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EVERSOURCE ENERGY - Quarter Report: 2022 September (Form 10-Q)


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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period EndedSeptember 30, 2022
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: 001-05324
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: 000-00404
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: 001-02301
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: 001-06392
I.R.S. Employer Identification No. 02-0181050

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, $5.00 par value per shareESNew York Stock Exchange

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

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).
YesNo
 

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 EnergyLarge accelerated filerAccelerated
filer
Non-accelerated
filer
Smaller reporting companyEmerging growth company
The Connecticut Light and Power CompanyLarge accelerated filerAccelerated
filer
Non-accelerated filerSmaller reporting companyEmerging growth company
NSTAR Electric CompanyLarge accelerated filerAccelerated
filer
Non-accelerated filerSmaller reporting companyEmerging growth company
Public Service Company of New HampshireLarge accelerated filerAccelerated
filer
Non-accelerated filerSmaller reporting companyEmerging 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 registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
YesNo
Eversource Energy
The Connecticut Light and Power Company
NSTAR Electric Company
Public Service Company of New Hampshire

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 StockOutstanding as of October 31, 2022
Eversource Energy Common Shares, $5.00 par value348,307,416 shares
The Connecticut Light and Power Company Common Stock, $10.00 par value6,035,205 shares
NSTAR Electric Company Common Stock, $1.00 par value200 shares
Public Service Company of New Hampshire Common Stock, $1.00 par value301 shares

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

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

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



GLOSSARY OF TERMS

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

Current or former Eversource Energy companies, segments or investments:
Eversource, ES or the CompanyEversource Energy and subsidiaries
Eversource parent or ES parentEversource Energy, a public utility holding company
ES parent and other companiesES parent and other companies are comprised of Eversource parent, Eversource Service, 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&PThe Connecticut Light and Power Company
NSTAR ElectricNSTAR Electric Company
PSNHPublic Service Company of New Hampshire
PSNH FundingPSNH Funding LLC 3, a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH
NSTAR GasNSTAR Gas Company
EGMAEversource Gas Company of Massachusetts
Yankee GasYankee Gas Services Company
AquarionAquarion Company and its subsidiaries
HEECHarbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric
Eversource ServiceEversource Energy Service Company
North East OffshoreNorth East Offshore, LLC, an offshore wind business being developed jointly by Eversource and Denmark-based Ørsted
CYAPCConnecticut Yankee Atomic Power Company
MYAPCMaine Yankee Atomic Power Company
YAECYankee Atomic Electric Company
Yankee CompaniesCYAPC, YAEC and MYAPC
Regulated companiesThe Eversource regulated companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric and PSNH, the natural gas distribution businesses of Yankee Gas, NSTAR Gas and EGMA, Aquarion’s water distribution businesses, and the solar power facilities of NSTAR Electric
Regulators and Government Agencies:
BOEM
U.S. Bureau of Ocean Energy Management
DEEPConnecticut Department of Energy and Environmental Protection
DOEU.S. Department of Energy
DOERMassachusetts Department of Energy Resources
DPUMassachusetts Department of Public Utilities
EPAU.S. Environmental Protection Agency
FERCFederal Energy Regulatory Commission
ISO-NEISO New England, Inc., the New England Independent System Operator
MA DEPMassachusetts Department of Environmental Protection
NHPUCNew Hampshire Public Utilities Commission
PURAConnecticut Public Utilities Regulatory Authority
SECU.S. Securities and Exchange Commission
Other Terms and Abbreviations:
ADITAccumulated Deferred Income Taxes
AFUDCAllowance For Funds Used During Construction
AOCIAccumulated Other Comprehensive Income
AROAsset Retirement Obligation
BcfBillion cubic feet
CfDContract for Differences
CWIPConstruction Work in Progress
EDCElectric distribution company
EDITExcess Deferred Income Taxes
EPSEarnings Per Share
ERISAEmployee Retirement Income Security Act of 1974
ESOPEmployee Stock Ownership Plan
Eversource 2021 Form 10-KThe Eversource Energy and Subsidiaries 2021 combined Annual Report on Form 10-K as filed with the SEC
FitchFitch Ratings, Inc.
i


FMCCFederally Mandated Congestion Charge
GAAPAccounting principles generally accepted in the United States of America
GWhGigawatt-Hours
IPPIndependent Power Producers
ISO-NE TariffISO-NE FERC Transmission, Markets and Services Tariff
kVKilovolt
kVaKilovolt-ampere
kWKilowatt (equal to one thousand watts)
LNGLiquefied natural gas
LRSSupplier of last resort service
MGMillion gallons
MGPManufactured Gas Plant
MMBtuOne million British thermal units
MMcfMillion cubic feet
Moody'sMoody's Investors Services, Inc.
MWMegawatt
MWhMegawatt-Hours
NETOsNew England Transmission Owners (including Eversource, National Grid and Avangrid)
OCIOther Comprehensive Income/(Loss)
PAMPension and PBOP Rate Adjustment Mechanism
PBOPPostretirement Benefits Other Than Pension
PBOP PlanPostretirement Benefits Other Than Pension Plan
Pension PlanSingle uniform noncontributory defined benefit retirement plan
PPAPower purchase agreement
RECsRenewable Energy Certificates
Regulatory ROEThe average cost of capital method for calculating the return on equity related to the distribution business segment excluding the wholesale transmission segment
ROEReturn on Equity
RRBsRate Reduction Bonds or Rate Reduction Certificates
RSUsRestricted share units
S&PStandard & Poor's Financial Services LLC
SERPSupplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SSStandard service
UIThe United Illuminating Company
VIEVariable Interest Entity
ii


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

TABLE OF CONTENTS
 Page
PART IFINANCIAL INFORMATION
   
ITEM 1.
Financial Statements (Unaudited)
   
 
Eversource Energy and Subsidiaries (Unaudited)
 
 
 
Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Common Shareholders' Equity
 
  
 
The Connecticut Light and Power Company (Unaudited)
 
 
 
Condensed Statements of Comprehensive Income
Condensed Statements of Common Stockholder's Equity
 
  
 
NSTAR Electric Company and Subsidiary (Unaudited)
 
 
 
Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Common Stockholder's Equity
 
  
 Public Service Company of New Hampshire and Subsidiaries (Unaudited)
 
 
 
Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Common Stockholder's Equity
 
  
 
   
 
Eversource Energy and Subsidiaries
 
The Connecticut Light and Power Company, NSTAR Electric Company and Subsidiary, and
Public Service Company of New Hampshire and Subsidiaries
  
   
   
PART II – OTHER INFORMATION
   
  
ITEM 1A.
Risk Factors
  
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  
  
SIGNATURES

iii


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of September 30, 2022As of December 31, 2021
ASSETS  
Current Assets:  
Cash $45,716 $66,773 
Cash Equivalents (Note 6)440,000 — 
Receivables, Net (net of allowance for uncollectible accounts of $457,645
   and $417,406 as of September 30, 2022 and December 31, 2021, respectively)
1,453,785 1,226,069 
Unbilled Revenues181,176 210,879 
Fuel, Materials, Supplies and REC Inventory322,216 267,547 
Regulatory Assets1,143,646 1,129,093 
Prepayments and Other Current Assets333,115 369,759 
Total Current Assets3,919,654 3,270,120 
Property, Plant and Equipment, Net35,029,497 33,377,650 
Deferred Debits and Other Assets:  
Regulatory Assets4,558,776 4,586,709 
Goodwill4,477,756 4,477,269 
Investments in Unconsolidated Affiliates2,053,404 1,436,293 
Prepaid Pension and PBOP561,012 271,987 
Marketable Securities377,183 460,347 
Other Long-Term Assets622,143 611,769 
Total Deferred Debits and Other Assets12,650,274 11,844,374 
Total Assets$51,599,425 $48,492,144 
LIABILITIES AND CAPITALIZATION  
Current Liabilities:  
Notes Payable$401,500 $1,505,450 
Long-Term Debt – Current Portion1,610,468 1,193,097 
Rate Reduction Bonds – Current Portion43,210 43,210 
Accounts Payable1,459,606 1,672,230 
Regulatory Liabilities988,714 602,432 
Other Current Liabilities983,663 830,620 
Total Current Liabilities5,487,161 5,847,039 
Deferred Credits and Other Liabilities:  
Accumulated Deferred Income Taxes4,830,158 4,597,120 
Regulatory Liabilities3,901,106 3,866,251 
Derivative Liabilities164,253 235,387 
Asset Retirement Obligations505,937 500,111 
Accrued Pension, SERP and PBOP159,217 242,463 
Other Long-Term Liabilities874,391 971,080 
Total Deferred Credits and Other Liabilities10,435,062 10,412,412 
Long-Term Debt19,831,967 17,023,577 
Rate Reduction Bonds410,492 453,702 
Noncontrolling Interest – Preferred Stock of Subsidiaries155,570 155,570 
Common Shareholders' Equity: 
Common Shares1,799,920 1,789,092 
Capital Surplus, Paid In8,327,477 8,098,514 
Retained Earnings5,429,076 5,005,391 
Accumulated Other Comprehensive Loss(41,006)(42,275)
Treasury Stock(236,294)(250,878)
Common Shareholders' Equity15,279,173 14,599,844 
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization$51,599,425 $48,492,144 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars, Except Share Information)2022202120222021
Operating Revenues$3,215,645 $2,432,794 $9,259,596 $7,381,172 
Operating Expenses:    
Purchased Power, Fuel and Transmission1,388,041 880,639 3,718,278 2,529,217 
Operations and Maintenance454,289 389,065 1,378,897 1,265,754 
Depreciation302,143 276,846 885,711 822,197 
Amortization111,287 45,236 418,644 158,860 
Energy Efficiency Programs162,545 143,796 498,708 460,814 
Taxes Other Than Income Taxes240,047 213,881 683,441 623,827 
Total Operating Expenses2,658,352 1,949,463 7,583,679 5,860,669 
Operating Income557,293 483,331 1,675,917 1,520,503 
Interest Expense178,174 147,962 491,509 431,162 
Other Income, Net89,831 43,768 255,253 124,588 
Income Before Income Tax Expense468,950 379,137 1,439,661 1,213,929 
Income Tax Expense117,661 94,091 349,305 294,461 
Net Income351,289 285,046 1,090,356 919,468 
Net Income Attributable to Noncontrolling Interests1,880 1,880 5,639 5,639 
Net Income Attributable to Common Shareholders$349,409 $283,166 $1,084,717 $913,829 
Basic Earnings Per Common Share$1.01 $0.82 $3.13 $2.66 
Diluted Earnings Per Common Share$1.00 $0.82 $3.13 $2.65 
Weighted Average Common Shares Outstanding:  
Basic347,297,411 344,023,846 346,115,823 343,848,905 
Diluted347,762,693 344,669,782 346,573,101 344,480,056 

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Net Income$351,289 $285,046 $1,090,356 $919,468 
Other Comprehensive Income, Net of Tax:    
Qualified Cash Flow Hedging Instruments115 15 967 
Changes in Unrealized Losses on
   Marketable Securities
(667)(106)(1,990)(569)
Changes in Funded Status of Pension, SERP and
   PBOP Benefit Plans
2,520 2,468 3,244 4,148 
Other Comprehensive Income, Net of Tax1,858 2,477 1,269 4,546 
Comprehensive Income Attributable to
   Noncontrolling Interests
(1,880)(1,880)(5,639)(5,639)
Comprehensive Income Attributable to Common
   Shareholders
$351,267 $285,643 $1,085,986 $918,375 

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






2




EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2022
 Common SharesCapital
Surplus,
Paid In
Retained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Common Shareholders' Equity
(Thousands of Dollars, Except Share Information)SharesAmount
Balance as of January 1, 2022344,403,196 $1,789,092 $8,098,514 $5,005,391 $(42,275)$(250,878)$14,599,844 
Net Income   445,326   445,326 
Dividends on Common Shares - $0.6375 Per Share
   (219,768)  (219,768)
Dividends on Preferred Stock   (1,880)  (1,880)
Long-Term Incentive Plan Activity  (16,538)   (16,538)
Issuance of Treasury Shares447,076 20,642 8,360 29,002 
Other Comprehensive Income  704  704 
Balance as of March 31, 2022344,850,272 1,789,092 8,102,618 5,229,069 (41,571)(242,518)14,836,690 
Net Income   293,742   293,742 
Dividends on Common Shares - $0.6375 Per Share
   (219,877)  (219,877)
Dividends on Preferred Stock   (1,880)  (1,880)
Issuance of Common Shares - $5 par value
1,392,804 6,964 121,142 128,106 
Long-Term Incentive Plan Activity  9,070    9,070 
Issuance of Treasury Shares167,953  11,340   3,141 14,481 
Capital Stock Expense(1,824)(1,824)
Other Comprehensive Loss   (1,293) (1,293)
Balance as of June 30, 2022346,411,029 1,796,056 8,242,346 5,301,054 (42,864)(239,377)15,057,215 
Net Income   351,289   351,289 
Dividends on Common Shares - $0.6375 Per Share
   (221,387)  (221,387)
Dividends on Preferred Stock   (1,880)  (1,880)
Issuance of Common Shares - $5 par value
772,867 3,864 67,935 71,799 
Long-Term Incentive Plan Activity  7,407    7,407 
Issuance of Treasury Shares164,853  10,762   3,083 13,845 
Capital Stock Expense(973)(973)
Other Comprehensive Income   1,858  1,858 
Balance as of September 30, 2022347,348,749 $1,799,920 $8,327,477 $5,429,076 $(41,006)$(236,294)$15,279,173 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Unaudited)

