or circumstance that, either individually or in the aggregate, has had a Material Adverse Effect with respect to any Borrower, other than as specifically disclosed in the Disclosure Documents.
(e)    Litigation. There shall not exist any action, suit, investigation or proceeding pending, or, to the knowledge of any Responsible Officer of any Borrower, threatened, in any court or before an arbitrator or Governmental Authority that could reasonably be expected to have a Material Adverse Effect with respect to any Borrower, other than as specifically disclosed in the Disclosure Documents.
(f)    Organization Documents, Resolutions, Etc. Receipt by the Administrative Agent of the following, each of which shall be originals or facsimiles (followed promptly by originals), in form and substance reasonably satisfactory to the Administrative Agent and its legal counsel:
(i)    copies of the Organization Documents of each Borrower certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary (or other officer of substantially equivalent title and authority) of such Borrower to be true and correct as of the Closing Date;
(ii)    such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Borrower as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Borrower is a party; and
(iii)    such documents and certifications as the Administrative Agent may require to evidence that each Borrower is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in its state of organization or formation.
(g)    Closing Certificate. Receipt by the Administrative Agent of a certificate, signed by a Responsible Officer of each Borrower, certifying that: (i) each of the conditions specified in the foregoing clauses (d), and (e), Section 5.02(a) and Section 5.02(b) have been satisfied; and (ii) each Borrower and its Subsidiaries (after giving effect to the transactions contemplated hereby and the incurrence of any Indebtedness related thereto on the Closing Date) are Solvent on a consolidated basis.
(h)    OFAC, Patriot Act, Beneficial Ownership Regulation, Etc. Receipt by the Administrative Agent of all documentation and other information that any Lender has reasonably



requested prior to the Closing Date in order to comply with its ongoing obligations under applicable “know your customer”, OFAC and anti-corruption laws, including, without limitation, the Patriot Act, and, if any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certification in relation to such Borrower.
(i)    Fees and Expenses. Receipt by the Administrative Agent, the Joint Lead Arrangers and the Lenders of all accrued fees and expenses required to be paid by the Borrowers on or prior to the Closing Date, including, without limitation, all reasonable fees, charges and disbursements of counsel to the Administrative Agent to the extent invoiced on, or prior to, the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute such counsel’s reasonable estimate of such fees, charges and disbursements incurred, or to be incurred, by it through the closing proceedings (provided, that, such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).
(j)    Other. Receipt by the Administrative Agent and the Lenders of such other documents, instruments, agreements and information as reasonably requested by the Administrative Agent or any Lender, including, without limitation, information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, environmental matters, contingent liabilities and management of each Borrower and its Subsidiaries.
Without limiting the generality of the provisions of the last paragraph of Section 10.03, for purposes of determining compliance with the conditions specified in this Section 5.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted, and to be satisfied with, each document made available to it for review prior to the Closing Date and each matter required thereunder to be consented to or approved by, or acceptable or satisfactory to, such Lender, unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
Section 5.02        Conditions to all Borrowings. The obligation of each Lender to honor any Request for Borrowing from any Borrower, whether on the Closing Date or after the Closing Date during the Availability Period, is subject to the following conditions precedent:
(a)    The representations and warranties of such Borrower contained in Article VI (other than in Section 6.05(c) and Section 6.06) or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct, in all material respects, on, and as of, the date of such Borrowing (other than any representation and warranty that is expressly qualified by materiality, in which case, such representation and warranty shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct, in all material respects (other than any representation and warranty that is expressly qualified by materiality, in which case, such representation and warranty shall be true and correct in all respects), as of such earlier date (and except that, for purposes of this Section 5.02, the representations and warranties contained in Section 6.05(a) and Section 6.05(b) shall be deemed to refer to the most recent statements furnished pursuant to Section 7.01(a) and Section 7.01(b), respectively).
(b)    No Default shall exist, or would result from such proposed Borrowing or from the application of the proceeds thereof, with respect to such Borrower.
(c)    The Administrative Agent and, if applicable, the Swing Line Lender shall have received a Request for Borrowing from such Borrower in accordance with the requirements hereof.



Each Request for Borrowing submitted by any Borrower shall be deemed to be a representation and warranty that the conditions specified in each of Section 5.02(a) and Section 5.02(b) have been satisfied on, and as of, the date of the applicable Borrowing.
ARTICLE VI.

REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to the Administrative Agent and the Lenders that:
Section 6.01        Existence, Qualification and Power. Each Borrower and each Principal Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business, and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified, and is licensed and in good standing, under the Laws of each jurisdiction where its ownership, lease or operation of properties, or the conduct of its business, requires such qualification or license, and (d) is in compliance with all Laws, except, in each case of the foregoing clauses (b)(i), (c) or (d), to the extent that failure to do so would not have a Material Adverse Effect.
Section 6.02        Authorization; No Contravention. The execution, delivery and performance by each Borrower of each Loan Document to which such Person is party have been duly authorized by all necessary corporate or other organizational action, and do not and will not: (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with, or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under, (i) any Contractual Obligation to which such Person is a party, or affecting such Person, or the properties of such Person or any of its Principal Subsidiaries, or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law. Each Borrower and each of its Principal Subsidiaries is in compliance with all Contractual Obligations referred to in the foregoing clause (b)(i), except to the extent that failure to do so would not have a Material Adverse Effect.
Section 6.03        Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to or filing with, any Governmental Authority (including, without limitation, FERC and DPU) is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Borrower of this Agreement or any other Loan Document, other than those approvals, consents or filings already obtained or made and in full force and effect.
Section 6.04        Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Borrower. This Agreement constitutes, and each other Loan Document, when so delivered, will constitute, a legal, valid and binding obligation of each Borrower, enforceable against each Borrower that is party thereto in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and general principles of equity.
Section 6.05        Financial Statements; No Material Adverse Effect.
(a)    The Audited Financial Statements: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present, in all material respects, the financial condition of Eversource and its Subsidiaries as of the date thereof, and their results of operations for the period covered thereby, in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show, to the extent required by



GAAP, all material indebtedness and other liabilities, direct or contingent, of Eversource and its Subsidiaries as of the date thereof, including, without limitation, liabilities for taxes, material commitments and Indebtedness.
(b)    The Interim Financial Statements: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present, in all material respects, the financial condition of Eversource and its Subsidiaries as of the date thereof, and their results of operations for the period covered thereby, subject, in each case of the foregoing clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
(c)    Since December 31, 2019, there has been no event or circumstance, either individually or in the aggregate, that has had a Material Adverse Effect, except as specifically disclosed in the Disclosure Documents.
Section 6.06        Litigation. There are no actions, suits, proceedings, or disputes pending, or, to the knowledge of any Responsible Officer of any Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any of the Borrowers or any of their respective Principal Subsidiaries, or against any of their respective properties or revenues, that: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby; or (b) could reasonably be expected to have a Material Adverse Effect, except as specifically disclosed in the Disclosure Documents.
Section 6.07        No Default. None of the Borrowers and their respective Principal Subsidiaries is in default under, or with respect to, any indebtedness for borrowed money in excess of the Threshold Amount. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 6.08        Ownership of Property; Liens. Each of the Borrowers and their respective Principal Subsidiaries have good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, have a Material Adverse Effect. As of the date of this Agreement, each of the Borrowers and their respective Principal Subsidiaries enjoy peaceful and undisturbed possession under all leases of real property on which facilities operated by it are situated, and all such leases are valid and subsisting and in full force and effect. The property of each of the Borrowers and their respective Principal Subsidiaries is subject to no Liens, other than Liens permitted by Section 8.01.
Section 6.09        Environmental Compliance. Each of the Borrowers and their Principal Subsidiaries conduct, in the ordinary course of business, a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and, as a result thereof, each Borrower has reasonably concluded that such Environmental Laws and claims would not, individually or in the aggregate, have a Material Adverse Effect.
Section 6.10        Insurance. The properties of each of the Borrowers and their respective Principal Subsidiaries are insured with financially sound and reputable insurance companies that are not Affiliates of any Borrower, in such amounts, with such deductibles, and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Borrower or the applicable Principal Subsidiary operates. All of such policies: (a) are in full force and effect; (b) are sufficient for compliance by each of the Borrowers and their respective Principal Subsidiaries with all written agreements or instruments to which such Borrower or any such Principal Subsidiary is a party, and all requirements of applicable Law; (c) provide that they will remain in full force and effect through the respective dates set forth in such policies; and (d) will not, in any way, be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. None of the Borrowers and their respective



Principal Subsidiaries are in default with respect to its or their obligations under any of such insurance policies, and none of the foregoing have received any notification of cancellation of any such insurance policies.
Section 6.11        Taxes. The Borrowers and their respective Principal Subsidiaries have filed all federal, state and other material tax returns and reports required to be filed, and have paid all federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them, or any of their respective properties, income or assets, otherwise due and payable, except: (a) those that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP; and (b) those where the failure to file or pay would not have a Material Adverse Effect. There is no unpaid tax claimed by any governmental Authority to be due against any of the Borrowers or any of their respective Principal Subsidiaries that would, if made, have a Material Adverse Effect. As of the Closing Date, none of the Borrowers and their respective Principal Subsidiaries is party to any tax sharing agreements, other than as set forth on Schedule 6.11.
Section 6.12        ERISA Compliance.
(a)    Except as would not reasonably be likely to result in a Material Adverse Effect, each Plan is in compliance, in all material respects, with the applicable provisions of ERISA, the Internal Revenue Code, and other applicable federal or state Laws. Each Pension Plan that is intended to be a qualified Plan under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Internal Revenue Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Internal Revenue Code, or an application for such a letter is currently being processed by the Internal Revenue Service with respect thereto. To the best knowledge of each Responsible Officer of each Borrower, nothing has occurred that has not been, or cannot be, corrected that would prevent, or cause the loss of, such tax-qualified status.
(b)    There are no pending, or, to the best knowledge of each Responsible Officer of each Borrower, threatened, claims, actions or lawsuits, or action by any Governmental Authority with respect to any Plan that would reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted, or would reasonably be expected to result, in a Material Adverse Effect.
(c)     (i) No ERISA Event has occurred, or is reasonably expected to occur, and no Responsible Officer of any Borrower, nor any ERISA Affiliate, is aware of any fact, event or circumstance that could reasonably be expected to constitute, or result in, an ERISA Event with respect to any Pension Plan; (ii) each Borrower, and, to the best knowledge of each Responsible Officer of each Borrower, each ERISA Affiliate, has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) no Borrower nor any ERISA Affiliate has incurred any liability to the PBGC, other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) no Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.
(d)    No Borrower is, or will be, using “plan assets” (within the meaning of 29 CFR §–2510.3–101, as modified by Section 3(42) of ERISA) of one (1) or more Benefit Plans in connection with the Loans or the Revolving Commitments.
Section 6.13        Subsidiaries. As of the Closing Date, none of the Borrowers has any Principal Subsidiaries, other than those specifically disclosed on Schedule 6.13, and all of the outstanding Equity Interests



entitled to vote for the election of directors or other governing Persons in such Principal Subsidiaries have been validly issued, are fully paid and non-assessable, and are owned by such Borrower in the amounts specified on Schedule 6.13, free and clear of all Liens. All of the outstanding Equity Interests entitled to vote in each Borrower have been validly issued and are fully paid and non-assessable, and the Equity Interests of each Borrower (other than Eversource) are owned by Eversource to the extent specified, as of the Closing Date, on Schedule 6.13, free and clear of all Liens.
Section 6.14        Use of Proceeds; Margin Regulations; Investment Company Act.
(a)    The proceeds of the Loans will be used for working capital, capital expenditures and other general corporate purposes (including, without limitation, the repayment of Indebtedness). The proceeds of the Loans will not be used in any way that would violate the provisions of Regulation U or Regulation X. No Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock.
(b)    None of the Borrowers and their respective Subsidiaries is a “registered investment company” or an “affiliated company” or a “principal underwriter” of a “registered investment company”, as such terms are defined in the Investment Company Act.
Section 6.15        Disclosure. Each Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Principal Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by, or on behalf of, any Borrower to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement, or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished), contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of the Closing Date, to the extent that any Borrower qualifies as a “legal entity customer” pursuant to the Beneficial Ownership Regulation, the information included in the applicable Beneficial Ownership Certification is true and correct in all respects.
Section 6.16        Compliance with Laws. Each of the Borrowers and their respective Principal Subsidiaries are in compliance, in all material respects, with the requirements of all applicable Laws and all orders, writs, injunctions and decrees applicable to it or to any of its properties, except in such instances in which: (a) such requirement of applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith, either individually or in the aggregate, would not have a Material Adverse Effect.
Section 6.17        Solvency. Each Borrower, together with its Subsidiaries on a consolidated basis, are on the Closing Date, and, upon the incurrence of any Borrowing on any date on which this representation and warranty is made, will be, Solvent.
Section 6.18        Taxpayer Numbers and Other Information. Each Borrower’s (a) true and correct U.S. taxpayer identification number, (b) full legal name, (c) state of incorporation, formation or organization (as the case may be), and (d) address of its principal place of business, are set forth on Schedule 6.18.
Section 6.19        Sanctions Concerns; Anti-Corruption Laws.



(a)    Sanctions Concerns. No Borrower, nor any Subsidiary of any Borrower, nor, to the knowledge of any Responsible Officer of any of the Borrowers and their respective Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is: (i) currently the subject or target of any Sanctions; (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority; or (iii) located, organized or resident in a Designated Jurisdiction so as to result in a violation of Sanctions.
(b)    Anti-Corruption Laws. Each of the Borrowers and their respective Subsidiaries, and, to the knowledge of any Responsible Officer of any of the Borrowers and their respective Subsidiaries, all directors, officers, employees, agents, affiliates and representatives thereof, have conducted their business in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
Section 6.20        Affected Financial Institutions. No Borrower is an Affected Financial Institution.
Section 6.21        Beneficial Ownership Regulation. With respect to any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, as of the Closing Date, the information included in the applicable Beneficial Ownership Certification is true and correct in all respects.
ARTICLE VII.

AFFIRMATIVE COVENANTS
So long as any Lender shall have any Revolving Commitment hereunder, or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, each of the Borrowers hereby agree that it shall, and shall (except in the case of the covenants set forth in Section 7.01, Section 7.02, and Section 7.03) cause each of its Principal Subsidiaries to:
Section 7.01        Financial Statements. Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:
(a)    with respect to each Borrower, as soon as available, but, in any event, within one-hundred five (105) calendar days after the end of each fiscal year of such Borrower, a consolidated balance sheet of such Borrower and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth, in each case in comparative form (where applicable), the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally-recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and to the effect that such financial statements have been prepared in accordance with GAAP applied on a basis consistent with prior years (except as to changes with which such accountants concur and which shall be disclosed in the notes thereto or in a letter) and fairly present, in all material respects, the financial condition of such Borrower and its Subsidiaries at the dates thereof, and the results of its consolidated operations for the periods covered thereby; provided, that, notwithstanding anything to the contrary in the foregoing, the financial statements described in this clause (a) required to be delivered by Eversource Gas with respect to the fiscal year ending December 31, 2020 shall not be required to be audited or accompanied by such



a report and opinion of an independent certified public accountant, so long as such financial statements are certified by a Responsible Officer of Eversource Gas as fairly presenting, in all material respects, the financial condition, results of operations, shareholders’ equity and cash flows of Eversource Gas and its Subsidiaries in accordance with GAAP; and
(b)    with respect to each Borrower, as soon as available, but, in any event, within fifty (50) calendar days after the end of each of the first (1st) three (3) fiscal quarters of each fiscal year of such Borrower, a consolidated balance sheet of such Borrower and its Subsidiaries as of the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter, and for the portion of such Borrower’s fiscal year then ended, setting forth, in each case in comparative form (where applicable), the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by a Responsible Officer of such Borrower as fairly presenting, in all material respects, the financial condition, results of operations, shareholders’ equity and cash flows of such Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section 7.02(d), no Borrower shall be separately required to furnish such information under the foregoing clauses (a) or (b), but the foregoing shall not be in derogation of the obligation of each Borrower to furnish the information and materials described in the foregoing clauses (a) and (b) at the times specified therein. For purposes of clarity, in the event that any Borrower merges with or into another entity and is not the surviving Person, dissolves, or otherwise ceases to have a legal existence, then the financial delivery requirements in this Section 7.01 shall no longer apply to such Borrower.
Section 7.02        Certificates; Other Information. Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:
(a)    concurrently with the delivery of the financial statements referred to in each of Section 7.01(a) and Section 7.01(b), a certificate, substantially in the form of Exhibit 7.02(a), signed by a Responsible Officer of each of the Borrowers (the “Compliance Certificate”): (i) stating that no Default or Event of Default has occurred and is continuing on the date of such certificate, and, if a Default or an Event of Default has then occurred and is continuing, specifying the details thereof and the action(s) that such Borrower has taken, or proposes to take, with respect thereto; (ii) setting forth, in reasonable detail, computations evidencing compliance with the financial covenant set forth in Section 8.06, determined as of the last day of the fiscal quarter immediately preceding the fiscal quarter in respect of which such certifications are to be delivered pursuant to this clause (a); and (iii) stating whether any change in GAAP, or the application thereof, has occurred since the date of the most recently-delivered financial statements pursuant to Section 7.01(a) (or, if no such financial statements have been delivered pursuant to Section 7.01(a), since (A) the date of the Audited Financial Statements, with respect to Eversource, and (B) May 28, 2020, with respect to Eversource Gas), and, if any change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
(b)    concurrently with the delivery of the financial statements referred to in each of Section 7.01(a) and Section 7.01(b), a copy of the certification (if any), signed by the principal executive officer and the principal financial officer of each Borrower (each, a “Certifying Officer”), as required by SEC Rule 13A–14 under the Securities Exchange Act, and a copy of the internal controls disclosure statement by such Certifying Officer as required by SEC Rule 13A–15 under the Securities Exchange Act, each as included in such Borrower’s Annual Report on SEC Form 10–K or Quarterly Report on SEC Form 10–Q, as the case may be, for the applicable fiscal period;



(c)    contemporaneously with the filing or mailing thereof, copies of all financial statements sent by each Borrower to shareholders and all reports, notices, proxy statements or other communications sent by such Borrower to its shareholders, and all reports under Section 12, Section 13 and Section 14, and under any rules promulgated with respect to such sections (including, without limitation, all reports on SEC Form 8–K, SEC Form 10–K and SEC Form 10–Q, along with all amendments and supplements thereto), of the Securities and Exchange Act, all SEC Schedule 13D and SEC Schedule 13G filings and all amendments thereto, and registration statements filed by such Borrower with any securities exchange, or with the SEC (or any successor agency);
(d)    promptly, and, in any event, within five (5) Business Days after receipt thereof by any Borrower or any Subsidiary thereof, copies of each formal notice received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation, or possible investigation or other inquiry, by such agency regarding financial or other operational results of such Borrower or such Subsidiary thereof that could reasonably be expected to result in a Material Adverse Effect;
(e)    promptly following any request therefor, provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act and, if any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Beneficial Ownership Regulation; and
(f)    promptly, such additional information regarding the business, financial or corporate affairs of any Borrower or any Principal Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.
Documents required to be delivered pursuant to Section 7.01(a), Section 7.01(b) or Section 7.02(d) (to the extent that any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which (i) Eversource or the applicable Borrower posts such documents, or provides a link thereto on Eversource’s or such Borrower’s website on the Internet at the website address listed on Schedule 11.02, or (ii) such documents are posted on Eversource’s or such Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided, that, (A) each Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests such Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender, and (B) each Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent, by electronic mail, electronic versions (i.e., soft copies) of such documents. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery, or to maintain copies, of the documents referred to above, and, in any event, shall have no responsibility to monitor compliance by any Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
Each Borrower hereby acknowledges that: (a) the Administrative Agent and/or the Joint Lead Arrangers will make available to the Lenders materials and/or information provided by, or on behalf of, such Borrower hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on SyndTrak or another similar electronic system (the “Platform”); and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to such Borrower or its securities) (each, a “Public Lender”). Each Borrower hereby agrees that: (i) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”, which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first (1st) page thereof; (ii) by marking Borrower Materials “PUBLIC”, such Borrower shall be deemed to have authorized the Administrative Agent,



the Joint Lead Arrangers, and the Lenders to treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to such Borrower or its securities for purposes of U.S. Federal and state securities laws; (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (iv) the Administrative Agent and the Joint Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor”.
Section 7.03        Notices. Promptly notify the Administrative Agent and each Lender of:
(a)    the occurrence of any Default;
(b)    any matter that has resulted, or could reasonably be expected to result, in a Material Adverse Effect, including, without limitation, as a result of: (i) breach or non-performance of, or any default under, any Contractual Obligation of any Borrower or any Principal Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between any Borrower or any Principal Subsidiary, on the one hand, and any Governmental Authority, on the other hand; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Borrower or any Principal Subsidiary, including, without limitation, pursuant to any applicable Environmental Laws;
(c)    the occurrence of any ERISA Event;
(d)    any announcement by Moody’s and/or S&P of any change in a credit rating (whether a Borrower Unsecured Debt rating, a Borrower Secured Debt rating, a long-term corporate/issuer rating or otherwise) that is used to determine the Reference Rating for any Borrower; and
(e)    with respect to any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, any change in the information provided in the applicable Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in part (c) or part (d) of such Beneficial Ownership Certification.
Each notice delivered, or required to be delivered, pursuant to this Section 7.03 shall be accompanied by a statement of a Responsible Officer of the applicable Borrower setting forth details of the occurrence referred to therein and stating what action such Borrower has taken, and/or proposes to take, with respect thereto. Each notice delivered, or required to be delivered, pursuant to the foregoing clause (a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
Section 7.04        Payment of Taxes. Pay and discharge, as the same shall become due and payable, all its tax liabilities, assessments and governmental charges or levies upon it or any of its properties and/or assets (including, without limitation, all lawful claims which, if unpaid, would by applicable Law become a Lien upon its property and/or assets), unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Borrower or such Subsidiary, except, in each case of the foregoing, where the failure to pay such amounts would not have a Material Adverse Effect.
Section 7.05        Preservation of Existence, Etc. (a) Preserve, renew and maintain, in full force and effect, its legal existence and good standing under the Laws of the jurisdiction of its organization, except in a transaction permitted by Section 8.02; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so would not have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which would not have a Material Adverse Effect.