For the Nine Months Ended September 30, 2021
 Common SharesCapital
Surplus,
Paid In
Retained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Common Shareholders' Equity
(Thousands of Dollars, Except Share Information)SharesAmount
Balance as of January 1, 2021342,954,023 $1,789,092 $8,015,663 $4,613,201 $(76,411)$(277,979)$14,063,566 
Net Income368,023 368,023 
Dividends on Common Shares - $0.6025 Per Share
(206,913)(206,913)
Dividends on Preferred Stock(1,880)(1,880)
Long-Term Incentive Plan Activity(15,727)(15,727)
Issuance of Treasury Shares480,275 16,182 8,981 25,163 
Other Comprehensive Income1,188 1,188 
Balance as of March 31, 2021343,434,298 1,789,092 8,016,118 4,772,431 (75,223)(268,998)14,233,420 
Net Income266,400 266,400 
Dividends on Common Shares - $0.6025 Per Share
(206,893)(206,893)
Dividends on Preferred Stock(1,880)(1,880)
Long-Term Incentive Plan Activity6,162 6,162 
Issuance of Treasury Shares166,805 10,679 3,120 13,799 
Other Comprehensive Income881 881 
Balance as of June 30, 2021343,601,103 1,789,092 8,032,959 4,830,058 (74,342)(265,878)14,311,889 
Net Income285,046 285,046 
Dividends on Common Shares - $0.6025 Per Share
(207,073)(207,073)
Dividends on Preferred Stock(1,880)(1,880)
Long-Term Incentive Plan Activity6,478 6,478 
Issuance of Treasury Shares173,221 11,435 3,239 14,674 
Other Comprehensive Income2,477 2,477 
Balance as of September 30, 2021343,774,324 $1,789,092 $8,050,872 $4,906,151 $(71,865)$(262,639)$14,411,611 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months Ended September 30,
(Thousands of Dollars)20222021
Operating Activities:  
Net Income$1,090,356 $919,468 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:  
Depreciation885,711 822,197 
Deferred Income Taxes170,752 191,346 
Uncollectible Expense40,753 39,690 
Pension, SERP and PBOP Income, Net(120,416)(10,882)
Pension and PBOP Contributions(80,000)(140,000)
Regulatory (Under)/Over Recoveries, Net(32,193)87,455 
(Customer Credits)/Reserve at CL&P related to PURA Settlement Agreement and Storm
    Performance Penalty
(72,041)103,583 
Amortization418,644 158,860 
Cost of Removal Expenditures(284,706)(138,730)
Other (113,148)(91,148)
Changes in Current Assets and Liabilities:  
Receivables and Unbilled Revenues, Net(294,383)(158,205)
Taxes Receivable/Accrued, Net160,260 44,003 
Accounts Payable11,821 (258,509)
Other Current Assets and Liabilities, Net(92,506)(48,855)
Net Cash Flows Provided by Operating Activities1,688,904 1,520,273 
Investing Activities:  
Investments in Property, Plant and Equipment(2,352,743)(2,211,136)
Proceeds from Sales of Marketable Securities340,660 334,619 
Purchases of Marketable Securities(313,714)(313,961)
Investments in Unconsolidated Affiliates(617,588)(245,245)
Other Investing Activities15,245 17,436 
Net Cash Flows Used in Investing Activities(2,928,140)(2,418,287)
Financing Activities:  
Issuance of Common Shares, Net of Issuance Costs197,108 — 
Cash Dividends on Common Shares(643,634)(603,611)
Cash Dividends on Preferred Stock(5,639)(5,639)
Decrease in Notes Payable(1,103,950)(458,325)
Repayment of Rate Reduction Bonds(43,210)(43,210)
Issuance of Long-Term Debt4,045,000 3,150,000 
Retirement of Long-Term Debt(775,000)(1,142,500)
Other Financing Activities(50,191)(45,522)
Net Cash Flows Provided by Financing Activities1,620,484 851,193 
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash381,248 (46,821)
Cash, Cash Equivalents and Restricted Cash - Beginning of Period221,008 264,950 
Cash, Cash Equivalents and Restricted Cash - End of Period$602,256 $218,129 

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


5



THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of September 30, 2022As of December 31, 2021
ASSETS  
Current Assets:  
Cash$14,289 $55,804 
Receivables, Net (net of allowance for uncollectible accounts of $198,599 and
   $181,319 as of September 30, 2022 and December 31, 2021, respectively)
645,489 447,774 
Accounts Receivable from Affiliated Companies76,512 43,944 
Unbilled Revenues49,511 56,787 
Materials and Supplies81,631 60,264 
Regulatory Assets305,556 371,609 
Prepaid Property Taxes79,067 24,261 
Prepayments and Other Current Assets37,667 95,996 
Total Current Assets1,289,722 1,156,439 
Property, Plant and Equipment, Net11,226,672 10,803,543 
Deferred Debits and Other Assets:  
Regulatory Assets1,632,875 1,713,161 
Other Long-Term Assets310,267 276,513 
Total Deferred Debits and Other Assets1,943,142 1,989,674 
Total Assets$14,459,536 $13,949,656 
LIABILITIES AND CAPITALIZATION  
Current Liabilities:
Notes Payable to Eversource Parent $26,000 $— 
Long-Term Debt – Current Portion400,000 — 
Accounts Payable439,249 533,454 
Accounts Payable to Affiliated Companies95,708 132,578 
Regulatory Liabilities434,465 266,489 
Derivative Liabilities78,564 73,528 
Other Current Liabilities209,253 141,955 
Total Current Liabilities1,683,239 1,148,004 
Deferred Credits and Other Liabilities: 
Accumulated Deferred Income Taxes1,562,256 1,562,102 
Regulatory Liabilities1,243,581 1,193,259 
Derivative Liabilities164,253 235,387 
Other Long-Term Liabilities175,733 179,824 
Total Deferred Credits and Other Liabilities3,145,823 3,170,572 
Long-Term Debt3,816,229 4,215,379 
Preferred Stock Not Subject to Mandatory Redemption116,200 116,200 
Common Stockholder's Equity:  
Common Stock60,352 60,352 
Capital Surplus, Paid In3,210,765 3,010,765 
Retained Earnings2,426,765 2,228,133 
Accumulated Other Comprehensive Income163 251 
Common Stockholder's Equity5,698,045 5,299,501 
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization$14,459,536 $13,949,656 

The accompanying notes are an integral part of these unaudited condensed financial statements.
6


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Operating Revenues$1,369,101 $919,643 $3,690,614 $2,736,513 
Operating Expenses:  
Purchased Power and Transmission641,052 392,301 1,585,515 1,073,712 
Operations and Maintenance189,864 137,816 515,928 465,630 
Depreciation89,468 85,304 264,966 253,132 
Amortization of Regulatory Assets, Net105,825 28,921 318,347 76,637 
Energy Efficiency Programs37,934 35,714 103,111 100,810 
Taxes Other Than Income Taxes104,298 99,901 290,449 275,178 
Total Operating Expenses1,168,441 779,957 3,078,316 2,245,099 
Operating Income200,660 139,686 612,298 491,414 
Interest Expense42,391 42,778 125,152 124,371 
Other Income, Net21,927 6,903 61,290 21,690 
Income Before Income Tax Expense180,196 103,811 548,436 388,733 
Income Tax Expense36,909 33,658 126,334 104,626 
Net Income$143,287 $70,153 $422,102 $284,107 
The accompanying notes are an integral part of these unaudited condensed financial statements.


CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Net Income$143,287 $70,153 $422,102 $284,107 
Other Comprehensive Loss, Net of Tax:    
Qualified Cash Flow Hedging Instruments(7)(7)(20)(20)
Changes in Unrealized Losses on
   Marketable Securities
(23)(2)(68)(18)
Other Comprehensive Loss, Net of Tax(30)(9)(88)(38)
Comprehensive Income$143,257 $70,144 $422,014 $284,069 

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

7


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2022
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 20226,035,205 $60,352 $3,010,765 $2,228,133 $251 $5,299,501 
Net Income   152,977  152,977 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock   (73,100) (73,100)
Capital Contributions from Eversource Parent100,000 100,000 
Other Comprehensive Loss    (35)(35)
Balance as of March 31, 20226,035,205 60,352 3,110,765 2,306,620 216 5,477,953 
Net Income   125,838  125,838 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock(73,100)(73,100)
Capital Contributions from Eversource Parent100,000 100,000 
Other Comprehensive Loss    (23)(23)
Balance as of June 30, 20226,035,205 60,352 3,210,765 2,357,968 193 5,629,278 
Net Income   143,287  143,287 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock(73,100)(73,100)
Other Comprehensive Loss    (30)(30)
Balance as of September 30, 20226,035,205 $60,352 $3,210,765 $2,426,765 $163 $5,698,045 

For the Nine Months Ended September 30, 2021
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 20216,035,205 $60,352 $2,810,765 $2,173,367 $302 $5,044,786 
Net Income   98,398  98,398 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock   (70,100) (70,100)
Other Comprehensive Loss    (32)(32)
Balance as of March 31, 20216,035,205 60,352 2,810,765 2,200,275 270 5,071,662 
Net Income   115,556  115,556 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock(70,100)(70,100)
Other Comprehensive Income    
Balance as of June 30, 20216,035,205 60,352 2,810,765 2,244,341 273 5,115,731 
Net Income   70,153  70,153 
Dividends on Preferred Stock   (1,390) (1,390)
Dividends on Common Stock(70,100)(70,100)
Other Comprehensive Loss    (9)(9)
Balance as of September 30, 20216,035,205 $60,352 $2,810,765 $2,243,004 $264 $5,114,385 

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

8


THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months Ended September 30,
(Thousands of Dollars)20222021
Operating Activities:  
Net Income$422,102 $284,107 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:  
Depreciation264,966 253,132 
Deferred Income Taxes(18,780)77,147 
Uncollectible Expense10,816 10,183 
Pension, SERP, and PBOP (Income)/Expense, Net(21,751)4,478 
Pension Contributions— (78,913)
Regulatory Under Recoveries, Net(47,620)(19,404)
(Customer Credits)/Reserve related to PURA Settlement Agreement and Storm
    Performance Penalty
(72,041)103,583 
Amortization of Regulatory Assets, Net318,347 76,637 
Cost of Removal Expenditures(54,145)(54,264)
Other(19,310)(19,915)
Changes in Current Assets and Liabilities:  
Receivables and Unbilled Revenues, Net(271,658)(165,423)
Taxes Receivable/Accrued, Net106,737 45,762 
Accounts Payable273 (54,226)
Other Current Assets and Liabilities, Net(63,682)(12,315)
Net Cash Flows Provided by Operating Activities554,254 450,569 
Investing Activities:  
Investments in Property, Plant and Equipment(608,966)(563,234)
Other Investing Activities513 251 
Net Cash Flows Used in Investing Activities(608,453)(562,983)
Financing Activities:  
Cash Dividends on Common Stock(219,300)(210,300)
Cash Dividends on Preferred Stock(4,169)(4,169)
Capital Contributions from Eversource Parent200,000 — 
Issuance of Long-Term Debt— 425,000 
Retirement of Long-Term Debt— (120,500)
Increase in Notes Payable to Eversource Parent26,000 — 
Other Financing Activities— (5,664)
Net Cash Flows Provided by Financing Activities2,531 84,367 
Net Decrease in Cash and Restricted Cash(51,668)(28,047)
Cash and Restricted Cash - Beginning of Period74,788 99,809 
Cash and Restricted Cash - End of Period$23,120 $71,762 

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



9



NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of September 30, 2022As of December 31, 2021
ASSETS  
Current Assets: 
Cash $13,581 $745 
Cash Equivalents (Note 6)440,000 — 
Receivables, Net (net of allowance for uncollectible accounts of $99,533 and
   $97,005 as of September 30, 2022 and December 31, 2021, respectively)
477,700 405,674 
Accounts Receivable from Affiliated Companies51,600 67,420 
Unbilled Revenues46,312 37,497 
Materials, Supplies and REC Inventory90,456 116,712 
Taxes Receivable— 80,617 
Regulatory Assets387,333 443,956 
Prepayments and Other Current Assets25,898 22,397 
Total Current Assets1,532,880 1,175,018 
Property, Plant and Equipment, Net11,365,172 10,876,614 
Deferred Debits and Other Assets: 
Regulatory Assets1,257,884 1,135,231 
Prepaid Pension and PBOP519,059 441,426 
Other Long-Term Assets186,936 171,657 
Total Deferred Debits and Other Assets1,963,879 1,748,314 
Total Assets$14,861,931 $13,799,946 
LIABILITIES AND CAPITALIZATION  
Current Liabilities:  
Notes Payable$— $162,500 
Notes Payable to Eversource Parent2,800 — 
Long-Term Debt – Current Portion400,000 400,000 
Accounts Payable399,669 490,915 
Accounts Payable to Affiliated Companies97,940 129,575 
Obligations to Third Party Suppliers168,845 116,273 
Renewable Portfolio Standards Compliance Obligations83,616 100,200 
Regulatory Liabilities368,044 228,248 
Other Current Liabilities132,919 84,303 
Total Current Liabilities1,653,833 1,712,014 
Deferred Credits and Other Liabilities:  
Accumulated Deferred Income Taxes1,647,513 1,579,508 
Regulatory Liabilities1,595,754 1,559,072 
Other Long-Term Liabilities291,093 347,934 
Total Deferred Credits and Other Liabilities3,534,360 3,486,514 
Long-Term Debt4,424,765 3,585,399 
Preferred Stock Not Subject to Mandatory Redemption43,000 43,000 
Common Stockholder's Equity:  
Common Stock— — 
Capital Surplus, Paid In2,303,942 2,253,942 
Retained Earnings2,901,666 2,718,576 
Accumulated Other Comprehensive Income365 501 
Common Stockholder's Equity5,205,973 4,973,019 
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization$14,861,931 $13,799,946 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Operating Revenues$1,105,452 $918,698 $2,752,278 $2,343,116 
Operating Expenses:   
Purchased Power and Transmission421,217 294,052 971,754 711,667 
Operations and Maintenance161,770 142,074 475,727 421,649 
Depreciation91,194 84,820 269,928 251,530 
Amortization of Regulatory Assets, Net15,940 8,073 65,307 23,963 
Energy Efficiency Programs105,708 86,699 255,230 226,071 
Taxes Other Than Income Taxes65,085 54,723 185,748 163,501 
Total Operating Expenses860,914 670,441 2,223,694 1,798,381 
Operating Income244,538 248,257 528,584 544,735 
Interest Expense41,829 37,329 119,035 106,829 
Other Income, Net37,895 20,215 101,385 58,941 
Income Before Income Tax Expense240,604 231,143 510,934 496,847 
Income Tax Expense52,520 53,692 110,674 114,560 
Net Income$188,084 $177,451 $400,260 $382,287 