Section 7.06        Maintenance of Properties. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted, (b) make all necessary repairs thereto and renewals and replacements thereof, except where the failure to do so would not have a Material Adverse Effect, and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities; provided, that, in each case of the foregoing clauses (a), (b), and (c), none of the Borrowers and Principal Subsidiaries will be prevented from discontinuing the operation and maintenance of any such properties if such discontinuance is, in the reasonable judgment of such Borrower or Principal Subsidiary, as the case may be, desirable in the operation or maintenance of its business and would not result, or be reasonably likely to result, in a Material Adverse Effect.
Section 7.07        Maintenance of Insurance. Maintain, with financially sound and reputable insurance companies that are not Affiliates of any Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types, and in such amounts, as are customarily carried under similar circumstances by such other Persons.
Section 7.08        Compliance with Laws. Comply (a) with the Patriot Act, the Beneficial Ownership Regulation (to the extent that any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation), OFAC rules and regulations, and all Sanctions and laws related thereto, (b) in all material respects, with the requirements of all other applicable Laws (including, without limitation, Environmental Laws and anti-money laundering laws) applicable to it or to its business or property, except in such instances in which such requirement of applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted, (c) all material provisions of its charter documents, by-laws, operating agreement, certificate and other constituent documents, as applicable, and (d) all material applicable decrees, orders, and judgments; except, solely in each case of the foregoing clauses (b) and (c), where the failure to so comply would not have a Material Adverse Effect.
Section 7.09        Books and Records. Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made, of all financial transactions and matters involving the assets and business of such Borrower or such Principal Subsidiary, as the case may be, in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over such Borrower or such Subsidiary, as the case may be.
Section 7.10        Inspection Rights. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the applicable Borrower.
Section 7.11        Use of Proceeds. Use the proceeds of the Borrowings for working capital, capital expenditures and other general corporate purposes (including, without limitation, the repayment of Indebtedness) not in contravention of any applicable Law or of any Loan Document. The proceeds of the Loans will not be used in any way that would violate the provisions of Regulation U or Regulation X.
Section 7.12        Further Assurances. (a) Promptly execute and deliver, or cause to be promptly executed and delivered, all further instruments and documents, and take, and cause to be taken, all further actions, that may be necessary, or that the Required Lenders, through the Administrative Agent, may reasonably request, to enable the Lenders and the Administrative Agent to carry out, to their reasonable satisfaction, the transactions contemplated by this Agreement, to enforce the terms and provisions of this Agreement, and to exercise their rights and remedies hereunder or under the Notes; and (b) use all commercially reasonable efforts to duly obtain governmental approvals required in connection with this Agreement from time to time on or prior



to such date, as the same may become legally required, and thereafter to maintain all such governmental approvals in full force and effect.
Section 7.13        Conduct of Business. Except as permitted by Section 8.02, conduct its primary business in substantially the same manner, and in substantially the same fields, as such business is conducted on the date hereof.
Section 7.14        Governmental Approvals. Duly obtain, on or prior to such date as the same may become legally required, and thereafter maintain in effect at all times, all Governmental Approvals on its part to be obtained, except, in the case of those Governmental Approvals referred to in clause (b) of the definition of “Governmental Approval” in Section 1.01, (a) those the absence of which could not reasonably be expected to result in a Material Adverse Effect, and (b) those that such Borrower or such Principal Subsidiary is diligently attempting in good faith to obtain, renew or extend, or the requirement for which such Borrower or such Principal Subsidiary is contesting in good faith by appropriate proceedings or by other appropriate means; provided, that, the exception set forth in the foregoing clause (b), shall be available only if, and for so long as, such attempt or contest, and any delay resulting therefrom, could not reasonably be expected to result in a Material Adverse Effect.
Section 7.15        Anti-Corruption Laws. Conduct its business in compliance with the U.S. Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions, and maintain policies and procedures designed to promote and achieve compliance with such Laws.
ARTICLE VIII.

NEGATIVE COVENANTS
So long as any Lender shall have any Revolving Commitment hereunder, or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, each of the Borrowers hereby agrees that it shall not, nor shall it permit any of its Principal Subsidiaries to (except in the case of the covenant set forth in Section 8.06, which shall apply only to the Borrowers), directly or indirectly:
Section 8.01        Liens. Create, incur, assume, or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:
(a)    Liens granted, incurred or existing in the ordinary course of business not in connection with the borrowing of money or the obtaining of credit;
(b)    Liens arising in connection with the sale of accounts receivable;
(c)    Liens existing on acquired property at the time of acquisition thereof by such Borrower or Subsidiary, which liens do not extend to any property other than such acquired properties;
(d)    any purchase money Lien or construction mortgage on assets hereafter acquired or constructed by a Borrower or any Subsidiary, and any Lien on any assets existing at the time of acquisition thereof by a Borrower or a Subsidiary, or created within one hundred eighty (180) days from the date of completion of such acquisition or construction; provided, that, such Lien or construction mortgage shall, at all times, be confined solely to the assets so acquired or constructed, and any additions thereto;
(e)    Liens existing on the date hereof and disclosed on Schedule 8.01;



(f)    Liens created by the First Mortgage Indentures, so long as, by the terms thereof, no “event of default” (howsoever designated) in respect of any bonds issued thereunder will arise upon the occurrence of a Default or Event of Default hereunder;
(g)    with respect to any Subsidiary that is party to a First Mortgage Indenture, “Permitted Liens” or “Permitted Encumbrances” under the First Mortgage Indenture to which such Subsidiary is a party, in each case of the foregoing, to the extent that such Liens do not secure Indebtedness of such Subsidiary;
(h)    Liens resulting from legal proceedings being contested in good faith by appropriate legal or administrative proceedings by any Borrower or any Subsidiary thereof, and as to which such Borrower or such Subsidiary, to the extent required by GAAP, shall have set aside on its books adequate reserves;
(i)    Liens created in favor of the other contracting party in connection with advance or progress payments;
(j)    any Liens in favor of any Governmental Authority, or trustee acting on behalf of holders of obligations issued by any Governmental Authority or any financial institutions lending to, or purchasing obligations of, any Governmental Authority, which Liens are created or assumed for the purpose of financing all or part of the cost of acquiring or constructing the property subject thereto;
(k)    Liens resulting from conditional sale agreements, capital leases, or other title retention agreements;
(l)    with respect to sewage facility and pollution control bond financings, Liens on funds, accounts, and other similar intangibles of any Borrower or any Subsidiary thereof created or arising under the relevant indenture, pledges of the related loan agreement with the relevant issuing authority, and pledges of any Borrower’s or any Subsidiary’s interest, if any, in any bonds issued pursuant to such financings, to a letter of credit bank, bond issuer or similar credit enhancer;
(m)    Liens granted on accounts receivable and Regulatory Assets in connection with financing transactions, whether denominated as sales or borrowings;
(n)    Liens on the assets of, the stock issued by or other equity of, any Subsidiary of any Borrower created to hold generating or transmission assets, if such Liens are created to secure Indebtedness that is: (i) non-recourse to such Borrower; and (ii) incurred to acquire, construct or otherwise develop such generating or transmission assets;
(o)    Liens created to secure Indebtedness of a transmission company Subsidiary of any Borrower with respect to assets transferred to such transmission company by another Subsidiary of such Borrower;
(p)    any extension, renewal or replacement of any Liens permitted by any of the foregoing clauses (c), (d), (e), (f), (g), (k), (l), (m) and (n); provided, that, (i) the principal amount of Indebtedness secured thereby shall not, at the time of such extension, renewal or replacement, exceed the principal amount of Indebtedness so secured, and (ii) such extension, renewal or replacement shall be limited to all, or a part, of the property that secured the Lien so extended, renewed or replaced, or to other property and/or assets of no greater value than the property and/or assets that secured the Lien so extended, renewed or replaced;
(q)    Liens on the assets of any Borrower and/or any of its Principal Subsidiaries granted by such Borrower and/or its Principal Subsidiaries to secure long term Indebtedness of such Borrower (exclusive of those Liens granted pursuant to any of the foregoing clauses (c), (d), (e), (f), (g), (k), (l), (m), (n) and (o)); provided, that, at the time of granting such Liens (and after giving effect thereto), the aggregate amount of all



such long term Indebtedness of all of the Borrowers and their respective Principal Subsidiaries, taken together, shall not exceed Seven-Hundred Million Dollars ($700,000,000); and
(r)    Stranded Cost Recovery Obligations securitization transactions.
Section 8.02        Fundamental Changes. Merge, amalgamate, dissolve, liquidate, wind-up or consolidate (or suffer any liquidation or dissolution) with or into another Person, or dispose of (whether in a single transaction or a series of transactions) all, or substantially all, of its assets (including, without limitation, Equity Interests in Subsidiaries) (whether now owned or hereafter acquired) to, or in favor of, any Person, unless:
(a)    a Subsidiary of Eversource merges, amalgamates or consolidates with Eversource or any other Subsidiary of Eversource, provided, that: (i) if Eversource is party to such transaction, Eversource shall be the surviving entity in such transaction; (ii) if Eversource Gas is a party to such transaction, Eversource Gas shall be the surviving entity in such transaction, or, if a Subsidiary other than Eversource Gas is the surviving entity in such transaction, such Subsidiary shall (A) be a Domestic Subsidiary, and (B) expressly assume, by an amendment to this Agreement in form satisfactory to the Administrative Agent, the Obligations under, and due and punctual performance of, this Agreement; and (iii) in the event that a Subsidiary is the surviving entity in such transaction, such Subsidiary shall be deemed to be, and shall be at all times thereafter, a “Principal Subsidiary” as defined in Section 1.01;
(b)    a Subsidiary of Eversource liquidates or dissolves into, or makes an asset disposition to, Eversource or any Subsidiary of Eversource, provided, that: (i) if Eversource is party to such transaction, Eversource shall be the entity into which assets are transferred; (ii) if Eversource Gas is a party to such transaction, Eversource Gas shall be the entity into which assets are transferred in such transaction, or, if a Subsidiary other than Eversource Gas is the surviving entity into which assets are transferred in such transaction, such Subsidiary shall (A) be a Domestic Subsidiary, and (B) expressly assume, by an amendment to this Agreement in form satisfactory to the Administrative Agent, the Obligations under, and due and punctual performance of, this Agreement; and (iii) in the event that a Subsidiary is the entity to which assets are transferred, such Subsidiary shall be deemed to be, and shall be at all times thereafter, “Principal Subsidiary” as defined in Section 1.01;
(c)    all corporate and regulatory approvals therefor have been received;
(d)    no Default or Event of Default would exist hereunder after giving effect to such transaction; and
(e)    the senior unsecured debt ratings of S&P and Moody’s (i) with respect to Eversource, if Eversource is the surviving entity in a transaction permitted under the foregoing clauses (a) or (b), and (ii) to the extent applicable, with respect to (A) the Principal Subsidiary that is the surviving entity in a transaction permitted under the foregoing clause (a), (B) the entity to which assets are transferred in a transaction permitted under the foregoing clause (b), and (C) the Principal Subsidiary disposing of assets to a Person other than Eversource or any of its Subsidiaries in a transaction permitted under the foregoing clause (b), in each case of the foregoing clauses (e)(i) and (e)(ii), after giving effect to such transaction, shall be at least “BBB-” and “Baa3”, respectively.
Notwithstanding anything to the contrary in the foregoing, any disposition of assets permitted by the foregoing provisions of this Section 8.02 to a Person other than Eversource and its Subsidiaries may be consummated by way of merger, amalgamation or consolidation.



Section 8.03        Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by such Borrower and/or such Subsidiary on the date hereof, or any business substantially related or incidental thereto.
Section 8.04        Transactions with Affiliates and Insiders. Enter into any transaction of any kind with any officer, director or Affiliate of any Borrower, whether or not in the ordinary course of business, other than: (a) except as otherwise specifically limited in this Agreement, transactions that are on terms and conditions substantially as favorable to such Person as would be obtainable by it in a comparable arms-length transaction with a Person other than such an officer, director or Affiliate; (b) any transaction for which such Borrower or Subsidiary has obtained the approval of the DPU; (c) immaterial incidental transactions among Borrower and its Affiliates that are substantially on arm’s length basis, such as cash management, facility sharing, tax sharing, management services, or other overhead sharing matters; (d) intercompany transactions (including, without limitation, loans and advances and the provision of services) not otherwise prohibited under this Agreement or required under the U.S. Federal Power Act and the rules of FERC or state utility commissions, in each case of the foregoing, to the extent applicable thereto; (e) normal and reasonable compensation and reimbursement expenses of officers and directors in the ordinary course of business; and (f) Stranded Cost Recovery Obligations securitization transactions.
Section 8.05        Use of Proceeds. Use the proceeds of any Borrowing, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
Section 8.06        Consolidated Indebtedness to Capitalization Ratio. With respect to each Borrower, permit the Consolidated Indebtedness to Capitalization Ratio of such Borrower, as of the end of any fiscal quarter of such Borrower, to be greater than 0.65:1.00.
Section 8.07        Compliance with ERISA. (a) Terminate, or permit any of its ERISA Affiliates to terminate, any Pension Plan so as to result in any direct liability of such Borrower or any Principal Subsidiary to the PBGC in an amount greater than the Threshold Amount, or (b) permit to exist any occurrence of any Reportable Event that, alone or together with any other Reportable Event with respect to the same or another Pension Plan, has a reasonable possibility of resulting in direct liability of such Borrower or any Subsidiary to the PBGC in an aggregate amount in excess of the Threshold Amount, or any other event or condition that presents a material risk of such a termination by the PBGC of any Pension Plan, or that has a reasonable possibility of resulting in a liability of such Borrower or any Subsidiary to the PBGC or a Multiemployer Plan, in an aggregate amount in excess of the Threshold Amount.
Section 8.08        Interests in Nuclear Plants. Acquire any nuclear plant, or any interest therein, not held on the date hereof, other than so called “power entitlements” acquired for use in the ordinary course of business.
Section 8.09        Financing Agreements. With respect to each Borrower only, permit any Principal Subsidiary to enter into any agreement, contract, indenture or similar obligation, or to issue any security (each of the foregoing being referred to, collectively, as “Financing Agreements”), that is not in effect on the date hereof, or amend or modify any existing Financing Agreement, if the effect of such Financing Agreement (or amendment or modification thereof) is to impose any additional restriction that is not in effect on the date hereof on the ability of such Principal Subsidiary to pay dividends to the applicable Borrower; provided, that, the foregoing shall not restrict the right of any Principal Subsidiary of any Borrower created to hold generating or transmission assets to enter into any such Financing Agreement in connection with the incurrence of Indebtedness that (i) is non-recourse to such Borrower, and (ii) is incurred to acquire, construct or otherwise develop generating or transmission assets.



Section 8.10        Sanctions. Directly or indirectly, use any Borrowing or the proceeds of any Borrowing, or lend, contribute or otherwise make available such Borrowing or the proceeds of any Borrowing to any Person, to fund any activities of, or business with, any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including, without limitation, any Person participating in the transaction, whether as Lender, Arranger, Administrative Agent, Swing Line Lender, or otherwise) of Sanctions.
Section 8.11        Anti-Corruption Laws. Directly or indirectly, use any Borrowing, or the proceeds of any Borrowing, for any purpose that would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, or any other similar anti-corruption legislation in other jurisdictions.
ARTICLE IX.

EVENTS OF DEFAULT AND REMEDIES
Section 9.01        Events of Default. Any of the following shall constitute an “Event of Default” with respect to any particular Borrower:
(a)    Non-Payment. Such Borrower fails to pay: (i) when and as required to be paid herein, any amount of principal of any Loan; or (ii) within five (5) calendar days after the same becomes due, any interest on any Loan, or any fee due hereunder; or (iii) within five (5) calendar days after the same becomes due, any other amount payable hereunder or under any other Loan Document, whether at the stated maturity or any accelerated date of maturity or at any other date fixed for payment; or
(b)    Specific Covenants. Such Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 7.01, Section 7.02(a), Section 7.03(a) Section 7.05, Section 7.10, Section 7.11 or Article VIII; or
(c)    Other Defaults. Such Borrower fails to perform or observe any other covenant or agreement (that is not specified in the foregoing clauses (a) or (b)) contained in any Loan Document on its part to be performed or observed, and such failure continues for thirty (30) calendar days after written notice from the Administrative Agent; or
(d)    Representations and Warranties. Any representation or warranty, made or deemed made by, or on behalf of, such Borrower or any Principal Subsidiary herein, in any other Loan Document, or in any document required to be delivered in connection herewith or therewith, shall be incorrect or misleading in any material respect (or, with respect to any representation and warranty that is expressly qualified by materiality, in any respect) when made or deemed made; or
(e)    Cross-Default. (i) Such Borrower or any Principal Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise, and after giving effect to applicable grace periods) in respect of any Indebtedness (other than (I) Indebtedness of such Borrower under this Agreement, but including, with respect to Eversource, Indebtedness of its Principal Subsidiaries hereunder, and (II) Indebtedness under Swap Contracts) having an aggregate principal amount (including, without limitation, undrawn committed or available amounts, and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded (or commitments to lend with respect to such Indebtedness to be terminated) or to become due, or to



be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case of the foregoing, prior to its stated maturity, or cash collateral in respect thereof to be demanded; or (ii) there occurs, under any Swap Contract, an Early Termination Date (or substantially similar term, as defined in such Swap Contract) resulting from an event of default under such Swap Contract as to which such Borrower or any Principal Subsidiary is the Defaulting Party (or substantially similar term, as defined in such Swap Contract), with respect to which the Swap Termination Value owed by such Borrower or such Principal Subsidiary as a result thereof is greater than the Threshold Amount; or
(f)    Insolvency Proceedings, Etc. Such Borrower or any of its Principal Subsidiaries: (i) institutes, or consents to the institution of, any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or (ii) applies for, or consents to the appointment of, any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it, or for all, or any material part, of its property; or (iii) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person, and the appointment continues undischarged or unstayed for a period of ninety (90) calendar days; or (iv) any proceeding under any Debtor Relief Law relating to any such Person, or to all, or any material part, of its property, is instituted without the consent of such Person and continues undismissed or unstayed for a period of ninety (90) calendar days, or an order for relief is entered in any such proceeding; or
(g)    Inability to Pay Debts; Attachment. (i) Such Borrower or any Principal Subsidiary becomes unable, or admits in writing its inability, or fails generally, to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all, or any material part, of the property of such Borrower and its Principal Subsidiaries that is not released, vacated or fully bonded within ninety (90) calendar days after the date of its issue or levy; or
(h)    Judgments. There is entered against such Borrower or any Principal Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount in excess of the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one (1) or more non-monetary final judgments that have, individually or in the aggregate, a Material Adverse Effect, and, in any such case of the foregoing clauses (h)(i) and (h)(ii): (A) enforcement proceedings are commenced by any creditor upon such judgment or order that are not stayed within thirty (30) calendar days; or (B) there is a period of thirty (30) consecutive calendar days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i)    ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted, or could reasonably be expected to result, in direct liability of such Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC, in an aggregate amount in excess of the Threshold Amount; or (ii) such Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j)    Invalidity of Loan Documents. (i) Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the obligations under this Agreement, ceases to be in full force and effect; or (ii) such Borrower or any other Person contests, in any manner, the validity or enforceability of any provision of any Loan Document; or (iii) such Borrower denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or
(k)    Change of Control. There occurs any Change of Control with respect to such Borrower.