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Net Income$188,084 $177,451 $400,260 $382,287 
Other Comprehensive (Loss)/Income, Net of Tax:  
  Changes in Funded Status of SERP Benefit Plan(61)(40)(132)(122)
  Qualified Cash Flow Hedging Instruments15 293 
Changes in Unrealized Losses on
   Marketable Securities
(6)(1)(19)(5)
Other Comprehensive (Loss)/Income, Net of Tax(62)(36)(136)166 
Comprehensive Income$188,022 $177,415 $400,124 $382,453 

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

11


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2022
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 2022200 $— $2,253,942 $2,718,576 $501 $4,973,019 
Net Income   92,739  92,739 
Dividends on Preferred Stock   (490) (490)
Dividends on Common Stock   (71,900) (71,900)
Other Comprehensive Loss    (47)(47)
Balance as of March 31, 2022200 — 2,253,942 2,738,925 454 4,993,321 
Net Income   119,437  119,437 
Dividends on Preferred Stock   (490) (490)
Dividends on Common Stock(71,900)(71,900)
Capital Contributions from Eversource Parent50,000 50,000 
Other Comprehensive Loss    (27)(27)
Balance as of June 30, 2022200 — 2,303,942 2,785,972 427 5,090,341 
Net Income   188,084  188,084 
Dividends on Preferred Stock   (490) (490)
Dividends on Common Stock(71,900)(71,900)
Other Comprehensive Loss    (62)(62)
Balance as of September 30, 2022200 $— $2,303,942 $2,901,666 $365 $5,205,973 

For the Nine Months Ended September 30, 2021
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 2021200 $— $1,993,942 $2,527,167 $309 $4,521,418 
Net Income   93,924  93,924 
Dividends on Preferred Stock   (490) (490)
Dividends on Common Stock   (206,400) (206,400)
Other Comprehensive Income    61 61 
Balance as of March 31, 2021200 — 1,993,942 2,414,201 370 4,408,513 
Net Income   110,912  110,912 
Dividends on Preferred Stock   (490) (490)
Dividends on Common Stock(76,800)(76,800)
Capital Contributions from Eversource Parent60,000 60,000 
Other Comprehensive Income    141 141 
Balance as of June 30, 2021200 — 2,053,942 2,447,823 511 4,502,276 
Net Income   177,451  177,451 
Dividends on Preferred Stock   (490) (490)
Other Comprehensive Loss    (36)(36)
Balance as of September 30, 2021200 $— $2,053,942 $2,624,784 $475 $4,679,201 

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

12


NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months Ended September 30,
(Thousands of Dollars)20222021
Operating Activities:  
Net Income$400,260 $382,287 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:  
Depreciation269,928 251,530 
Deferred Income Taxes34,025 12,905 
Uncollectible Expense12,159 12,477 
Pension, SERP and PBOP Income, Net(41,790)(19,627)
Pension Contributions(15,000)(10,000)
Regulatory (Under)/Over Recoveries, Net(36,203)86,111 
Amortization of Regulatory Assets, Net65,307 23,963 
Cost of Removal Expenditures(33,467)(36,521)
Payment of Withheld Property Taxes(76,084)— 
Other (8,961)(34,484)
Changes in Current Assets and Liabilities:  
Receivables and Unbilled Revenues, Net(67,950)(110,336)
Taxes Receivable/Accrued, Net122,467 109,561 
Accounts Payable(55,676)(85,431)
Other Current Assets and Liabilities, Net65,609 34,905 
Net Cash Flows Provided by Operating Activities634,624 617,340 
Investing Activities:  
Investments in Property, Plant and Equipment(691,940)(675,245)
Other Investing Activities143 70 
Net Cash Flows Used in Investing Activities(691,797)(675,175)
Financing Activities:  
Cash Dividends on Common Stock(215,700)(283,200)
Cash Dividends on Preferred Stock(1,470)(1,470)
Issuance of Long-Term Debt850,000 600,000 
Retirement of Long-Term Debt— (250,000)
Capital Contributions from Eversource Parent50,000 60,000 
Increase in Notes Payable to Eversource Parent2,800 3,300 
Decrease in Notes Payable(162,500)(57,000)
Other Financing Activities(13,191)(10,367)
Net Cash Flows Provided by Financing Activities509,939 61,263 
Net Increase in Cash, Cash Equivalents and Restricted Cash452,766 3,428 
Cash, Cash Equivalents and Restricted Cash - Beginning of Period18,179 17,410 
Cash, Cash Equivalents and Restricted Cash - End of Period$470,945 $20,838 

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

13



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)As of September 30, 2022As of December 31, 2021
ASSETS  
Current Assets:  
Cash$2,171 $15 
Receivables, Net (net of allowance for uncollectible accounts of $28,820 and $24,331
   as of September 30, 2022 and December 31, 2021, respectively)
180,790 124,232 
Accounts Receivable from Affiliated Companies14,418 17,156 
Unbilled Revenues59,715 53,937 
Materials, Supplies and REC Inventory38,041 25,930 
Regulatory Assets110,111 107,169 
Special Deposits18,721 31,390 
Prepayments and Other Current Assets3,789 22,109 
Total Current Assets427,756 381,938 
Property, Plant and Equipment, Net3,917,559 3,656,462 
Deferred Debits and Other Assets:  
Regulatory Assets618,720 679,182 
Other Long-Term Assets25,651 23,202 
Total Deferred Debits and Other Assets644,371 702,384 
Total Assets$4,989,686 $4,740,784 
LIABILITIES AND CAPITALIZATION  
Current Liabilities:  
Notes Payable to Eversource Parent$139,700 $110,600 
Rate Reduction Bonds – Current Portion43,210 43,210 
Accounts Payable162,643 166,452 
Accounts Payable to Affiliated Companies27,032 43,485 
Regulatory Liabilities185,092 120,176 
Other Current Liabilities69,801 63,005 
Total Current Liabilities627,478 546,928 
Deferred Credits and Other Liabilities:  
Accumulated Deferred Income Taxes534,875 537,978 
Regulatory Liabilities381,294 381,366 
Other Long-Term Liabilities42,453 64,264 
Total Deferred Credits and Other Liabilities958,622 983,608 
Long-Term Debt1,164,427 1,163,833 
Rate Reduction Bonds410,492 453,702 
Common Stockholder's Equity: 
Common Stock— — 
Capital Surplus, Paid In1,268,134 1,088,134 
Retained Earnings560,627 504,556 
Accumulated Other Comprehensive (Loss)/Income(94)23 
Common Stockholder's Equity1,828,667 1,592,713 
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization$4,989,686 $4,740,784 

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

14


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Operating Revenues$430,642 $314,893 $1,077,124 $887,177 
Operating Expenses:    
Purchased Power and Transmission215,360 107,353 452,007 279,475 
Operations and Maintenance67,811 57,041 194,114 168,242 
Depreciation32,187 30,169 94,997 89,462 
Amortization of Regulatory Assets, Net7,398 17,922 43,449 62,744 
Energy Efficiency Programs11,142 10,762 28,678 30,475 
Taxes Other Than Income Taxes25,331 24,038 73,377 69,639 
Total Operating Expenses359,229 247,285 886,622 700,037 
Operating Income71,413 67,608 190,502 187,140 
Interest Expense15,030 14,321 43,432 42,774 
Other Income, Net8,073 3,171 23,365 11,598 
Income Before Income Tax Expense64,456 56,458 170,435 155,964 
Income Tax Expense13,009 12,315 36,364 32,512 
Net Income$51,447 $44,143 $134,071 $123,452 

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


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Thousands of Dollars)2022202120222021
Net Income$51,447 $44,143 $134,071 $123,452 
Other Comprehensive (Loss)/Income, Net of Tax:    
Qualified Cash Flow Hedging Instruments— 109 — 673 
Changes in Unrealized Losses on
   Marketable Securities
(39)(6)(117)(33)
Other Comprehensive (Loss)/Income, Net of Tax(39)103 (117)640 
Comprehensive Income$51,408 $44,246 $133,954 $124,092 

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

15


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2022
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 2022301 $— $1,088,134 $504,556 $23 $1,592,713 
Net Income   45,586  45,586 
Dividends on Common Stock   (26,000) (26,000)
Other Comprehensive Loss    (48)(48)
Balance as of March 31, 2022301 — 1,088,134 524,142 (25)1,612,251 
Net Income   37,038  37,038 
Dividends on Common Stock(26,000)(26,000)
Capital Contributions from Eversource Parent  180,000  180,000 
Other Comprehensive Loss(30)(30)
Balance as of June 30, 2022301 — 1,268,134 535,180 (55)1,803,259 
Net Income   51,447  51,447 
Dividends on Common Stock(26,000)(26,000)
Other Comprehensive Loss    (39)(39)
Balance as of September 30, 2022301 $— $1,268,134 $560,627 $(94)$1,828,667 

For the Nine Months Ended September 30, 2021
 Common StockCapital
Surplus,
Paid In
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss)/Income
Total
Common
Stockholder's
Equity
(Thousands of Dollars, Except Stock Information)StockAmount
Balance as of January 1, 2021301 $— $928,134 $615,018 $(613)$1,542,539 
Net Income   44,676  44,676 
Dividends on Common Stock(25,200)(25,200)
Other Comprehensive Income    255 255 
Balance as of March 31, 2021301 — 928,134 634,494 (358)1,562,270 
Net Income   34,633  34,633 
Dividends on Common Stock(185,200)(185,200)
Capital Contributions from Eversource Parent160,000 160,000 
Other Comprehensive Income    282 282 
Balance as of June 30, 2021301 — 1,088,134 483,927 (76)1,571,985 
Net Income   44,143  44,143 
Dividends on Common Stock(25,200)(25,200)
Other Comprehensive Income103 103 
Balance as of September 30, 2021301 $— $1,088,134 $502,870 $27 $1,591,031 

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

16


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30,
(Thousands of Dollars)20222021
Operating Activities:  
Net Income $134,071 $123,452 
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:  
Depreciation94,997 89,462 
Deferred Income Taxes(12,212)(13,385)
Uncollectible Expense8,060 4,381 
Pension, SERP and PBOP Income, Net(12,269)(2,664)
Regulatory Over Recoveries, Net63,423 29,029 
Amortization of Regulatory Assets, Net43,449 62,744 
Cost of Removal Expenditures(25,682)(19,988)
Other10,317 (2,750)
Changes in Current Assets and Liabilities:  
Receivables and Unbilled Revenues, Net(66,751)(25,607)
Taxes Receivable/Accrued, Net20,986 22,286 
Accounts Payable(3,969)(42,654)
Other Current Assets and Liabilities, Net(7,681)12,866 
Net Cash Flows Provided by Operating Activities246,739 237,172 
Investing Activities:  
Investments in Property, Plant and Equipment(346,318)(217,414)
Other Investing Activities879 431 
Net Cash Flows Used in Investing Activities(345,439)(216,983)
Financing Activities:  
Cash Dividends on Common Stock(78,000)(235,600)
Capital Contributions from Eversource Parent180,000 160,000 
Issuance of Long-Term Debt— 350,000 
Retirement of Long-Term Debt— (282,000)
Repayment of Rate Reduction Bonds(43,210)(43,210)
Increase in Notes Payable to Eversource Parent29,100 20,200 
Other Financing Activities(70)(2,961)
Net Cash Flows Provided by/(Used in) Financing Activities87,820 (33,571)
Net Decrease in Cash and Restricted Cash(10,880)(13,382)
Cash and Restricted Cash - Beginning of Period35,126 39,555 
Cash and Restricted Cash - End of Period$24,246 $26,173 

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

17



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

COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.    Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business.  Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and EGMA (natural gas utilities), and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.4 million electric, natural gas and water customers through twelve regulated utilities in Connecticut, Massachusetts and New Hampshire.

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

The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC.  Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations.  The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 2021 Form 10-K, which was filed with the SEC on February 17, 2022. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of September 30, 2022 and December 31, 2021, and the results of operations, comprehensive income and common shareholders' equity for the three and nine months ended September 30, 2022 and 2021 and the cash flows for the nine months ended September 30, 2022 and 2021. The results of operations and comprehensive income for the three and nine months ended September 30, 2022 and 2021 and the cash flows for the nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results expected for a full year.  

CYAPC and YAEC are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates the operations of 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.

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.

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

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

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

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The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including an aging-based quantitative assessment that applies an estimated uncollectible percentage to each receivable aging category.  Factors in determining credit loss include historical collection, write-off experience, analysis of delinquency statistics, and management's assessment of collectability from customers, including current conditions, customer payment trends, the impact on customer bills because of energy usage trends and changes in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, 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 conditions, 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. Management concluded that the reserve balance as of September 30, 2022 adequately reflected the collection risk and net realizable value for its receivables.

As of September 30, 2022 and December 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $55.5 million and $55.3 million at Eversource, $19.7 million and $23.9 million at CL&P, and $4.1 million and $9.0 million at NSTAR Electric, respectively. At our Connecticut and Massachusetts utilities, the 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 future rates. No COVID-19 related uncollectible amounts were deferred at PSNH as a result of a July 2021 NHPUC order. Based on the status of our COVID-19 regulatory dockets, policies and practices in the jurisdictions in which we operate, we believe the state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental uncollectible customer receivable costs associated with COVID-19.

The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively.  The DPU allows NSTAR Electric, NSTAR Gas and EGMA to recover in rates amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.