Section 9.02        Remedies Upon Event of Default. If any Event of Default with respect to any Borrower occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions with respect to such Borrower:
(a)    declare the commitment of each Lender to make Loans to such Borrower to be terminated, whereupon such commitments and obligation shall be terminated;
(b)    declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable by such Borrower hereunder or under any other Loan Document, to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by such Borrower;
(c)    exercise, on behalf of itself and the Lenders, all rights and remedies against such Borrower and its property available to it and the Lenders under the Loan Documents;
provided, that, upon the occurrence of an actual or deemed entry of an order for relief with respect to such Borrower or any of its Principal Subsidiaries under the Bankruptcy Code, the obligation of each Lender to make Loans to such Borrower shall automatically terminate, and the unpaid principal amount of all outstanding Loans of such Borrower and all interest and other amounts as aforesaid of such Borrower shall automatically become due and payable, in each case of the foregoing, without further act of the Administrative Agent or any Lender.
Section 9.03        Application of Funds. After the exercise of remedies provided for in Section 9.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 9.02), any amounts received on account of the Obligations of any Borrower shall be applied by the Administrative Agent to the then outstanding Obligations of such Borrower in the following order:
(a)    First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including, without limitation, fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
(b)    Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including, without limitation, fees, charges and disbursements of counsel to the respective Lenders) arising under the Loan Documents and amounts payable under Article III, ratably among them in proportion to the respective amounts described in this Second clause payable to them;
(c)    Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts described in this Third clause held by them;
(d)    Fourth, to payment of that portion of the Obligations constituting accrued and unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this Fourth clause held by them; and
(e)    Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to such Borrower or as otherwise required by applicable Law.
ARTICLE X.




ADMINISTRATIVE AGENT
Section 10.01        Appointment and Authority. Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents, and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article X are solely for the benefit of the Administrative Agent, and none of the Lenders or the Borrowers shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law; instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between the contracting parties.
Section 10.02        Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender, and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of banking, trust, financial, advisory, underwriting or other business with, any Borrower or any Subsidiary or other Affiliate thereof, as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice or consent of the Lenders with respect thereto.
Section 10.03        Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations, except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent and its Related Parties:
(a)    shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b)    shall not have any duty to take any discretionary action or to exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided, that, the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including, for the avoidance of doubt, any action that may be in violation of the automatic stay under any Debtor Relief Law, or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law;
(c)    shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclosure, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Borrowers or any of their Affiliates, that is communicated to, obtained by, or in the possession of any of the Administrative Agent, the Joint Lead Arrangers, or any of their respective Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein;



(d)    shall not be liable for any action taken, or not taken, by the Administrative Agent under, or in connection with, this Agreement or any other Loan Document, or the transactions contemplated hereby or thereby: (i) with the consent, or at the request, of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 11.01 and Section 9.02); or (ii) in the absence of its own gross negligence or willful misconduct (as determined by a court of competent jurisdiction by a final, non-appealable judgment). The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to a Responsible Officer of the Administrative Agent by a Borrower or a Lender; and
(e)    shall not be responsible for, or have any duty or obligation to any Lender, any participant or any other Person to ascertain or inquire into: (i) any statement, warranty or representation made in, or in connection with, this Agreement or any other Loan Document; (ii) the contents of any certificate, report or other document delivered hereunder or thereunder, or in connection herewith or therewith; (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, or the occurrence of any Default; (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document; or (v) the satisfaction of any condition set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
Section 10.04        Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, without limitation, any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that, by its terms, must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender, unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants, and other experts selected by it, and shall not be liable for any action taken, or not taken, by it in accordance with the advice of any such counsel, accountants or experts.
Section 10.05        Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one (1) or more sub-agents appointed by the Administrative Agent. The Administrative Agent, and any such sub-agent, may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article X shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents, except to the extent that a court of competent jurisdiction determines, in a final and non-appealable judgment, that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 10.06        Resignation of Administrative Agent.
(a)    The Administrative Agent may, at any time, give notice of its resignation to the Lenders and the Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the



consent of the Borrowers so long as no Event of Default has occurred and continues, which consent shall not be unreasonably withheld, conditioned or delayed, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been appointed by the Required Lenders and shall have accepted such appointment within thirty (30) calendar days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided, that, in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b)    If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof in Section 1.01, the Required Lenders may, to the extent permitted by applicable Law, by notice in writing to the Borrowers and such Person, remove such Person as the Administrative Agent, and, with the consent of the Borrowers so long as no Event of Default has occurred and continues, which consent shall not be unreasonably withheld, conditioned or delayed, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) calendar days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c)    With effect from the Resignation Effective Date or the Removal Effective Date (as applicable): (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to, or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.06. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to, and become vested with, all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 10.06). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor, unless otherwise agreed between the Borrowers and such successor. After the retiring or removed Administrative Agent Administrative Agent’s resignation (or removal) hereunder and under the other Loan Documents, the provisions of this Article X and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties, in respect of any actions taken, or omitted to be taken, by any of them (A) while the retiring Administrative Agent was acting as Administrative Agent, and (B) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including, without limitation, in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
(d)    Any resignation by, or removal of, Bank of America as Administrative Agent pursuant to this Section 10.06 shall also constitute its resignation or removal, as the case may be, as Swing Line Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder: (iii) such successor shall succeed to, and become vested with all of the rights, powers, privileges and duties of, the retiring Swing Line Lender; and (iv) the retiring Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents.



Section 10.07        Non-Reliance on the Administrative Agent, the Joint Lead Arrangers and the Other Lenders.
(a)    Each Lender expressly acknowledges that none of the Administrative Agent nor any Joint Lead Arranger has made any representation or warranty to it, and that no act by the Administrative Agent or any Joint Lead Arranger hereafter taken, including, without limitation, any consent to, and acceptance of, any assignment or review of the affairs of any Borrower (or any Affiliate thereof) shall be deemed to constitute any representation or warranty by the Administrative Agent or any Joint Lead Arranger to any other Lender as to any matter, including, without limitation, as to whether the Administrative Agent or any Joint Lead Arranger has disclosed material information in their (or their Related Parties’) possession. Each Lender hereby represents to the Administrative Agent and each Joint Lead Arranger that it has, independently and without reliance upon the Administrative Agent, any Joint Lead Arranger, any other Lender, or any Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the applicable Borrowers hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Joint Lead Arranger, any other Lender, or any Related Parties of any of the foregoing, and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking, or not taking, action under, or based upon, this Agreement, any other Loan Document, or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers and their Subsidiaries.
(b)    Each Lender hereby represents and warrants that: (i) (A) the Loan Documents set forth the terms of a commercial lending facility, and (B) such Lender is engaged in the making, acquiring or holding of commercial loans in the ordinary course, and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not, in any event, for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender hereby agrees not to assert a claim in contravention of the foregoing; and (ii) such Lender is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities as set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans, or to provide such other facilities, as the case may be, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
Section 10.08        No Other Duties; Etc. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, none of the bookrunners, arrangers, syndication agents, documentation agents or co-agents shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
Section 10.09        Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceeding relative to any Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise, and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a)    to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid, and to file such other



documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including, without limitation, any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel, and all other amounts due the Lenders and the Administrative Agent under Section 2.08 and Section 11.04) allowed in such judicial proceeding; and
(b)    to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent, and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 2.08 and Section 11.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to, or accept or adopt on behalf of any Lender, any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender, or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 10.10        Lender ERISA Representations.
(a)    Each Lender (A) represents and warrants, as of the date on which such Person became a Lender party hereto, to, and (B) covenants, from the date on which such Person became a Lender party hereto to the date on which such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and each Joint Lead Arranger and their respective Affiliates, and not, for the avoidance of doubt, to, or for the benefit of, any Borrower, that at least one (1) of the following is and will be true:
(i)    such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA) of one (1) or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of, and performance of the Loans, the Revolving Commitments and/or this Agreement, as the case may be;
(ii)    the transaction exemption set forth in one (1) or more PTEs, such as PTE 84–14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95–60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90–1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91–38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96–23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Revolving Commitments and this Agreement;
(iii)     (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84–14); (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Revolving Commitments and this Agreement; (C) the entrance into, participation in, administration of and performance of the Loans, the Revolving Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84–14; and (D) to the best knowledge of any Responsible Officer of such Lender, the requirements of subsection (a) of Part I of PTE 84–14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Revolving Commitments and this Agreement; or



(iv)    such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)    In addition, unless the foregoing clause (a)(i) is true with respect to a Lender, or such Lender has provided another representation, warranty and covenant as provided in the foregoing clause (a)(iv), such Lender further (A) represents and warrants, as of the date on which such Person became a Lender party hereto, to, and (B) covenants, from the date on which such Person became a Lender party hereto to the date on which such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent and each Joint Lead Arranger and their respective Affiliates, and not, for the avoidance of doubt, to, or for the benefit of, any Borrower, that none of the Administrative Agent or any Joint Lead Arranger, or any of their respective Affiliates, is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of, and performance of the Loans, the Revolving Commitments and/or this Agreement, as the case may be (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document, or any documents related to hereto or thereto).
ARTICLE XI.