The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment as of September 30th is as follows:
EversourceCL&PNSTAR ElectricPSNH
(Millions of Dollars)Hardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceHardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceHardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceTotal Allowance
Three Months Ended 2022
Beginning Balance$242.7 $215.1 $457.8 $152.1 $40.6 $192.7 $45.0 $55.5 $100.5 $27.3 
Uncollectible Expense— 10.7 10.7 — 4.1 4.1 — 3.5 3.5 3.5 
Uncollectible Costs Deferred (1)
15.6 9.4 25.0 11.3 2.0 13.3 2.8 4.0 6.8 0.1 
Write-Offs(6.5)(33.2)(39.7)(5.0)(7.7)(12.7)(0.3)(12.3)(12.6)(2.3)
Recoveries Collected0.3 3.5 3.8 0.2 1.0 1.2 — 1.3 1.3 0.2 
Ending Balance$252.1 $205.5 $457.6 $158.6 $40.0 $198.6 $47.5 $52.0 $99.5 $28.8 
Nine Months Ended 2022
Beginning Balance$226.1 $191.3 $417.4 $144.6 $36.7 $181.3 $43.3 $53.7 $97.0 $24.3 
Uncollectible Expense— 40.8 40.8 — 10.8 10.8 — 12.2 12.2 8.1 
Uncollectible Costs Deferred (1)
38.0 36.7 74.7 22.3 2.0 24.3 4.9 11.8 16.7 1.2 
Write-Offs(13.5)(76.3)(89.8)(9.4)(14.4)(23.8)(0.7)(30.6)(31.3)(5.4)
Recoveries Collected1.5 13.0 14.5 1.1 4.9 6.0 — 4.9 4.9 0.6 
Ending Balance$252.1 $205.5 $457.6 $158.6 $40.0 $198.6 $47.5 $52.0 $99.5 $28.8 
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EversourceCL&PNSTAR ElectricPSNH
(Millions of Dollars)Hardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceHardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceHardship AccountsRetail (Non-Hardship),
Wholesale, and Other
Total AllowanceTotal Allowance
Three Months Ended 2021
Beginning Balance$210.7 $215.1 $425.8 $145.6 $43.2 $188.8 $35.9 $62.1 $98.0 $17.2 
Uncollectible Expense— 12.0 12.0 — 3.6 3.6 — 5.1 5.1 1.2 
Uncollectible Costs Deferred (1)
22.8 1.7 24.5 4.5 5.7 10.2 11.8 (3.5)8.3 1.2 
Write-Offs(3.9)(20.5)(24.4)(3.5)(5.4)(8.9)(0.1)(7.4)(7.5)(2.8)
Recoveries Collected0.3 3.5 3.8 0.2 1.6 1.8 — 1.1 1.1 0.2 
Ending Balance$229.9 $211.8 $441.7 $146.8 $48.7 $195.5 $47.6 $57.4 $105.0 $17.0 
Nine Months Ended 2021
Beginning Balance$194.8 $164.1 $358.9 $129.1 $28.3 $157.4 $39.7 $51.9 $91.6 $17.2 
Uncollectible Expense— 39.7 39.7 — 10.2 10.2 — 12.5 12.5 4.4 
Uncollectible Costs Deferred (1)
44.8 53.3 98.1 25.7 21.4 47.1 8.3 11.8 20.1 2.0 
Write-Offs(10.6)(55.2)(65.8)(8.7)(14.8)(23.5)(0.4)(22.6)(23.0)(7.3)
Recoveries Collected0.9 9.9 10.8 0.7 3.6 4.3 — 3.8 3.8 0.7 
Ending Balance$229.9 $211.8 $441.7 $146.8 $48.7 $195.5 $47.6 $57.4 $105.0 $17.0 

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

C.    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, AROs, and in the valuation of acquisitions. 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," and Note 10, "Fair Value of Financial Instruments," to the financial statements.

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D.    Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
 For the Three Months Ended
 September 30, 2022September 30, 2021
(Millions of Dollars)EversourceCL&PNSTAR ElectricPSNHEversourceCL&PNSTAR ElectricPSNH
Pension, SERP and PBOP Non-Service
   Income Components, Net of Deferred Portion
$55.3 $16.2 $21.6 $6.8 $21.7 $4.2 $10.1 $2.5 
AFUDC Equity12.6 3.7 6.5 0.7 10.3 1.7 6.2 0.3 
Equity in Earnings of Unconsolidated Affiliates3.8 — 0.1 — 4.9 — 0.1 — 
Investment Income/(Loss)1.3 0.2 0.4 0.2 (0.6)(0.3)(0.2)(0.1)
Interest Income14.1 1.8 9.2 0.4 7.3 1.3 3.9 0.4 
Gain on Sale of Property2.5 — — — — — — — 
Other0.2 — 0.1 — 0.2 — 0.1 0.1 
Total Other Income, Net$89.8 $21.9 $37.9 $8.1 $43.8 $6.9 $20.2 $3.2 
 For the Nine Months Ended
 September 30, 2022September 30, 2021
(Millions of Dollars)EversourceCL&PNSTAR ElectricPSNHEversourceCL&PNSTAR ElectricPSNH
Pension, SERP and PBOP Non-Service
   Income Components, Net of Deferred Portion
$164.5 $48.3 $64.0 $20.1 $63.9 $11.2 $30.3 $7.9 
AFUDC Equity33.7 9.3 17.5 1.7 28.7 5.1 18.6 1.2 
Equity in Earnings of Unconsolidated Affiliates (1)
20.8 — 0.2 — 13.3 — 0.3 — 
Investment Income/(Loss)2.4 (0.9)0.6 0.5 0.7 1.2 0.6 0.3 
Interest Income30.3 4.6 18.8 1.1 17.2 4.1 8.8 2.0 
Gain on Sale of Property2.7 — — — 0.1 — — 0.1 
Other0.9 — 0.3 — 0.7 0.1 0.3 0.1 
Total Other Income, Net$255.3 $61.3 $101.4 $23.4 $124.6 $21.7 $58.9 $11.6 

(1)    Equity in earnings of unconsolidated affiliates includes $12.2 million and $2.1 million of pre-tax unrealized gains associated with an investment in a renewable energy fund for the nine months ended September 30, 2022 and 2021, respectively.

E.    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:
(Millions of Dollars)Ownership InterestAs of September 30, 2022As of December 31, 2021
Offshore Wind Business - North East Offshore50 %$1,823.5 $1,213.6 
Natural Gas Pipeline - Algonquin Gas Transmission, LLC15 %119.6 121.9 
Renewable Energy Investment Fund90 %84.5 76.5 
Other various25.8 24.3 
Total Investments in Unconsolidated Affiliates$2,053.4 $1,436.3 

Offshore Wind Business: Eversource’s offshore wind business includes a 50 percent ownership interest in North East Offshore, which holds PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as an undeveloped offshore lease area. The offshore wind investment includes capital expenditures for the three offshore wind projects, as well as capitalized costs related to future development, acquisition costs of offshore lease areas, and capitalized interest. Cash flows used in investing activities presented in Investments in Unconsolidated Affiliates on the statements of cash flows primarily relates to capital contributions in the offshore wind investment.

On May 4, 2022, Eversource announced that it had initiated a strategic review of its offshore wind investment portfolio. As part of that review, Eversource is exploring strategic alternatives that could result in a potential sale of all, or part, of its 50 percent interest in its offshore wind partnership with Ørsted. In late July, Eversource started preliminary and targeted outreach to potential buyers. Eversource continues to work with potential buyers through this ongoing process and expects to complete this review during 2022. Eversource’s strategic review of its offshore wind investment does not impact the September 30, 2022 financial statements.
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F.    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 Three Months EndedFor the Nine Months Ended
(Millions of Dollars)September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Eversource$52.9 $49.4 $146.0 $137.9 
CL&P49.2 46.1 126.0 120.7

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. 

G.    Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
(Millions of Dollars)As of September 30, 2022As of September 30, 2021
Eversource$394.1 $359.6 
CL&P96.7 75.3 
NSTAR Electric94.5 94.2 
PSNH49.7 32.8 

The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash, cash equivalents and restricted cash balance as reported on the statements of cash flows:
 As of September 30, 2022As of December 31, 2021
(Millions of Dollars)EversourceCL&PNSTAR ElectricPSNHEversourceCL&PNSTAR ElectricPSNH
Cash and Cash Equivalents as reported on the Balance Sheets$485.7 $14.3 $453.6 $2.2 $66.8 $55.8 $0.7 $— 
Restricted cash included in:
Special Deposits76.5 8.7 17.3 18.7 78.2 18.7 17.4 31.4 
Marketable Securities20.8 0.1 — 0.1 31.3 0.3 0.1 0.5 
Other Long-Term Assets19.3 — — 3.2 44.7 — — 3.2 
Cash, Cash Equivalents and Restricted Cash as reported on the Statements of Cash Flows$602.3 $23.1 $470.9 $24.2 $221.0 $74.8 $18.2 $35.1 

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. The December 31, 2021 balance also included a $10 million customer assistance fund to provide bill payment assistance to certain existing non-hardship and hardship customers carrying arrearages at CL&P established under the terms of the PURA-approved October 2021 settlement agreement. Those customers were provided with $10 million of bill forgiveness in the first quarter of 2022, which represented a non-cash transaction. 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 also includes an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley and an additional energy efficiency program established under the terms of the EGMA 2020 settlement agreement. As of September 30, 2022, $20.0 million of this restricted cash was recorded as short-term in Special Deposits and $15.9 million was recorded in Other Long-Term Assets. As of December 31, 2021, this restricted cash totaled $41.5 million and was recorded in Other Long-Term Assets on the balance sheet.

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.

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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 September 30, 2022As of December 31, 2021
(Millions of Dollars)EversourceCL&PNSTAR
Electric
PSNHEversourceCL&PNSTAR
Electric
PSNH
Benefit Costs$1,408.9 $263.3 $389.0 $114.6 $1,481.0 $272.4 $395.5 $118.9 
Storm Costs, Net1,243.9 722.5 459.9 61.5 1,102.7 695.6 341.3 65.8 
Regulatory Tracking Mechanisms941.2 214.4 339.0 70.4 1,050.5 333.6 376.6 85.4 
Income Taxes, Net808.5 480.0 114.5 17.4 790.7 470.5 112.6 17.5 
Securitized Stranded Costs446.5 — — 446.5 478.9 — — 478.9 
Goodwill-related285.2 — 244.8 — 297.8 — 255.7 — 
Derivative Liabilities195.9 195.9 — — 249.2 249.2 — — 
Asset Retirement Obligations124.3 35.3 66.0 4.3 115.0 33.6 59.8 4.1 
Other Regulatory Assets248.0 27.1 32.0 14.1 150.0 29.9 37.7 15.8 
Total Regulatory Assets5,702.4 1,938.5 1,645.2 728.8 5,715.8 2,084.8 1,579.2 786.4 
Less:  Current Portion1,143.6 305.6 387.3 110.1 1,129.1 371.6 444.0 107.2 
Total Long-Term Regulatory Assets$4,558.8 $1,632.9 $1,257.9 $618.7 $4,586.7 $1,713.2 $1,135.2 $679.2 

Regulatory Costs in Long-Term Assets:  Eversource's regulated companies had $288.9 million (including $121.0 million for CL&P, $94.6 million for NSTAR Electric and $2.8 million for PSNH) and $252.5 million (including $114.9 million for CL&P, $85.0 million for NSTAR Electric and $3.4 million for PSNH) of additional regulatory costs as of September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021, these regulatory costs included incremental COVID-19 related non-tracked uncollectible expense deferred of $34.6 million and $33.0 million at Eversource, $16.5 million and $18.0 million at CL&P, and $2.2 million and $6.1 million at NSTAR Electric, respectively.

Regulatory Liabilities:  The components of regulatory liabilities were as follows:
 As of September 30, 2022As of December 31, 2021
(Millions of Dollars)EversourceCL&PNSTAR
Electric
PSNHEversourceCL&PNSTAR
Electric
PSNH
EDIT due to Tax Cuts and Jobs Act of 2017$2,629.0 $986.1 $952.6 $350.0 $2,685.2 $996.1 $984.5 $359.2 
Cost of Removal654.5 122.4 418.3 19.3 649.6 100.1 381.0 17.2 
Regulatory Tracking Mechanisms957.4 455.7 326.2 165.1 448.4 182.0 185.1 107.0 
Deferred Portion of Non-Service Income
   Components of Pension, SERP and PBOP
240.3 28.9 127.5 25.3 148.3 12.0 90.7 14.9 
Benefit Costs110.9 — 88.1 — 133.5 — 107.4 — 
AFUDC - Transmission93.1 46.4 46.7 — 81.0 43.2 37.8 — 
CL&P Settlement Agreement and Storm
  Performance Penalty
— — — — 81.3 81.3 — — 
Other Regulatory Liabilities204.6 38.6 4.4 6.7 241.4 45.1 0.8 3.3 
Total Regulatory Liabilities4,889.8 1,678.1 1,963.8 566.4 4,468.7 1,459.8 1,787.3 501.6 
Less:  Current Portion988.7 434.5 368.0 185.1 602.4 266.5 228.2 120.2 
Total Long-Term Regulatory Liabilities$3,901.1 $1,243.6 $1,595.8 $381.3 $3,866.3 $1,193.3 $1,559.1 $381.4 

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3.    PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

The following tables summarize property, plant and equipment by asset category:
EversourceAs of September 30, 2022As of December 31, 2021
(Millions of Dollars)
Distribution - Electric$18,132.2 $17,679.1 
Distribution - Natural Gas7,020.1 6,694.8 
Transmission - Electric13,371.2 12,882.4 
Distribution - Water1,971.1 1,900.9 
Solar 200.9 200.9 
Utility40,695.5 39,358.1 
Other (1)
1,663.4 1,469.5 
Property, Plant and Equipment, Gross42,358.9 40,827.6 
Less:  Accumulated Depreciation  
Utility   (9,070.0)(8,885.2)
Other(672.9)(580.1)
Total Accumulated Depreciation(9,742.9)(9,465.3)
Property, Plant and Equipment, Net32,616.0 31,362.3 
Construction Work in Progress2,413.5 2,015.4 
Total Property, Plant and Equipment, Net$35,029.5 $33,377.7 
 As of September 30, 2022As of December 31, 2021
(Millions of Dollars)CL&PNSTAR
Electric
PSNHCL&PNSTAR
Electric
PSNH
Distribution - Electric$7,297.2 $8,329.1 $2,546.2 $7,117.6 $8,105.5 $2,496.2 
Transmission - Electric6,022.8 5,243.3 2,106.8 5,859.0 5,090.5 1,934.6 
Solar— 200.9 — — 200.9 — 
Property, Plant and Equipment, Gross
13,320.0 13,773.3 4,653.0 12,976.6 13,396.9 4,430.8 
Less:  Accumulated Depreciation
(2,571.5)(3,322.3)(908.2)(2,572.1)(3,227.3)(908.4)
Property, Plant and Equipment, Net
10,748.5 10,451.0 3,744.8 10,404.5 10,169.6 3,522.4 
Construction Work in Progress
478.2 914.2 172.8 399.0 707.0 134.1 
Total Property, Plant and Equipment, Net
$11,226.7 $11,365.2 $3,917.6 $10,803.5 $10,876.6 $3,656.5 

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

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 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 September 30, 2022As of December 31, 2021
CL&P
(Millions of Dollars)
Fair Value HierarchyCommodity 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 AssetsLevel 3$15.7 $(0.5)$15.2 $14.7 $(1.0)$13.7 
Long-Term Derivative AssetsLevel 332.8 (1.0)31.8 46.9 (0.9)46.0 
Current Derivative LiabilitiesLevel 3(78.6)— (78.6)(73.5)— (73.5)
Long-Term Derivative LiabilitiesLevel 3(164.3)— (164.3)(235.4)— (235.4)
    

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(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.

Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management:  As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities.  CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI.  The combined capacities of these contracts as of both September 30, 2022 and December 31, 2021 were 675 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets. 

For the three months ended September 30, 2022 and 2021, there were gains of $2.4 million and $0.7 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts. For the nine months ended September 30, 2022 and 2021, there were gains of $11.2 million and losses of $9.5 million, respectively.

Fair Value Measurements of Derivative Instruments
The fair value of derivative contracts classified as Level 3 utilizes both significant observable and unobservable inputs.  The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions related to exit price.  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.  Significant observable inputs for valuations of these contracts include energy-related product prices in future years for which quoted prices in an active market exist. 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.  Fair value measurements categorized in Level 3 of the fair value hierarchy are prepared by individuals with expertise in valuation techniques, pricing of energy-related products, and accounting requirements.

The following is a summary of the significant unobservable inputs utilized in the valuations of the derivative contracts classified as Level 3:
 As of September 30, 2022As of December 31, 2021
CL&PRangeAveragePeriod CoveredRangeAveragePeriod Covered
Forward Reserve Prices$0.44 $0.50$0.47 per kW-Month2023 - 2024$0.50 $1.15$0.82 per kW-Month2022 - 2024

Exit price premiums of 3.4 percent through 7.7 percent, or a weighted average of 6.6 percent, are also Level 3 significant unobservable inputs 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.

As of December 31, 2021, Level 3 unobservable inputs also utilized in the valuation of CL&P’s capacity-related contracts included capacity prices of $2.61 per kW-Month over the period 2025 through 2026. Beginning in the first quarter of 2022, these capacity price inputs are now observable.

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

The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis.  The derivative assets and liabilities are presented on a net basis.
CL&PFor the Three Months Ended September 30,For the Nine Months Ended September 30,
(Millions of Dollars)2022202120222021
Derivatives, Net:  
Fair Value as of Beginning of Period$(213.3)$(279.7)$(249.2)$(293.1)
Net Realized/Unrealized Gains/(Losses) Included in Regulatory Assets2.4 0.7 11.2 (10.9)
Settlements15.0 13.7 42.1 38.7 
Fair Value as of End of Period$(195.9)$(265.3)$(195.9)$(265.3)

5.    MARKETABLE SECURITIES

Eversource holds marketable securities that are primarily used to fund certain non-qualified executive benefits.  The trusts that hold these marketable securities are not subject to regulatory oversight by state or federal agencies.  Eversource’s marketable securities also include the CYAPC and YAEC legally restricted trusts that each hold equity and available-for-sale debt securities to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities. Equity and available-for-sale debt marketable securities are recorded at fair value, with the current portion recorded in Prepayments and Other Current Assets and the long-term portion recorded in Marketable Securities on the balance sheets.

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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 September 30, 2022 and December 31, 2021 was $23.3 million and $40.2 million, respectively.  For the three months ended September 30, 2022 and 2021, there were unrealized losses of $1.5 million and $0.5 million, respectively, recorded in Other Income, Net related to these equity securities. For the nine months ended September 30, 2022 and 2021, there were unrealized losses of $10.6 million and unrealized gains of $2.5 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 $170.1 million and $214.0 million as of September 30, 2022 and December 31, 2021, respectively.  Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income.

Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities:
As of September 30, 2022As of December 31, 2021
Eversource
(Millions of Dollars)
Amortized CostPre-Tax
Unrealized Gains
Pre-Tax
Unrealized
Losses
Fair ValueAmortized CostPre-Tax
Unrealized Gains
Pre-Tax
Unrealized
Losses
Fair Value
Debt Securities$205.4 $0.2 $(15.5)$190.1 $214.5 $5.1 $(0.2)$219.4 

Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified executive 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 credit losses for the three and nine months ended September 30, 2022 and 2021, and no allowance for credit losses as of September 30, 2022. 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.

Eversource's debt securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $170.3 million and $189.9 million as of September 30, 2022 and December 31, 2021, respectively. Unrealized gains and losses for available-for-sale debt securities included in the CYAPC and YAEC spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income. Pre-tax unrealized gains and losses as of September 30, 2022 and December 31, 2021 primarily relate to the debt securities included in CYAPC's and YAEC's spent nuclear fuel trusts.

As of September 30, 2022, the contractual maturities of available-for-sale debt securities were as follows:
 
Eversource
(Millions of Dollars)
Amortized CostFair Value
Less than one year (1)
$22.4 $22.4 
One to five years56.0 54.6 
Six to ten years40.8 36.7 
Greater than ten years86.2 76.4 
Total Debt Securities$205.4 $190.1 

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

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

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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 September 30, 2022As of December 31, 2021
Level 1:    
Mutual Funds and Equities$193.4 $254.2 
Money Market Funds20.8 31.3 
Total Level 1$214.2 $285.5 
Level 2:  
U.S. Government Issued Debt Securities (Agency and Treasury)$77.4 $81.3 
Corporate Debt Securities54.8 65.3 
Asset-Backed Debt Securities9.5 12.6 
Municipal Bonds13.0 12.3 
Other Fixed Income Securities14.6 16.6 
Total Level 2$169.3 $188.1 
Total Marketable Securities$383.5 $473.6 

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.    SHORT-TERM AND LONG-TERM DEBT

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 15, 2027. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.  

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 15, 2027. This 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 ofAvailable Borrowing Capacity as ofWeighted-Average Interest Rate as of
September 30, 2022December 31, 2021September 30, 2022December 31, 2021September 30, 2022December 31, 2021
(Millions of Dollars)
Eversource Parent Commercial Paper Program $401.5 $1,343.0 $1,598.5 $657.0 3.34 %0.31 %
NSTAR Electric Commercial Paper Program — 162.5 650.0 487.5 — %0.14 %

There were no borrowings outstanding on the revolving credit facilities as of September 30, 2022 or December 31, 2021.

CL&P and PSNH have uncommitted line of credit agreements totaling $450 million and $300 million, respectively, which will expire on May 12, 2023. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of September 30, 2022.

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 September 30, 2022, there were intercompany loans from Eversource parent to CL&P of $26.0 million, to PSNH of $139.7 million, and to a subsidiary of NSTAR Electric of $2.8 million. As of December 31, 2021, there were intercompany loans from Eversource parent to PSNH of $110.6 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.

Sources and Uses of Cash: 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.

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Availability under Long-Term Debt Issuance Authorizations: On June 14, 2022, the DPU approved NSTAR Gas’ request for authorization to issue up to $325 million in long-term debt through December 31, 2024.

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 DateMaturity DateUse of Proceeds for Issuance/
Repayment Information
NSTAR Electric 4.55% 2022 Debentures
$450.0 May 2022June 2052Repaid short-term debt, paid capital expenditures and working capital
NSTAR Electric 4.95% 2022 Debentures
400.0 September 2022September 2052Refinanced investments in eligible green expenditures, which were previously financed using short-term debt from October 1, 2020 through June 30, 2022
NSTAR Electric 2.375% 2012 Debentures
(400.0)October 2022October 2022Paid at maturity
Eversource Parent 2.90% Series V Senior Notes
650.0 February 2022March 2027
Repaid Series K Senior Notes at maturity and short-term debt
Eversource Parent 3.375% Series W Senior Notes
650.0 February 2022March 2032
Repaid Series K Senior Notes at maturity and short-term debt
Eversource Parent 4.20% Series X Senior Notes
900.0 June 2022June 2024Repaid short-term debt and paid working capital
Eversource Parent 4.60% Series Y Senior Notes
600.0 June 2022July 2027Repaid short-term debt and paid working capital
Eversource Parent 2.75% Series K Senior Notes
(750.0)March 2022March 2022Paid at maturity
Yankee Gas 8.48% Series B First Mortgage Bonds
(20.0)March 2022March 2022Paid at maturity
Yankee Gas 4.31% Series U First Mortgage Bonds
100.0 September 2022September 2032Repaid short-term debt, paid capital expenditures and for general corporate purposes
EGMA 4.70% Series C First Mortgage Bonds
100.0 June 2022June 2052Repaid short-term debt, paid capital expenditures and for general corporate purposes
NSTAR Gas 4.40% Series V First Mortgage Bonds
125.0 July 2022August 2032Repaid short-term debt, paid capital expenditures and for general corporate purposes
Aquarion Water Company of New Hampshire 4.45% General Mortgage Bonds
(5.0)0July 2022July 2022Paid at maturity
Aquarion Water Company of Connecticut 4.69% Senior Notes
70.0 August 2022September 2052Repaid short-term debt

Cash Equivalents on the Eversource and NSTAR Electric balance sheets as of September 30, 2022 comprise a money market fund that primarily included proceeds received from an NSTAR Electric $400 million long-term debt issuance on September 15, 2022 that was used to pay $400 million of long-term debt that matured on October 15, 2022.

7.    RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES

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

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)
PSNH Balance Sheets:As of September 30, 2022As of December 31, 2021
Restricted Cash - Current Portion (included in Current Assets)$18.0 $31.1 
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets)3.2 3.2 
Securitized Stranded Cost (included in Regulatory Assets)446.5 478.9 
Other Regulatory Liabilities (included in Regulatory Liabilities)7.9 5.4 
Accrued Interest (included in Other Current Liabilities)2.8 7.5 
Rate Reduction Bonds - Current Portion43.2 43.2 
Rate Reduction Bonds - Long-Term Portion410.5 453.7 

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(Millions of Dollars)
PSNH Income Statements:
For the Three Months EndedFor the Nine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net)$10.8 $10.8 $32.4 $32.4 
Interest Expense on RRB Principal (included in Interest Expense)4.2 4.5 12.9 13.9 

8.    PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSION

Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees.  In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans (SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource also provides defined benefit postretirement plans (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 components of net periodic benefit plan expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets/(liabilities) for future recovery or refund, are shown below.  The service cost component of net periodic benefit plan expense/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income. The remaining components of net periodic benefit plan expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense/(income) reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include intercompany allocations of net periodic benefit plan expense/(income), as these amounts are cash settled on a short-term basis.
 Pension and SERPPBOP
 For the Three Months Ended September 30, 2022For the Three Months Ended September 30, 2022
(Millions of Dollars)EversourceCL&PNSTAR ElectricPSNHEversourceCL&PNSTAR ElectricPSNH
Service Cost$17.5 $4.7 $3.4 $1.7 $2.9 $0.5 $0.5 $0.3 
Interest Cost38.6 7.8 8.2 4.2 5.0 0.9 1.3 0.5 
Expected Return on Plan Assets(130.7)(26.5)(32.1)(14.0)(22.5)(2.8)(10.6)(1.7)
Actuarial Losses, net28.4 4.0 8.1 1.9 — — — — 
Prior Service Cost/(Credit)0.4 — 0.1 — (5.4)0.3 (4.2)0.1 
Total Net Periodic Benefit Plan Income$(45.8)$(10.0)$(12.3)$(6.2)$(20.0)$(1.1)$(13.0)$(0.8)
Intercompany Income AllocationsN/A$(4.0)$(3.2)$(1.0)N/A$(0.9)$(0.9)$(0.3)
Pension and SERPPBOP
For the Nine Months Ended September 30, 2022For the Nine Months Ended September 30, 2022
(Millions of Dollars)EversourceCL&PNSTAR
Electric
PSNHEversourceCL&PNSTAR
Electric
PSNH
Service Cost$52.7 $13.9 $10.4 $5.2 $8.7 $1.5 $1.5 $0.8 
Interest Cost115.8 23.4 24.5 12.6 15.1 2.7 3.9 1.6 
Expected Return on Plan Assets(393.1)(79.6)(96.2)(42.1)(67.5)(8.4)(31.8)(5.0)
Actuarial Losses, net87.5 12.2 24.7 6.0 — — — — 
Prior Service Cost/(Credit)1.1 — 0.3 — (16.2)0.8 (12.7)0.3 
Total Net Periodic Benefit Plan Income$(136.0)$(30.1)$(36.3)$(18.3)$(59.9)$(3.4)$(39.1)$(2.3)
Intercompany Income AllocationsN/A$(11.9)$(9.3)$(2.7)N/A$(2.7)$(2.7)$(0.9)
Pension and SERPPBOP
For the Three Months Ended September 30, 2021For the Three Months Ended September 30, 2021
(Millions of Dollars)EversourceCL&PNSTAR
Electric
PSNHEversourceCL&PNSTAR
Electric
PSNH
Service Cost$21.5 $5.6 $4.0 $2.2 $3.3 $0.5 $0.6 $0.3 
Interest Cost32.5 6.7 6.7 3.7 4.3 0.8 1.1 0.4 
Expected Return on Plan Assets(109.5)(21.7)(27.1)(11.9)(19.8)(2.5)(9.2)(1.6)
Actuarial Loss60.7 10.8 15.3 5.3 2.0 0.4 0.5 0.1 
Prior Service Cost/(Credit)0.3 — 0.1 — (5.3)0.3 (4.3)0.1 
Total Net Periodic Benefit Plan Expense/(Income)$5.5 $1.4 $(1.0)$(0.7)$(15.5)$(0.5)$(11.3)$(0.7)
Intercompany Expense/(Income) AllocationsN/A$2.2 $2.4 $0.7 N/A$(0.4)$(0.5)$(0.2)
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Pension and SERPPBOP
For the Nine Months Ended September 30, 2021For the Nine Months Ended September 30, 2021
(Millions of Dollars)EversourceCL&PNSTAR
Electric
PSNHEversourceCL&PNSTAR
Electric
PSNH
Service Cost$64.3 $17.4 $11.9 $6.6 $10.1 $1.7 $1.8 $0.9 
Interest Cost97.5 20.7 20.1 10.9 12.9 2.4 3.3 1.3 
Expected Return on Plan Assets(328.0)(65.0)(81.1)(35.6)(59.3)(7.7)(27.7)(4.6)
Actuarial Loss183.1 34.6 46.1 15.4 5.9 1.2 1.6 0.4 
Prior Service Cost/(Credit)1.1 — 0.3 — (15.9)0.8 (12.7)0.3 
Total Net Periodic Benefit Plan Expense/(Income)$18.0 $7.7 $(2.7)$(2.7)$(46.3)$(1.6)$(33.7)$(1.7)
Intercompany Expense/(Income) AllocationsN/A$5.8 $6.4 $1.9 N/A$(1.3)$(1.5)$(0.5)

Eversource Contributions: Based on the current status of the Pension Plans and federal pension funding requirements, there is no minimum funding requirement for our Pension Plans for 2022. Eversource has contributed $80 million to its Pension and PBOP Plans for the nine months ended September 30, 2022 and does not expect to make additional pension contributions for the remainder of 2022.