MISCELLANEOUS
Section 11.01        Amendments, Etc. Subject to Section 3.03, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure therefrom by any Borrower, shall be effective unless in writing signed by the Required Lenders and the Borrowers and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given, provided, that:
(a)    no such amendment, waiver or consent shall:
(i)    extend or increase the Revolving Commitment of a Lender (or reinstate any Revolving Commitment terminated pursuant to Section 9.02) without the written consent of such Lender whose Revolving Commitment is being extended or increased (it being understood and agreed that a waiver of any condition precedent set forth in Section 5.02, or of any Default or a mandatory reduction in Revolving Commitments, is not considered an extension or increase in Revolving Commitments of any Lender);
(ii)    postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them), or any scheduled or mandatory reduction of the Revolving Commitments hereunder or under any other Loan Document, in each case of the foregoing, without the written consent of each Lender entitled to receive such payment or whose Revolving Commitments are to be reduced, as the case may be;
(iii)    reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (i) of the final proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document, in each case of the foregoing, without the written consent of each Lender entitled to receive such payment of principal, interest, fees or other amounts; provided, that, only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” in Section 1.01, or to waive any obligation of the Borrowers to pay interest at the Default Rate;



(iv)    change any provision of this Section 11.01 or the definition of “Required Lenders” in Section 1.01, in each case of the foregoing, without the written consent of each Lender;
(v)    change the provisions of Section 2.12 or Section 9.03 in a manner that would alter the pro rata sharing of payments required thereby, in each case of the foregoing, without the written consent of each Lender directly affected thereby;
(b)    unless also signed by the Swing Line Lender, no amendment, waiver or consent shall affect the rights or duties of the Swing Line Lender under this Agreement; and
(c)    unless also signed by the Administrative Agent, no amendment, waiver or consent shall affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;
provided, that, notwithstanding anything to the contrary herein: (i) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto; (ii) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent that, by its terms, requires the consent of all Lenders or each affected Lender, as the case may be, may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (A) the Revolving Commitment of any Defaulting Lender may not be increased or extended, nor any principal amount(s) owed to any Defaulting Lender reduced nor the final maturity thereof extended, in each case of the foregoing, without the consent of such Lender, and (B) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender, as the case may be, that, by its terms, affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender; (iii) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein; (iv) the Required Lenders shall determine whether or not to allow a Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding, and such determination shall be binding on all of the Lenders; (v) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent, the Borrowers and the relevant Lenders providing such additional credit facilities (A) to add one (1) or more additional credit facilities to this Agreement, to permit the extensions of credit from time to time outstanding hereunder, and the accrued interest and fees in respect thereof, to share ratably in the benefits of this Agreement and the other Loan Documents, and the Loans and the accrued interest and fees in respect thereof, and to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders, and (B) to change, modify or alter Section 2.12 or Section 9.03, or any other provision hereof relating to the pro rata sharing of payments among the Lenders, solely to the extent necessary to effectuate any of the amendments (or amendments and restatements) enumerated in this clause (v) and for no other purpose; and (vi) if, following the Closing Date, the Administrative Agent and the Borrowers, acting together, identify any ambiguity, omission, mistake, typographical error and/or other defect in any provision of this Agreement or any other Loan Document (including, without limitation, the schedules and exhibits hereto or thereto), then the Administrative Agent and the Borrowers shall be permitted to amend, restate, amend and restate, supplement and/or otherwise modify such provision to cure such ambiguity, omission, mistake, typographical error and/or other defect, and such amendment (or amendment and restatement, as the case may be) shall become effective without any further action or consent of any other party to this Agreement.
Section 11.02        Notices and Other Communications; Facsimile Copies.
(a)    Notices Generally. Except, in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by



certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i)    if to any Borrower, the Administrative Agent or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 11.02; and
(ii)    if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to a Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (provided, that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day). Notices and other communications delivered through electronic communications, to the extent provided in clause (b) below, shall be effective as provided in such clause (b).
(b)    Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail, FPML messaging and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided, that, the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under Article II by electronic communication. The Administrative Agent or any Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided, that, approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes: (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail, or other written acknowledgement), provided, that, if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day; and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (b)(i) of notification that such notice or communication is available and identifying the website address therefor.
(c)    The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Borrower’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction, by a final and non-appealable judgment, to have



resulted from the gross negligence or willful misconduct of such Agent Party; provided, that, in no event shall any Agent Party have any liability to any Borrower, any Lender, or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d)    Change of Address, Etc. Each Borrower, the Administrative Agent and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrowers, the Administrative Agent and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record: (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent; and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one (1) individual at, or on behalf of, such Public Lender to, at all times, have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including, without limitation, U.S. Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to any Borrower or its securities for purposes of U.S. Federal or state securities laws.
(e)    Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Revolving Loan Notices, Swing Line Loan Notices and Prepayment Notices) purportedly given by, or on behalf of, any Borrower, even if: (i) such notices were not made in a manner specified herein, were incomplete, or were not preceded or followed by any other form of notice specified herein; or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrowers shall indemnify the Administrative Agent, each Lender, and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by, or on behalf of, a Borrower. All telephonic notices to, and other telephonic communications with, the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
Section 11.03        No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and are not exclusive of any rights, remedies, powers and privileges provided by applicable Law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against any of the Borrowers shall be vested exclusively in, and all actions and proceedings at Law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 9.02 for the benefit of all the Lenders, provided, that: (a) the foregoing shall not prohibit (i) the Administrative Agent from exercising, on its own behalf, the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (ii) the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Swing Line Lender) hereunder and under the other Loan Documents, (iii) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.12), or (iv) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Borrower under any Debtor Relief Law; and (b) if, at any time, there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise



ascribed to the Administrative Agent pursuant to Section 9.02, and (ii) in addition to the matters set forth in the foregoing clauses (a)(ii), (a)(iii) and (a)(iv) and subject to Section 2.12, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Section 11.04        Expenses; Indemnity; and Damage Waiver.
(a)    Costs and Expenses. Each of the Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Joint Lead Arrangers and their respective Affiliates (including, without limitation, the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender (including, without limitation, the reasonable fees, charges and disbursements of one (1) primary counsel and, to the extent reasonably necessary, one (1) special and one (1) local counsel in each applicable jurisdiction for the Administrative Agent and for all of the Lenders as a group (and, in the event of any actual or potential conflict of interest, one (1) additional counsel for the Administrative Agent and/or each Lender subject to such conflict)) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 11.04, or (B) in connection with the Loans made, including, without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b)    Indemnification by the Borrowers. Each of the Borrowers shall indemnify the Administrative Agent (and any sub-agent thereof), each Joint Lead Arranger, each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, penalties and reasonable related expenses (including, without limitation, the reasonable fees, charges and disbursements of one (1) primary counsel and, to the extent reasonably necessary, one (1) special and one (1) local counsel in each applicable jurisdiction for the Indemnitees (and, in the event of any actual or potential conflict of interest, one (1) additional counsel for the Administrative Agent and/or each Lender subject to such conflict)) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use, or proposed use, of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Borrower or any of its Subsidiaries, or any Environmental Liability related, in any way, to a Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided, that, such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction, by final and non-appealable judgment, to have resulted from the gross negligence or willful misconduct of such Indemnitee.
(c)    Reimbursement by Lenders. To the extent that any of the Borrowers, for any reason, fails to indefeasibly pay any amount required under the foregoing clauses (a) or (b) to be paid by them to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed



expense or indemnity payment is sought) of such unpaid amount; provided, that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by, or asserted against, the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.11(d).
(d)    Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no Borrower shall assert, and each Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use, or proposed use, of the proceeds thereof. No Indemnitee referred to in the foregoing clause (b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents, or the transactions contemplated hereby or thereby.
(e)    Payments. All amounts due under this Section 11.04 shall be payable not later than ten (10) Business Days after demand therefor. Payment obligations of the Borrowers under this Section 11.04 shall be subject to Section 11.19.
(f)    Survival. The agreements in this Section 11.04 shall survive: (i) the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Revolving Commitments and the repayment, satisfaction or discharge of all the other Obligations; and (ii) the repayment of Obligations and the termination of rights and of any Borrower pursuant to Section 2.05.
Section 11.05        Payments Set Aside. To the extent that any payment by, or on behalf of, any Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff, or any part thereof, is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including, without limitation, pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then: (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect, as if such payment had not been made or such setoff had not occurred; and (b) each Lender severally agrees to pay to the Administrative Agent, upon demand, its applicable share (without duplication) of any amount so recovered from, or repaid by, the Administrative Agent, plus interest thereon from, and including, the date of such demand to, and including, the date such payment is made, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under the foregoing clause (b) shall survive the payment in full of the Obligations and the termination of this Agreement.
Section 11.06        Successors and Assigns.
(a)    Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon, and inure to the benefit of, the parties hereto and thereto and their respective successors and assigns permitted hereby, provided, that, no Borrower may assign, or otherwise transfer, any of its rights or obligations hereunder or thereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder, except: (i) to an assignee in accordance with the provisions of clause (b) below; (ii) by way of participation in accordance with the provisions of clause (d) below; or (iii) by way of pledge or assignment of a security interest subject to the restrictions of clause (f) below (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective



successors and assigns permitted hereby, Participants to the extent provided in clause (d) below, and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under, or by reason of, this Agreement.
(b)    Assignments by Lenders. Any Lender may, at any time, assign to one (1) or more assignees all, or a portion, of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all, or a portion, of its Revolving Commitment and the Loans (including, for purposes of this clause (b), participations in Swing Line Loans) at the time owing to it), provided, that, any such assignment shall be subject to the following conditions:
(i)    Minimum Amounts.
(A)    in the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment and the Loans at the time owing to it, or, in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B)    in any case not described in the foregoing clause (b)(i)(A), the aggregate amount of the Revolving Commitment (which, for this purpose, includes Loans outstanding thereunder) or, if the Revolving Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent, or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than Five Million Dollars ($5,000,000), in the case of an assignment of Revolving Loans or Term Out Loans, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, each Borrower otherwise consents (each such consent not to be unreasonably withheld, conditioned or delayed); provided, that, concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;
(ii)    Required Consents. No consent shall be required for any assignment, except to the extent required by the foregoing clause (b)(i)(B), and, in addition:
(A)    the consent of each Borrower (such consent not to be unreasonably withheld, conditioned or delayed) shall be required, unless (I) an Event of Default has occurred and is continuing at the time of such assignment, or (II) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, that, each Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(B)    the consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed) shall be required for assignments in respect of any Revolving Commitment if such assignment is to a Person that is not a Lender with a Revolving Commitment in respect of the Revolving Commitment subject to such assignment, an Affiliate of such Lender, or an Approved Fund with respect to such Lender; and



(C)    the consent of the Swing Line Lender (such consent not to be unreasonably withheld, conditioned or delayed) shall be required for any assignment in respect of the Revolving Commitment.
(iii)    Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, that, the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(iv)    No Assignment to Certain Persons. No such assignment shall be made: (A) to any Borrower, or any of the Borrowers’ Affiliates or Subsidiaries; or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (b)(iv)(B); or (C) to a natural person (or to a holding company, investment vehicle or trust for, or owned and operated by, or for the primary benefit of, a natural person).
(v)    Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or sub-participations, or other compensating actions, including funding, with the consent of each Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to: (A) pay and satisfy, in full, all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon); and (B) acquire (and fund, as appropriate) its full pro rata share of all Loans and participations in Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding anything to the contrary in the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this clause (b), then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to the acceptance and recording thereof by the Administrative Agent pursuant to clause (c) below, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, shall have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto), but shall continue to be entitled to the benefits of Section 3.01, Section 3.04, Section 3.05 and Section 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the applicable Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this clause (b), shall be treated, for purposes of this Agreement, as a sale by such Lender of a participation in such rights and obligations in accordance with clause (d) below.



(c)    Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by any Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d)    Participations. Any Lender may, at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender, or any Borrower or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all, or a portion, of such Lender’s rights and/or obligations under this Agreement (including, without limitation, all, or a portion, of its Revolving Commitment and/or the Loans (including, without limitation, such Lender’s participations in Swing Line Loans) owing to it), provided, that: (i) such Lender’s obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Borrowers, the Administrative Agent, the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that, such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in clauses (a)(i) through (a)(v) of Section 11.01 that affects such Participant. Subject to clause (e) below, each Borrower agrees that each Participant shall be entitled to the benefits of Section 3.01, Section 3.04 and Section 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to the foregoing clause (b). To the extent permitted by applicable Law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided, that, such Participant agrees to be subject to Section 2.12 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided, that, no Lender shall have any obligation to disclose all, or any portion, of the Participant Register (including, without limitation, the identity of any Participant, or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person, except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103–1(c) of the U.S. Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement, notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. No sale of a participation shall be effective unless and until it has been recorded in the Participant Register as provided in this clause (d).
(e)    Limitation on Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or Section 3.04 than the applicable Lender would have been entitled



to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with each Borrower’s prior written consent. Furthermore, a Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01, unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 3.01(e) as though it were a Lender.
(f)    Certain Pledges. Any Lender may, at any time, pledge or assign a security interest in all, or any portion, of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided, that, no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g)    Resignation as Swing Line Lender after Assignment. Notwithstanding anything to the contrary contained herein, if, at any time, Bank of America assigns all of its Revolving Commitment and Loans pursuant to the foregoing clause (b), Bank of America may, upon thirty (30) calendar days’ notice to the Borrowers, resign as Swing Line Lender. In the event of any such resignation as Swing Line Lender, the Borrowers shall be entitled to appoint from among the Lenders a successor Swing Line Lender hereunder; provided, that, no failure by the Borrowers to appoint any such successor shall affect the resignation of Bank of America as Swing Line Lender, as the case may be. If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.03(c). Upon the appointment of a successor Swing Line Lender, such successor shall succeed to, and become vested with all of the rights, powers, privileges and duties of, the retiring Swing Line Lender, as the case may be.
Notice by the Administrative Agent to the Borrowers of any assignment made under this Section 11.06 shall be provided as may be agreed in writing from time to time between the Borrowers and the Administrative Agent.
Section 11.07        Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed: (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable Laws or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document, or any action or proceeding relating to this Agreement or any other Loan Document, or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section 11.07, to (i) any assignee of, or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to a Borrower and its obligations; (g) with the consent of each Borrower; (h) to the extent such Information (i) becomes publicly available, other than as a result of a breach of this Section 11.07, or (ii) becomes available to the Administrative Agent, any Lender, or any of their respective Affiliates on a non-confidential basis from a source other than any Borrower; (i) to rating agencies if requested or required by such agency in connection with a rating relating to the Loans hereunder; and (j) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to this Agreement. In addition, the



Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Revolving Commitments.
For purposes of this Section 11.07, “Information” means all information received from a Borrower or any Subsidiary relating to the Borrowers or any Subsidiary, or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender on a non-confidential basis prior to disclosure by such Borrower or any Subsidiary, provided, that, in the case of information received from a Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 11.07 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent and the Lenders acknowledges that: (A) the Information may include material non-public information concerning any Borrower or Subsidiary thereof, as the case may be; (B) it has developed compliance procedures regarding the use of material non-public information; and (C) it will handle such material non-public information in accordance with applicable Law, including U.S. federal and state securities Laws.
Section 11.08        Set-off. If an Event of Default shall have occurred and be continuing, each Lender, and each of their respective Affiliates, is hereby authorized, at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender or any such Affiliate to, or for the credit or the account of, any Borrower, against any and all of the obligations of such Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document, and although such obligations of such Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness; provided, that, in the event that any Defaulting Lender shall exercise any such right of setoff, (i) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.14, and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (ii) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing, in reasonable detail, the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and its respective Affiliates under this Section 11.08 are in addition to other rights and remedies (including other rights of setoff) that such Lender or its respective Affiliates may have. Each Lender agrees to notify the Borrowers and the Administrative Agent promptly after any such setoff and application; provided, that, the failure to give such notice shall not affect the validity of such setoff and application.
Section 11.09        Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid, or agreed to be paid, under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans, or, if it exceeds such unpaid principal, refunded to the applicable Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law: (a) characterize any payment that is not principal as an expense, fee, or premium, rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate, and



spread, in equal or unequal parts, the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 11.10        Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties hereto relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 5.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 11.11        Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto, or in connection herewith or therewith, shall survive the execution and delivery hereof and thereof. Such representations and warranties have been, or will be, relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender, or on its or their behalf, and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.
Section 11.12        Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby, and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate, or render unenforceable, such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12, if, and to the extent, that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 11.13        Replacement of Lenders. If (i) any Lender requests compensation under Section 3.04, (ii) any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, (iii) a Lender (a “Non-Consenting Lender”) does not consent to a proposed change, waiver, discharge or termination with respect to any Loan Document that has been approved by the Required Lenders as provided in Section 11.01, but requires unanimous consent of all Lenders or all Lenders directly affected thereby (as applicable), or (iv) any Lender is a Defaulting Lender, then, in any such case of the foregoing clauses (i) through (iv), the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with, and subject to, the rights and restrictions contained in, and consents required by, Section 11.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if such other Lender accepts such assignment), provided, that:
(a)    the applicable Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 11.06(b);



(b)    such Lender shall have received payment of an amount equal to one hundred percent (100.0%) of the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including, without limitation, any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);
(c)    in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;
(d)    such assignment does not conflict with applicable Laws; and
(e)    in the case of any such assignment resulting from a Non-Consenting Lender’s failure to consent to a proposed change, waiver, discharge or termination with respect to any Loan Document, the applicable replacement bank, financial institution or Approved Fund consents to the proposed change, waiver, discharge or termination; provided, that, the failure by such Non-Consenting Lender to execute and deliver an Assignment and Assumption shall not impair the validity of the removal of such Non-Consenting Lender, and the mandatory assignment of such Non-Consenting Lender’s Revolving Commitments and outstanding Loans and participations in Swing Line Loans pursuant to this Section 11.13 shall nevertheless be effective without the execution by such Non-Consenting Lender of an Assignment and Assumption.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.
Section 11.14        Governing Law; Jurisdiction; Etc.
(a)    GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF, OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN), AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)    SUBMISSION TO JURISDICTION. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE



HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c)    WAIVER OF VENUE. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THE FOREGOING CLAUSE (B). EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d)    SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section 11.15        Waiver of Right to Trial by Jury. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO: (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.15.
Section 11.16        Electronic Execution. The words “delivery”, “execute”, “execution”, “signed” and “signature”, and words of like import in any Loan Document or any other document executed in connection herewith, shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually-executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including, without limitation, the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided, that, (i) notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format, unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it, and (ii) without limiting the foregoing, upon the request of the Administrative Agent, any electronic signature shall be promptly followed by such manually-executed counterpart.
Section 11.17        USA Patriot Act; Beneficial Ownership Regulation. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself, and not on behalf of any Lender) hereby notifies each Borrower that, pursuant to the requirements of the Patriot Act and, to the extent that any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Beneficial Ownership Regulation, it is required to obtain, verify and record information that identifies each Borrower, which information includes the



name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Patriot Act and, to the extent that any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Beneficial Ownership Regulation. Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act and, to the extent that any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Beneficial Ownership Regulation.
Section 11.18        No Advisory or Fiduciary Relationship. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a) (i) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Joint Lead Arrangers and the Lenders are, in each case, arm’s-length commercial transactions between the Borrowers and their Affiliates, on the one hand, and the Administrative Agent, the Joint Lead Arrangers and the Lenders, as applicable, on the other hand, (ii) each Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) each Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b) (i) the Administrative Agent, the Joint Lead Arrangers and the Lenders each is, and has been, acting solely as a principal, and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as, an advisor, agent or fiduciary for any Borrower, any Affiliate of any Borrower or any other Person, and (ii) none of the Administrative Agent, the Joint Lead Arrangers and the Lenders has any obligation to any Borrower or any of its Affiliates with respect to the transactions contemplated hereby, except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent, the Joint Lead Arrangers, the Lenders, and each of their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their Affiliates, and none of the Administrative Agent, the Joint Lead Arrangers and the Lenders has any obligation to disclose any of such interests to any Borrower or its Affiliates. To the fullest extent permitted by applicable Law, each Borrower hereby waives and releases any claims that it may have against the Administrative Agent, any Joint Lead Arranger or any Lender with respect to any breach, or alleged breach, of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.
Section 11.19        Pro Rata Shares of Obligations of Borrowers. Each Borrower shall be liable for its pro rata share of any payment to be made by the Borrowers under Section 3.01, Section 3.04, Section 3.05, and Section 11.04, such pro rata share to be determined on the basis of such Borrower’s Facility Percentage; provided, that, if, and to the extent that, any such liabilities are reasonably determined by the Borrowers (subject to the approval of the Administrative Agent, which approval shall not be unreasonably withheld, conditioned or delayed) to be directly attributable to a specific Borrower, only such Borrower shall be liable for such payments.
Section 11.20        Limitation of Liability. No shareholder or trustee of Eversource shall be held to any liability whatsoever for the payment of any sum of money, for damages or otherwise under any Loan Document, and such Loan Documents shall not be enforceable against any such shareholder or trustee in its, his or her individual capacity, and such Loan Documents shall be enforceable against the trustees of Eversource only in such trustee capacity, and every person, firm, association, trust or corporation having any claim or demand arising under such Loan Documents and relating to Eversource, its shareholders or trustees shall look solely to the trust estate of Eversource for the payment or satisfaction thereof.
Section 11.21        Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent that any Lender that is an Affected Financial Institution is party to this Agreement, and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or



understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising under any Loan Document, to the extent that such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority, and each party hereto agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder that may be payable to it by any Lender that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable, (i) a reduction, in full or in part, or cancellation of any such liability, (ii) a conversion of all, or a portion, of such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to, or otherwise conferred on, it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document, or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 11.22        Acknowledgement Regarding any Supported QFCs.
(a)    To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Obligation or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”; and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the U.S. Federal Deposit Insurance Corporation under the U.S. Federal Deposit Insurance Act and Title II of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder or in connection therewith, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the Laws of the State of New York and/or of the United States or any other state of the United States.
(b)    In the event that a Covered Entity that is a party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the Laws of the United States or a state of the United States. In the event that a Covered Party, or a BHC Act Affiliate of a Covered Party, becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

    IN WITNESS WHEREOF, each of the parties hereto have caused a counterpart of this Agreement to be duly executed and delivered by their respective duly authorized officers as of the day and year first written above, intending to create an instrument under seal.