9.    COMMITMENTS AND CONTINGENCIES

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

The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
 As of September 30, 2022As of December 31, 2021
Number of SitesReserve
(in millions)
Number of SitesReserve
(in millions)
Eversource62 $121.1 61 $115.4 
CL&P14 14.1 14 13.9 
NSTAR Electric11 3.5 11 3.3 
PSNH6.2 6.3 

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 $110.6 million and $105.6 million as of September 30, 2022 and December 31, 2021, respectively, and related primarily to the natural gas business segment.

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.

B.    Long-Term Contractual Arrangements
The following is an update to the current status of long-term contractual arrangements set forth in Note 13B of the Eversource 2021 Form 10-K.

Renewable Energy: Renewable energy contracts include non-cancelable commitments under contracts of NSTAR Electric for the purchase of energy and RECs from renewable energy facilities.
NSTAR Electric      
(Millions of Dollars)20222023202420252026ThereafterTotal
Renewable Energy$27.1 $78.3 $269.4 $315.8 $322.1 $5,812.2 $6,824.9 

The table includes long-term commitments of NSTAR Electric pertaining to the Vineyard Wind LLC contract awarded under the Massachusetts Clean Energy 83C procurement solicitation. NSTAR Electric, along with other Massachusetts distribution companies, entered into 20-year contracts to purchase electricity generated by this 800 megawatt offshore wind project. Construction on the Vineyard Wind project commenced in 2022. Estimated energy costs under this contract are expected to begin when the facilities are in service in 2024 and range between $240 million and $375 million per year under NSTAR Electric’s 20-year contract, totaling approximately $6.0 billion.

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C.    Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric and PSNH, in the form of guarantees. 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 were $4.3 million and $7.3 million as of September 30, 2022 and December 31, 2021, respectively.

The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties, and primarily relates to its offshore wind business:  
As of September 30, 2022
Company (Obligor)DescriptionMaximum Exposure
(in millions)
Expiration Dates
North East Offshore LLC
Construction-related purchase agreements with third-party contractors (1)
$759.6 
 (1)
Sunrise Wind LLC
Construction-related purchase agreements with third-party contractors (2)
288.1 
2025 - 2026
Revolution Wind, LLC
Construction-related purchase agreements with third-party contractors (3)
419.0 2024 - 2027
South Fork Wind, LLC
Construction-related purchase agreements with third-party contractors (4)
142.7 2023 - 2026
Eversource Investment LLC
Funding and indemnification obligations of North East Offshore LLC (5)
94.8 
 (5)
South Fork Wind, LLC
Power Purchase Agreement Security (6)
7.1 
 (6)
Sunrise Wind LLC
OREC capacity production (7)
2.2 
 (7)
Bay State Wind LLCReal estate purchase2.5 2023
South Fork Wind, LLC
Transmission interconnection
1.2 
Eversource Investment LLC
Letters of Credit (8)
4.3 
Various
Surety bonds (9)
35.7 2022 - 2023
Eversource ServiceLease payments for real estate0.6 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 contractors, in an aggregate amount not to exceed $1.3 billion with an expiration date in 2025. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million and expiring upon full performance of the guaranteed obligation. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 5, below.

(2)     Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an aggregate amount not to exceed $461.9 million, in connection with construction-related purchase agreements. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging from March 2025 and April 2026 and (ii) full performance of the guaranteed obligations.     

(3)    Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, Revolution Wind, LLC, whereby Eversource parent will guarantee Revolution Wind, LLC's performance of certain obligations, in an aggregate amount not to exceed $542.1 million, in connection with construction-related purchase agreements. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging from May 2024 and November 2027 and (ii) full performance of the guaranteed obligations.

(4)    Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations in connection with construction-related purchase agreements. Under these guarantees, Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in a total aggregate amount not to exceed $206.6 million. Eversource parent’s obligations under these guarantees expire upon the earlier of (i) dates ranging from June 2023 and August 2026 and (ii) full performance of the guaranteed obligations.

(5)    Eversource parent issued a guarantee (Funding Guarantee) on behalf of Eversource Investment LLC (EI), its wholly-owned subsidiary that holds a 50 percent ownership interest in NEO, under which Eversource parent agreed to guarantee certain funding obligations and certain indemnification payments of EI under the 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.

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(6)    Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an amount not to exceed $7.1 million, under a Power Purchase Agreement between the Long Island Power Authority and South Fork Wind, LLC (the Agreement). The guarantee expires upon the later of (i) the end of the Agreement term and (ii) full performance of the guarantee obligations.

(7)    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 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.    

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

(9)    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.

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

Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high-level waste disposal contracts between the Yankee Companies and the DOE. The court previously awarded the Yankee Companies damages for Phases I, II, III and IV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.

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

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

The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, FERC issued Opinion No. 531-A and 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 September 30, 2022 and December 31, 2021. 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 September 30, 2022 and December 31, 2021.

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

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

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

On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos 569-A and 569-B were appealed to the Court. On August 9, 2022, the Court issued its decision vacating MISO ROE FERC Opinions 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return. At this time, Eversource cannot predict how and when FERC will address the Court’s findings on the remand of the MISO FERC opinions or any potential associated impact on the NETOs’ four pending ROE complaint 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 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.

NSTAR Electric and HEEC continue to finalize the resolution of certain long-term environmental restoration efforts, as required under the current permit. Upon completion of these restoration efforts and subsequent resolution with the United States Army Corps of Engineers, such litigation is expected to be dismissed with prejudice.

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

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

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

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

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

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

The cumulative pre-tax impact of the settlement agreement and the Storm Isaias assessment imposed in PURA’s April 28, 2021 and July 14, 2021 decisions totaled $103.6 million, and the after-tax earnings impact was $85.8 million, or $0.25 per share, for the nine months ended September 30, 2021.

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10.    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:

 EversourceCL&PNSTAR ElectricPSNH
(Millions of Dollars)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
As of September 30, 2022:        
Preferred Stock Not Subject to Mandatory Redemption
$155.6 $146.0 $116.2 $107.4 $43.0 $38.6 $— $— 
Long-Term Debt21,442.4 19,010.3 4,216.2 3,774.9 4,824.8 4,415.1 1,164.4 960.1 
Rate Reduction Bonds453.7 429.5 — — — — 453.7 429.5 
As of December 31, 2021:        
Preferred Stock Not Subject to Mandatory Redemption
$155.6 $166.3 $116.2 $122.3 $43.0 $44.0 $— $— 
Long-Term Debt18,216.7 19,636.3 4,215.4 4,848.9 3,985.4 4,453.5 1,163.8 1,220.6 
Rate Reduction Bonds496.9 543.3 — — — — 496.9 543.3 

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

11.    ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in accumulated other comprehensive income/(loss) by component, net of tax, are as follows:
For the Nine Months Ended September 30, 2022For the Nine Months Ended September 30, 2021
Eversource
(Millions of Dollars)
Qualified
Cash Flow
Hedging
Instruments
Unrealized
Gains/(Losses) on Marketable
Securities
Defined
Benefit Plans
TotalQualified
Cash Flow
Hedging
Instruments
Unrealized
Gains/(Losses) on Marketable
Securities
Defined
Benefit Plans
Total
Balance as of Beginning of Period$(0.4)$0.4 $(42.3)$(42.3)$(1.4)$1.1 $(76.1)$(76.4)
OCI Before Reclassifications
— (2.0)(2.5)(4.5)— (0.6)(2.4)(3.0)
Amounts Reclassified from AOCI
— — 5.8 5.8 1.0 — 6.5 7.5 
Net OCI— (2.0)3.3 1.3 1.0 (0.6)4.1 4.5 
Balance as of End of Period$(0.4)$(1.6)$(39.0)$(41.0)$(0.4)$0.5 $(72.0)$(71.9)

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.

12.    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
 Authorized as of September 30, 2022 and December 31, 2021Issued as of
 Par ValueSeptember 30, 2022December 31, 2021
Eversource$380,000,000 359,984,073 357,818,402 
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 

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Common Share Issuances and 2022 Equity Distribution Agreement: On May 11, 2022, Eversource entered into an equity distribution agreement pursuant to which it may offer and sell up to $1.2 billion of its common shares from time to time through an “at-the-market” (ATM) equity offering program. Eversource may issue and sell its common shares through its sales agents during the term of this agreement. Shares may be offered in transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise. Sales may be made at either market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In the first nine months of 2022, Eversource issued 2,165,671 common shares, which resulted in proceeds of $197.1 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes.

Treasury Shares: As of September 30, 2022 and December 31, 2021, there were 12,635,324 and 13,415,206 Eversource common shares held as treasury shares, respectively. As of September 30, 2022 and December 31, 2021, there were 347,348,749 and 344,403,196 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. Eversource also issued treasury shares for its December 2021 and October 2022 water business acquisitions. 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.

Acquisition of Torrington Water Company: On October 3, 2022, Aquarion acquired The Torrington Water Company (TWC) following the receipt of all required approvals. The acquisition was structured as a stock-for-stock exchange, and Eversource issued 925,264 treasury shares at closing for a purchase price of approximately $72 million. TWC provided regulated water service to approximately 10,100 customers in Connecticut.

13.    COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS

Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for each of the three months ended September 30, 2022 and 2021 and $5.6 million for each of the nine months ended September 30, 2022 and 2021. 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 September 30, 2022 and December 31, 2021. 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.

14.    EARNINGS PER SHARE

Basic EPS is computed based upon the weighted average number of common shares outstanding during each period.  Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into outstanding common shares.  The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method.  RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the three and nine months ended September 30, 2022 and 2021, there were no antidilutive share awards excluded from the computation of diluted EPS.

The following table sets forth the components of basic and diluted EPS:
Eversource
(Millions of Dollars, except share information)
For the Three Months EndedFor the Nine Months Ended
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Net Income Attributable to Common Shareholders$349.4 $283.2 $1,084.7 $913.8 
Weighted Average Common Shares Outstanding:    
Basic347,297,411 344,023,846 346,115,823 343,848,905 
Dilutive Effect465,282 645,936 457,278 631,151 
Diluted347,762,693 344,669,782 346,573,101 344,480,056 
Basic EPS$1.01 $0.82 $3.13 $2.66 
Diluted EPS$1.00 $0.82 $3.13 $2.65 