BORROWERS:            EVERSOURCE ENERGY,
                a voluntary association and Massachusetts business trust organized
                under the laws of the Commonwealth of Massachusetts

                By: /s/ EMILIE O’NEIL
                Name: Emilie O’Neil
                Title: Assistant Treasurer
            

                EVERSOURCE GAS COMPANY OF MASSACHUSETTS,
                a Massachusetts corporation

                By: /s/ EMILIE O’NEIL
                Name: Emilie O’Neil
                Title: Assistant Treasurer –
Corporate Finance and Cash Management
                











ADMINISTRATIVE AGENT:         BANK OF AMERICA, N.A.
                    as Administrative Agent




                    By: /s/ MELISSA MULLIS
                    Name: Melissa Mullis
                    Title: Assistant Vice President

LENDERS:                BANK OF AMERICA, N.A.
                    as a Swing Line Lender and as a Lender
                    
                    By: /s/ JENNIFER COCHRANE
                    Name: Jennifer Cochrane
                    Title: Vice President

                    BARCLAYS BANK PLC,
                    as a Lender

                    By: /s/ SYDNEY G. DENNIS
                    Name: Sydney G. Dennis
                    Title: Director

                    CITIBANK, N.A.,
                    as a Lender
                    
                    By: /s/ RICHARD RIVERA
Name: Richard Rivera
                    Title: Vice President
                    GOLDMAN SACHS BANK USA,
as a Lender

                    By: /s/ JACOB ELDER
                    Name: Jacob Elder
                    Title: Authorized Signatory

                    MIZUHO BANK, LTD.,
                    as a Lender

                    By: /s/ EDWARD SACKS
                    Name: Edward Sacks
                    Title: Authorized Signatory

                    MUFG BANK, LTD,
                    as a Lender

                    By: /s/ JEFFREY FESENMAIER
                    Name: Jeffrey Fesenmaier
                    Title: Managing Director
                        



                    TD BANK, N.A.,
                    as a Lender

                    By: /s/ SHANNON BATCHMAN
                    Name: Shannon Batchman
                    Title: Senior Vice President

                    U.S. BANK NATIONAL ASSOCIATION
                    as a Lender

                    By: /s/ JOSEPH HORRIGAN
                    Name: Joseph Horrigan
                    Title: Managing Director

                    WELLS FARGO BANK, NATIONAL ASSOCIATION,
                    as a Lender

                    By: /s/ KEITH LUETTEL
                    Name: Keith Luettel
                    Title: Managing Director

                    THE BANK OF NEW YORK MELLON,
                    as a Lender

                    By: /s/ RICHARD K. FRONAPLEL, JR.
                    Name: Richard K. Fronaplel, Jr.
                    Title: Director

                    JPMORGAN CHASE BANK, N.A.,
                    as a Lender

                    By: /s/ NANCY R. BARWIG
                    Name: Nancy R. Barwig
                    Title: Executive Director

                    KEYBANK NATIONAL ASSOCIATION,
                    as a Lender

                    By: /s/ LISA A. RYDER
                    Name: Lisa A. Ryder
                    Title: Senior Vice President

                    MORGAN STANLEY BANK, N.A.,
                    as a Lender

                    By: /s/ JULIE LILIENFELD
                    Name: Julie Lilienfeld
                    Title: Authorized Signatory
                    

                    PNC BANK, NATIONAL ASSOCIATION,



                    as a Lender

                    By: /s/ RICHARD G. TUTICH
                    Name: Richard G. Tutich
                    Title: Vice President


                    ROYAL BANK OF CANADA,
                    as a Lender

                    By: /s/ JUSTIN PAINTER
                    Name: Justin Painter
                    Title: Authorized Signatory



Exhibit 21
Subsidiaries of the Registrants as of February 17, 2021 (1)

State of Incorporation
Eversource Energy (a Massachusetts business trust) (2)
MA
The Connecticut Light and Power Company (2) (3)
CT
Connecticut Yankee Atomic Power Company (4)
CT
Eversource Energy Service Company CT
Eversource Energy Transmission Ventures, Inc. CT
Eversource Gas Transmission LLC
MA
Eversource Gas Transmission II LLC
MA
Eversource LNG Service Company LLC
MA
Northern Pass Transmission LLC
NH
Renewable Properties, Inc.
NH
Eversource Holdco Corporation MA
Eversource Investment LLC
MA
Eversource Investment Service Company LLC
MA
Eversource Water Ventures, Inc. CT
Eversource Aquarion Holdings, Inc.
DE
Aquarion Company
DE
Aquarion Water Company
CT
Aquarion Water Company of Connecticut
CT
Aquarion Water Company of Massachusetts, Inc.
MA
Aquarion Water Capital of Massachusetts, Inc.
DE
Aquarion Water Company of New Hampshire, Inc.
NH
Homeowner Safety Valve Company
DE
HWP Company MA
North Atlantic Energy Corporation NH
North Atlantic Energy Service Corporation NH
Northeast Nuclear Energy Company CT
NSTAR Electric Company (2) (3)
MA
Harbor Electric Energy Company
MA
Public Service Company of New Hampshire (2) (3)
NH
Properties, Inc.
NH
PSNH Funding LLC 3
DE
The Rocky River Realty Company CT
Yankee Atomic Electric Company (4)
MA
Yankee Energy System, Inc. CT
Eversource Gas Company of Massachusetts (3)
MA
Hopkinton LNG Corp.
MA
NSTAR Gas Company (3)
MA
Yankee Gas Services Company (3)
CT




(1)    The names of some of our subsidiaries which, if considered in the aggregate as a single subsidiary, would not constitute a “significant subsidiary,” have been omitted in accordance with Item 601(b)(21)(ii) of Regulation S-K.
(2)    SEC Registrant.
(3)    This entity is doing business as Eversource Energy.
(4)    For The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire, investments in Connecticut Yankee Atomic Power Company and Yankee Atomic Electric Company are accounted for under the equity method.



Exhibit 23

CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-231118 and 333-224122 on Form S-3 and Registration Statement Nos. 333-121364, 333-142724, 333-181258, 333-224605, and 333-231116 on Form S-8 of our reports dated February 17, 2021, relating to the consolidated financial statements and the financial statement schedules of Eversource Energy and subsidiaries, and the effectiveness of Eversource Energy and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of Eversource Energy for the year ended December 31, 2020.

We also consent to the incorporation by reference in Registration Statement No. 333-231118-01 on Form S-3 of our report dated February 17, 2021, relating to the financial statements and the financial statement schedule of The Connecticut Light and Power Company appearing in this Annual Report on Form 10-K of The Connecticut Light and Power Company for the year ended December 31, 2020.

We also consent to the incorporation by reference in Registration Statement No. 333-231118-02 on Form S-3 of our report dated February 17, 2021, relating to the consolidated financial statements and the financial statement schedule of NSTAR Electric Company and subsidiary appearing in this Annual Report on Form 10-K of NSTAR Electric Company for the year ended December 31, 2020.

We also consent to the incorporation by reference in Registration Statement No. 333-231118-03 on Form S-3 of our report dated February 17, 2021, relating to the consolidated financial statements and the financial statement schedule of Public Service Company of New Hampshire and subsidiary appearing in this Annual Report on Form 10-K of Public Service Company of New Hampshire for the year ended December 31, 2020.


/s/ Deloitte & Touche LLP

Hartford, Connecticut
February 17, 2021




Exhibit 31

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, James J. Judge, certify that:
1.I have reviewed this Annual Report on Form 10-K of Eversource Energy (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:  February 17, 2021

/s/ James J. Judge
  James J. Judge
  Chairman of the Board, President and Chief Executive Officer
  (Principal Executive Officer)





Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip J. Lembo, certify that:
1.I have reviewed this Annual Report on Form 10-K of Eversource Energy (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  February 17, 2021

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer
  (Principal Financial Officer)




Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of Eversource Energy (the registrant) for the period ending December 31, 2020 as filed with the Securities and Exchange Commission (the Report), we, James J. Judge, Chairman of the Board, President and Chief Executive Officer of the registrant, and Philip J. Lembo, Executive Vice President and Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.


/s/ James J. Judge
  James J. Judge
  Chairman of the Board, President and Chief Executive Officer

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer

Date:  February 17, 2021





Exhibit 31

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James J. Judge, certify that:
1.I have reviewed this Annual Report on Form 10-K of The Connecticut Light and Power Company (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:  February 17, 2021

/s/ James J. Judge
  James J. Judge
  Chairman
  (Principal Executive Officer)




Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip J. Lembo, certify that:
1.I have reviewed this Annual Report on Form 10-K of The Connecticut Light and Power Company (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  February 17, 2021

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer
  (Principal Financial Officer)




Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of The Connecticut Light and Power Company (the registrant) for the period ending December 31, 2020 as filed with the Securities and Exchange Commission (the Report), we, James J. Judge, Chairman of the registrant, and Philip J. Lembo, Executive Vice President and Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.


/s/ James J. Judge
  James J. Judge
  Chairman

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer

Date:  February 17, 2021




Exhibit 31

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James J. Judge, certify that:
1.I have reviewed this Annual Report on Form 10-K of NSTAR Electric Company (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:  February 17, 2021

/s/ James J. Judge
  James J. Judge
  Chairman
  (Principal Executive Officer)



Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip J. Lembo, certify that:
1.I have reviewed this Annual Report on Form 10-K of NSTAR Electric Company (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  February 17, 2021

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer
  (Principal Financial Officer)



Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of NSTAR Electric Company (the registrant) for the period ending December 31, 2020 as filed with the Securities and Exchange Commission (the Report), we, James J. Judge, Chairman of the registrant, and Philip J. Lembo, Executive Vice President and Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.


/s/ James J. Judge
  James J. Judge
  Chairman

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer

Date:  February 17, 2021




Exhibit 31

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James J. Judge, certify that:
1.I have reviewed this Annual Report on Form 10-K of Public Service Company of New Hampshire (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:  February 17, 2021

/s/ James J. Judge
  James J. Judge
  Chairman
  (Principal Executive Officer)




Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Philip J. Lembo, certify that:
1.I have reviewed this Annual Report on Form 10-K of Public Service Company of New Hampshire (the registrant);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  February 17, 2021

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer
  (Principal Financial Officer)




Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of Public Service Company of New Hampshire (the registrant) for the period ending December 31, 2020 as filed with the Securities and Exchange Commission (the Report), we, James J. Judge, Chairman of the registrant, and Philip J. Lembo, Executive Vice President and Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.


/s/ James J. Judge
  James J. Judge
  Chairman

/s/ Philip J. Lembo
  Philip J. Lembo
  Executive Vice President and Chief Financial Officer

Date:  February 17, 2021