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15.    REVENUES

The following tables present operating revenues disaggregated by revenue source:
For the Three Months Ended September 30, 2022
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $1,492.9 $94.7 $— $45.7 $— $— $1,633.3 
Commercial 890.5 76.7 — 18.5 — (1.7)984.0 
Industrial105.6 33.6 — 1.3 — (5.2)135.3 
Total Retail Tariff Sales Revenues2,489.0 205.0 — 65.5 — (6.9)2,752.6 
Wholesale Transmission Revenues— — 520.3 — 29.9 (416.3)133.9 
Wholesale Market Sales Revenues317.1 22.7 — 1.1 — — 340.9 
Other Revenues from Contracts with Customers17.3 0.6 3.4 2.1 313.6 (311.9)25.1 
Amortization of/(Reserve for)
    Revenues Subject to Refund (1)
7.0 — — (0.1)— — 6.9 
Total Revenues from Contracts with Customers2,830.4 228.3 523.7 68.6 343.5 (735.1)3,259.4 
Alternative Revenue Programs(37.7)(2.8)(55.1)(3.6)— 52.6 (46.6)
Other Revenues (2)
2.4 0.1 0.2 0.1 — — 2.8 
Total Operating Revenues$2,795.1 $225.6 $468.8 $65.1 $343.5 $(682.5)$3,215.6 
For the Nine Months Ended September 30, 2022
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $3,683.9 $870.0 $— $109.1 $— $— $4,663.0 
Commercial 2,216.0 456.9 — 49.9 — (4.2)2,718.6 
Industrial284.1 145.2 — 3.5 — (14.8)418.0 
Total Retail Tariff Sales Revenues6,184.0 1,472.1 — 162.5 — (19.0)7,799.6 
Wholesale Transmission Revenues— — 1,301.0 — 79.4 (1,047.3)333.1 
Wholesale Market Sales Revenues895.2 89.3 — 2.8 — — 987.3 
Other Revenues from Contracts with Customers53.4 2.8 10.5 6.2 983.3 (974.9)81.3 
Amortization of/(Reserve for)
    Revenues Subject to Refund (1)
71.9 — 0.7 (0.9)— — 71.7 
Total Revenues from Contracts with Customers7,204.5 1,564.2 1,312.2 170.6 1,062.7 (2,041.2)9,273.0 
Alternative Revenue Programs(26.2)4.3 48.9 (2.8)— (46.9)(22.7)
Other Revenues (2)
7.5 0.9 0.5 0.4 — — 9.3 
Total Operating Revenues$7,185.8 $1,569.4 $1,361.6 $168.2 $1,062.7 $(2,088.1)$9,259.6 
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For the Three Months Ended September 30, 2021
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $1,146.8 $81.7 $— $39.1 $— $— $1,267.6 
Commercial 748.8 59.0 — 17.2 — (1.4)823.6 
Industrial96.2 28.6 — 1.1 — (4.8)121.1 
Total Retail Tariff Sales Revenues1,991.8 169.3 — 57.4 — (6.2)2,212.3 
Wholesale Transmission Revenues— — 527.2 — 23.0 (408.5)141.7 
Wholesale Market Sales Revenues133.8 12.2 — 1.1 — — 147.1 
Other Revenues from Contracts with Customers29.6 1.2 3.5 1.8 303.1 (301.4)37.8 
Reserve for Revenues Subject to Refund (1)
(93.4)— — (0.9)— — (94.3)
Total Revenues from Contracts with Customers2,061.8 182.7 530.7 59.4 326.1 (716.1)2,444.6 
Alternative Revenue Programs(7.9)2.7 (112.6)2.3 — 102.0 (13.5)
Other Revenues (2)
1.3 0.1 0.2 0.1 — — 1.7 
Total Operating Revenues$2,055.2 $185.5 $418.3 $61.8 $326.1 $(614.1)$2,432.8 
For the Nine Months Ended September 30, 2021
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $3,094.9 $722.8 $— $102.8 $— $— $3,920.5 
Commercial 1,902.9 356.4 — 47.0 — (4.1)2,302.2 
Industrial261.1 119.5 — 3.3 — (12.8)371.1 
Total Retail Tariff Sales Revenues5,258.9 1,198.7 — 153.1 — (16.9)6,593.8 
Wholesale Transmission Revenues— — 1,338.4 — 62.5 (1,075.4)325.5 
Wholesale Market Sales Revenues380.1 54.1 — 3.0 — — 437.2 
Other Revenues from Contracts with Customers68.4 3.6 10.2 5.5 936.6 (929.6)94.7 
Reserve for Revenues Subject to Refund (1)
(93.4)— — (2.2)— — (95.6)
Total Revenues from Contracts with Customers5,614.0 1,256.4 1,348.6 159.4 999.1 (2,021.9)7,355.6 
Alternative Revenue Programs14.9 21.3 (119.2)1.3 — 103.0 21.3 
Other Revenues (2)
3.2 0.1 0.7 0.3 — — 4.3 
Total Operating Revenues$5,632.1 $1,277.8 $1,230.1 $161.0 $999.1 $(1,918.9)$7,381.2 
38

For the Three Months Ended September 30, 2022For the Three Months Ended September 30, 2021
(Millions of Dollars)CL&PNSTAR ElectricPSNHCL&PNSTAR ElectricPSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $739.1 $507.6 $246.2 $572.0 $401.9 $172.9 
Commercial 311.2 469.6 110.4 249.4 411.3 88.5 
Industrial41.9 39.3 24.4 35.0 35.9 25.3 
Total Retail Tariff Sales Revenues1,092.2 1,016.5 381.0 856.4 849.1 286.7 
Wholesale Transmission Revenues250.3 183.8 86.2 268.2 171.0 88.0 
Wholesale Market Sales Revenues232.9 57.5 26.7 100.3 21.3 12.2 
Other Revenues from Contracts with Customers7.5 10.7 3.1 12.1 14.3 7.3 
Amortization of/(Reserve for)
    Revenues Subject to Refund (1)
7.0 — — (93.4)— — 
Total Revenues from Contracts with Customers1,589.9 1,268.5 497.0 1,143.6 1,055.7 394.2 
Alternative Revenue Programs(65.1)(20.5)(7.2)(82.0)(14.4)(24.1)
Other Revenues (2)
0.2 1.8 0.6 0.2 0.7 0.6 
Eliminations(155.9)(144.3)(59.8)(142.2)(123.3)(55.8)
Total Operating Revenues$1,369.1 $1,105.5 $430.6 $919.6 $918.7 $314.9 
For the Nine Months Ended September 30, 2022For the Nine Months Ended September 30, 2021
(Millions of Dollars)CL&PNSTAR ElectricPSNHCL&PNSTAR ElectricPSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential $1,864.4 $1,239.0 $580.5 $1,558.6 $1,069.0 $467.3 
Commercial 808.7 1,128.8 280.5 679.3 975.7 249.2 
Industrial111.4 104.0 68.7 100.2 89.5 71.4 
Total Retail Tariff Sales Revenues2,784.5 2,471.8 929.7 2,338.1 2,134.2 787.9 
Wholesale Transmission Revenues575.2 512.7 213.1 652.8 478.2 207.4 
Wholesale Market Sales Revenues656.3 163.1 75.8 278.1 64.7 37.3 
Other Revenues from Contracts with Customers22.8 34.1 8.8 28.8 36.8 14.9 
Amortization of/(Reserve for)
    Revenues Subject to Refund (1)
72.6 — — (93.4)— — 
Total Revenues from Contracts with Customers4,111.4 3,181.7 1,227.4 3,204.4 2,713.9 1,047.5 
Alternative Revenue Programs28.3 (14.4)8.8 (74.2)(11.3)(18.8)
Other Revenues (2)
0.5 5.4 2.1 0.3 2.5 1.1 
Eliminations(449.6)(420.4)(161.2)(394.0)(362.0)(142.6)
Total Operating Revenues$3,690.6 $2,752.3 $1,077.1 $2,736.5 $2,343.1 $887.2 

(1)    Amortization of Revenues Subject to Refund within the Electric Distribution segment in the third quarter and first nine months of 2022 primarily represents the reversal of a 2021 reserve at CL&P established to provide bill credits to customers as a result of the settlement agreement on October 1, 2021 and a storm performance penalty assessed by PURA. The reserve was reversed as customer credits were distributed to CL&P’s customers in retail electric rates. Total customer credits as a result of the 2021 settlement and civil penalty were $93.4 million. The settlement amount of $65 million was refunded over a two-month billing period from December 1, 2021 to January 31, 2022 and the civil penalty of $28.4 million was refunded over a one year billing period, which began September 1, 2021.

(2)    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 $1.0 million (including $0.2 million at CL&P and $0.6 million at NSTAR Electric) and $1.1 million (including $0.2 million at CL&P and $0.7 million at NSTAR Electric) for the three months ended September 30, 2022 and 2021, respectively, and $3.1 million (including $0.6 million at CL&P and $1.9 million at NSTAR Electric) and $3.8 million (including $0.6 million at CL&P and $2.5 million at NSTAR Electric) for the nine months ended September 30, 2022 and 2021, respectively.     

16.    SEGMENT INFORMATION

Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates.  These reportable segments represent substantially all of Eversource's total consolidated revenues.  Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer.  The Electric Distribution reportable segment includes the results of NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources.
 
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The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of other unregulated subsidiaries, which are not part of its core business, and 5) Eversource parent's equity ownership interests that are not consolidated, which primarily include the offshore wind business, a natural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund.

In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.

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

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

Eversource's segment information is as follows:
For the Three Months Ended September 30, 2022
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Operating Revenues$2,795.1 $225.6 $468.8 $65.1 $343.5 $(682.5)$3,215.6 
Depreciation and Amortization(256.9)(25.1)(85.1)(12.7)(35.4)1.8 (413.4)
Other Operating Expenses(2,261.5)(226.3)(143.7)(28.8)(265.7)681.1 (2,244.9)
Operating Income/(Loss)$276.7 $(25.8)$240.0 $23.6 $42.4 $0.4 $557.3 
Interest Expense$(64.5)$(18.8)$(36.6)$(8.7)$(69.6)$20.0 $(178.2)
Other Income, Net59.6 11.1 10.1 2.1 429.9 (423.0)89.8 
Net Income/(Loss) Attributable to Common
  Shareholders
225.1 (24.6)155.8 16.7 379.0 (402.6)349.4 
For the Nine Months Ended September 30, 2022
Eversource
(Millions of Dollars)
Electric DistributionNatural Gas DistributionElectric TransmissionWater DistributionOtherEliminationsTotal
Operating Revenues$7,185.8 $1,569.4 $1,361.6 $168.2 $1,062.7 $(2,088.1)$9,259.6 
Depreciation and Amortization(806.7)(116.2)(250.3)(37.5)(98.8)5.1 (1,304.4)
Other Operating Expenses(5,743.2)(1,244.3)(414.3)(82.9)(876.5)2,081.9 (6,279.3)
Operating Income$635.9 $208.9 $697.0 $47.8 $87.4 $(1.1)$1,675.9 
Interest Expense$(184.2)$(51.2)$(107.3)$(25.2)$(169.9)$46.3 $(491.5)
Other Income, Net160.1 31.9 28.3 6.4 1,280.1 (1,251.5)255.3 
Net Income Attributable to Common Shareholders495.0 147.2 455.8 29.4 1,163.6 (1,206.3)1,084.7 
Cash Flows Used for Investments in Plant823.9 424.5 823.3 103.4 177.6 — 2,352.7 
40

For the Three Months Ended September 30, 2021
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Operating Revenues$2,055.2 $185.5 $418.3 $61.8 $326.1 $(614.1)$2,432.8 
Depreciation and Amortization(179.8)(28.5)(75.4)(11.5)(28.0)1.1 (322.1)
Other Operating Expenses(1,640.5)(176.9)(122.4)(26.1)(275.2)613.7 (1,627.4)
Operating Income/(Loss)$234.9 $(19.9)$220.5 $24.2 $22.9 $0.7 $483.3 
Interest Expense$(61.0)$(15.7)$(33.5)$(8.0)$(42.5)$12.7 $(148.0)
Other Income, Net25.4 6.7 5.0 1.2 325.9 (320.4)43.8 
Net Income/(Loss) Attributable to Common
   Shareholders
150.4 (22.0)139.4 17.5 304.9 (307.0)283.2 
For the Nine Months Ended September 30, 2021
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
Operating Revenues$5,632.1 $1,277.8 $1,230.1 $161.0 $999.1 $(1,918.9)$7,381.2 
Depreciation and Amortization(534.1)(108.7)(223.4)(34.3)(83.7)3.1 (981.1)
Other Operating Expenses(4,531.3)(970.6)(359.6)(76.7)(860.3)1,918.9 (4,879.6)
Operating Income$566.7 $198.5 $647.1 $50.0 $55.1 $3.1 $1,520.5 
Interest Expense$(175.4)$(44.2)$(98.7)$(24.0)$(125.9)$37.0 $(431.2)
Other Income, Net76.0 15.2 17.3 3.1 1,059.2 (1,046.2)124.6 
Net Income Attributable to Common Shareholders365.4 129.6 412.4 30.0 982.5 (1,006.1)913.8 
Cash Flows Used for Investments in Plant764.9 506.4 691.0 91.2 157.6 — 2,211.1 

The following table summarizes Eversource's segmented total assets:
Eversource
(Millions of Dollars)
Electric
Distribution
Natural Gas
Distribution
Electric
Transmission
Water DistributionOtherEliminationsTotal
As of September 30, 2022$26,992.6 $7,692.6 $13,225.3 $2,627.9 $24,865.4 $(23,804.4)$51,599.4 
As of December 31, 202125,411.2 7,215.9 12,377.8 2,551.1 22,674.7 (21,738.6)48,492.1 

41

EVERSOURCE ENERGY AND SUBSIDIARIES

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

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, the combined Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, as well as the Eversource 2021 combined Annual Report on Form 10-K.  References in this combined Quarterly Report on Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries.  All per-share amounts are reported on a diluted basis.  The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."  

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

The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business, but rather represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure that is not recognized under GAAP (non-GAAP) and is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. Our earnings discussion also includes non-GAAP financial measures referencing our 2022 and 2021 earnings and EPS excluding certain transaction and transition costs, and our 2021 earnings and EPS excluding charges at CL&P related to an October 2021 settlement agreement that included credits to customers and funding of various customer assistance initiatives and a 2021 storm performance penalty imposed on CL&P by the PURA.

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 2022 and 2021 results without including these items. This information is among the primary indicators we use as a basis for evaluating performance and planning and forecasting of future periods. We believe the impacts of transaction and transition costs, the CL&P October 2021 settlement agreement, and the 2021 storm performance penalty imposed on CL&P by the PURA, are not indicative of our ongoing costs and performance. We view these charges as not directly related to the ongoing operations of the business and therefore not an indicator of baseline operating performance. Due to the nature and significance of the effect of these items on Net Income Attributable to Common Shareholders and EPS, 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.

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 involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in our forward-looking statements. 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 may cause our actual results or outcomes 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, including any new or emerging variants, 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.
42

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

All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, many of which are beyond our control.  You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A, Risk Factors, included in this combined Quarterly Report on Form 10-Q and in Eversource's 2021 combined Annual Report on Form 10-K.  This combined Quarterly Report on Form 10-Q and Eversource's 2021 combined Annual Report on Form 10-K also describe material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements.  We encourage you to review these items.

Financial Condition and Business Analysis

Executive Summary

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 EGMA (natural gas utilities) and Aquarion (water utilities). Eversource is organized into the electric distribution, electric transmission, natural gas distribution, and water distribution reportable segments.

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

Earnings Overview and Future Outlook: 

We earned $349.4 million, or $1.00 per share, in the third quarter of 2022, and $1.08 billion, or $3.13 per share, in the first nine months of 2022, compared with $283.2 million, or $0.82 per share, in the third quarter of 2021, and $913.8 million, or $2.65 per share, in the first nine months of 2021.

Our results include after-tax transaction and transition costs recorded at Eversource parent of $2.2 million, or $0.01 per share, in the third quarter of 2022, and $13.0 million, or $0.04 per share, in the first nine months of 2022, compared with $4.3 million, or $0.01 per share, in the third quarter of 2021, and $17.3 million, or $0.05 per share, in the first nine months of 2021. Our third quarter and first nine months of 2021 results include a charge resulting from a PURA-approved CL&P settlement agreement and our first nine months of 2021 results also include a charge at CL&P resulting from a PURA assessment as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020. These after-tax charges at CL&P were recorded within the electric distribution segment and totaled $63.2 million, or $0.19 per share, in the third quarter of 2021, and $85.8 million, or $0.25 per share, in the first nine months of 2021. Excluding these costs, our non-GAAP earnings were $351.6 million, or $1.01 per share, in the third quarter of 2022, and $1.10 billion, or $3.17 per share, in the first nine months of 2022, compared with $350.7 million, or $1.02 per share, in the third quarter of 2021, and $1.02 billion, or $2.95 per share, in the first nine months of 2021.

We reaffirmed our projection of our long-term EPS growth rate through 2026 from our regulated utility businesses in the upper half of the 5 to 7 percent range. We estimate that we will earn within a 2022 non-GAAP earnings guidance range of between $4.04 per share and $4.14 per share, which excludes the impact of transaction and transition costs.

Liquidity:

Cash flows provided by operating activities totaled $1.69 billion in the first nine months of 2022, compared with $1.52 billion in the first nine months of 2021. Investments in property, plant and equipment totaled $2.35 billion in the first nine months of 2022, compared with $2.21 billion in the first nine months of 2021.  

Cash and Cash Equivalents totaled $485.7 million as of September 30, 2022, compared with $66.8 million as of December 31, 2021. Our available borrowing capacity under our commercial paper programs totaled $2.25 billion as of September 30, 2022.

In the first nine months of 2022, we issued $4.05 billion of new long-term debt and we repaid $775 million of long-term debt.

In the first nine months of 2022, we issued 2,165,671 common shares, which resulted in proceeds of $197.1 million, net of issuance costs.

On September 16, 2022, our Board of Trustees approved a common share dividend payment of $0.6375 per share, paid on September 30, 2022 to shareholders of record as of September 26, 2022.



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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 Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
(Millions of Dollars, Except Per Share Amounts)AmountPer ShareAmountPer ShareAmountPer ShareAmountPer Share
Net Income Attributable to Common Shareholders (GAAP)$349.4 $1.00 $283.2 $0.82 $1,084.7 $3.13 $913.8 $2.65 
Regulated Companies (Non-GAAP)$373.0 $1.07 $348.5 $1.01 $1,127.4 $3.26 $1,023.2 $2.97 
Eversource Parent and Other Companies (Non-GAAP)(21.4)(0.06)2.2 0.01 (29.7)(0.09)(6.3)(0.02)
Non-GAAP Earnings$351.6 $1.01 $350.7 $1.02 $1,097.7 $3.17 $1,016.9 $2.95 
CL&P Settlement Impacts (after-tax) (1)
— — (63.2)(0.19)— — (85.8)(0.25)
Transaction and Transition Costs (after-tax) (2)
(2.2)(0.01)(4.3)(0.01)(13.0)(0.04)(17.3)(0.05)
Net Income Attributable to Common Shareholders (GAAP)$349.4 $1.00 $283.2 $0.82 $1,084.7 $3.13 $913.8 $2.65 

(1)    The 2021 after-tax costs are associated with the October 1, 2021 CL&P settlement agreement approved by PURA on October 27, 2021, which included a pre-tax $65 million charge to earnings for customer credits provided to customers over a two-month billing period from December 1, 2021 to January 31, 2022 and a $10 million charge to earnings to establish a fund that provided bill payment assistance to certain existing non-hardship and hardship customers carrying arrearages. These charges were recorded in the third quarter of 2021. The nine months ended 2021 after-tax costs also include a charge recorded at CL&P as a result of PURA’s April 28, 2021 and July 14, 2021 decisions, which included a $28.4 million penalty for storm performance results provided as credits to customer bills over a one-year period that began September 1, 2021 and a $0.2 million fine to the State of Connecticut’s general fund. As a result of the October 1, 2021 settlement agreement, CL&P agreed to withdraw its pending appeals related to the storm performance penalty imposed in PURA’s April 28, 2021 and July 14, 2021 decisions. Management views these collective charges as not directly related to the ongoing operations of the business and therefore not an indicator of baseline operating performance.

(2)    The after-tax costs are for the transition of systems as a result of our purchase of the assets of Columbia Gas of Massachusetts (CMA) on October 9, 2020 and integrating the CMA assets onto Eversource’s systems. The after-tax costs also include costs associated with our water business acquisitions and the strategic review of our offshore wind investment portfolio.

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 Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
(Millions of Dollars, Except Per Share Amounts)AmountPer ShareAmountPer ShareAmountPer ShareAmountPer Share
Net Income - Regulated Companies (GAAP)$373.0 $1.07 $285.3 $0.82 $1,127.4 $3.26 $937.4 $2.72 
Electric Distribution, excluding CL&P
   Settlement Impacts (Non-GAAP)
$225.1 $0.65 $213.6 $0.62 $495.0 $1.43 $451.2 $1.31 
Electric Transmission155.8 0.44 139.4 0.40 455.8 1.32 412.4 1.20 
Natural Gas Distribution(24.6)(0.07)(22.0)(0.06)147.2 0.42 129.6 0.37 
Water Distribution16.7 0.05 17.5 0.05 29.4 0.09 30.0 0.09 
Net Income - Regulated Companies (Non-GAAP)$373.0 $1.07 $348.5 $1.01 $1,127.4 $3.26 $1,023.2 $2.97 
CL&P Settlement Impacts (after-tax)— — (63.2)(0.19)— — (85.8)(0.25)
Net Income - Regulated Companies (GAAP)$373.0 $1.07 $285.3 $0.82 $1,127.4 $3.26 $937.4 $2.72 

Our electric distribution segment earnings increased $74.7 million in the third quarter of 2022, as compared to the third quarter of 2021, due primarily to the absence in 2022 of CL&P’s October 1, 2021 settlement agreement that resulted in a $75 million pre-tax charge to earnings recorded in 2021. The after-tax impact of the CL&P settlement agreement was $63.2 million, or $0.19 per share. Excluding that 2021 charge, electric distribution segment earnings increased $11.5 million due primarily to a base distribution rate increase at NSTAR Electric effective January 1, 2022, higher earnings from CL&P's capital tracking mechanism due to increased electric system improvements, a lower effective tax rate resulting from the income tax return to provision adjustment and a decrease in permanent and flow-through income tax items, and lower pension plan expense in Connecticut and New Hampshire. Those earnings increases were partially offset by higher operations and maintenance expense driven primarily by higher insurance reserves and higher shared corporate costs resulting from the implementation of new information technology systems, higher property and other tax expense, and higher depreciation expense.

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Our electric distribution segment earnings increased $129.6 million in the first nine months of 2022, as compared to the first nine months of 2021, due primarily to the absence in 2022 of CL&P’s October 1, 2021 settlement agreement that resulted in a $75 million pre-tax charge to earnings and a $28.6 million pre-tax charge to earnings at CL&P for a storm performance penalty imposed by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020 recorded in 2021. The after-tax impact of the CL&P settlement agreement and CL&P storm performance penalty imposed by the PURA was $85.8 million, or $0.25 per share. Excluding those 2021 charges, electric distribution segment earnings increased $43.8 million due primarily to a base distribution rate increase at NSTAR Electric effective January 1, 2022, higher earnings from CL&P's capital tracking mechanism due to increased electric system improvements, lower pension plan expense in Connecticut and New Hampshire, a lower effective tax rate resulting from the income tax return to provision adjustment in the third quarter and a decrease in permanent and flow-through income tax items, and an increase in interest income primarily on regulatory deferrals. Those earnings increases were partially offset by higher operations and maintenance expense driven primarily by higher insurance reserves and higher shared corporate costs resulting from the implementation of new information technology systems, higher depreciation expense, higher property and other tax expense, and higher interest expense.

Our electric transmission segment earnings increased $16.4 million and $43.4 million in the third quarter and first nine months of 2022, respectively, as compared to the third quarter and first nine months of 2021, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.

Our natural gas distribution segment earnings had an increased loss of $2.6 million in the third quarter of 2022, as compared to the third quarter of 2021, due primarily to higher operations and maintenance expense, higher property tax expense, and higher depreciation expense, partially offset by higher earnings from capital tracking mechanisms due to continued investments in natural gas infrastructure, higher revenues from base distribution rate increases at EGMA and NSTAR Gas effective November 1, 2021, and lower pension plan expense at Yankee Gas.

Our natural gas distribution segment earnings increased $17.6 million in the first nine months of 2022, as compared to the first nine months of 2021, due primarily to base distribution rate increases at EGMA and NSTAR Gas effective November 1, 2021, higher earnings from capital tracking mechanisms due to continued investments in natural gas infrastructure, and lower pension plan expense at Yankee Gas. Those earnings increases were partially offset by higher operations and maintenance expense, higher property tax expense, higher depreciation expense, and higher interest expense. Our natural gas companies' decoupled rate structure is seasonally structured and provides greater earnings in the winter heating months in correlation to higher customer usage. Therefore, the majority of the impact of the EGMA and NSTAR Gas annual base distribution rate increases were recognized by the end of the first quarter of 2022.

Our water distribution segment earnings decreased $0.8 million and $0.6 million in the third quarter and first nine months of 2022, respectively, as compared to the third quarter and first nine months of 2021.

Eversource Parent and Other Companies:  Eversource parent and other companies’ losses increased $21.5 million and $19.1 million in the third quarter and the first nine months of 2022, respectively, as compared to the third quarter and first nine months of 2021. Higher losses in both periods were due primarily to higher interest expense and a higher effective tax rate driven by the income tax return to provision adjustment in the third quarter, partially offset by higher return at Eversource Service as a result of increased investments in property, plant and equipment, and after-tax decreases of $2.1 million and $4.3 million in transition costs associated with EGMA integration and transaction costs in the third quarter and first nine months of 2022, respectively, as compared to the same periods in 2021. The nine-month period also benefited from higher unrealized gains associated with our equity method investment in a renewable energy fund.

Pension Plan: Pension plan assets and obligation are presented on a net basis and remeasured annually using a December 31st measurement date. Our future pension expense amount is dependent on plan asset returns and market performance, discount rates, and other actuarial assumptions. An underperformance of our pension plan investment returns relative to the expected returns would increase our net pension liability at December 31st, resulting in unamortized actuarial losses to be recognized in future years’ pension plan expense and a reduced expected return on assets component of pension expense. An increase in the discount rate used to determine our pension obligation would decrease our net pension liability at December 31st, resulting in unamortized actuarial gains to be recognized in future years’ pension plan expense. An increase in the discount rate at December 31st would also result in an increase in the interest cost component and a decrease in the service cost component of the subsequent year’s pension plan expense. Unamortized actuarial gains or losses arising at the December 31st measurement date are primarily from differences in actual investment performance compared to expected performance, as well as changes in the discount rate and other actuarial assumptions. These actuarial gains or losses are amortized as a component of pension plan expense over the estimated average future employee service period, which is seven years for the pension plan.

The change in total pension plan expense arising from this annual remeasurement does not fully impact earnings. Our Massachusetts utilities recover qualified pension expenses related to their distribution operations through a rate reconciling mechanism that fully tracks the change in net pension expenses each year, therefore the change in their pension expense does not impact earnings. Our electric transmission companies' rates provide for an annual true-up of estimated to actual costs, which include pension expenses, therefore the change in their pension expense does not impact earnings. Additionally, the portion of our pension expense that relates to company labor devoted to capital projects is capitalized on the balance sheet instead of being charged to expense.

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Impact of COVID-19

The current and expected future financial impacts of COVID-19 as it relates to our businesses primarily relate to collectability of customer receivables and customer payment plans and the outcome of future proceedings before our state regulatory commissions to recover our incremental uncollectible customer receivable costs associated with COVID-19.

As of September 30, 2022, our allowance for uncollectible customer receivable balance of $457.6 million, of which $252.1 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. As of September 30, 2022 and December 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $55.5 million and $55.3 million at Eversource, $19.7 million and $23.9 million at CL&P, and $4.1 million and $9.0 million at NSTAR Electric, respectively. At our Connecticut and Massachusetts utilities, the 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 future rates. No COVID-19 related uncollectible amounts were deferred at PSNH as a result of a July 2021 NHPUC order. Based on the status of our COVID-19 regulatory dockets, policies and practices in the jurisdictions in which we operate, we believe the state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental uncollectible customer receivable costs associated with COVID-19.

As of September 30, 2022 and December 31, 2021, a total of $34.6 million and $33.0 million, respectively, of incremental COVID-19 related non-tracked uncollectible costs were recorded on the balance sheets.

Liquidity

Sources and Uses of Cash: Eversource’s regulated business is capital intensive and requires considerable capital resources. Eversource’s regulated companies’ capital resources are provided by cash flows generated from operations, short-term borrowings, long-term debt issuances, capital contributions from Eversource parent, and existing cash, and are used to fund their liquidity and capital requirements. Eversource’s regulated companies typically maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. Short-term borrowings are also used as a bridge to long-term debt financings. The levels of short-term borrowing may vary significantly over the course of the year due to the impact of fluctuations in cash flows from operations, dividends paid, capital contributions received and the timing of long-term debt financings.

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. Eversource's regulated companies spend a significant amount of cash on capital improvements and construction projects that have a long-term return on investment and recovery period. In addition, Eversource uses its capital resources to fund investments in its offshore wind business, which are recognized as long-term assets.

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.

Cash and Cash Equivalents totaled $485.7 million as of September 30, 2022, compared with $66.8 million as of December 31, 2021. The increase in Cash and Cash Equivalents was due to the NSTAR Electric $400 million long-term debt issuance on September 15, 2022 that was used to pay $400 million of long-term debt that matured on October 15, 2022.

Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 15, 2027. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.  

NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 15, 2027. This 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 ofAvailable Borrowing Capacity as ofWeighted-Average Interest Rate as of
September 30, 2022December 31, 2021September 30, 2022December 31, 2021September 30, 2022December 31, 2021
(Millions of Dollars)
Eversource Parent Commercial Paper Program $401.5 $1,343.0 $1,598.5 $657.0 3.34 %0.31 %
NSTAR Electric Commercial Paper Program — 162.5 650.0 487.5 — %0.14 %

There were no borrowings outstanding on the revolving credit facilities as of September 30, 2022 or December 31, 2021.

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CL&P and PSNH have uncommitted line of credit agreements totaling $450 million and $300 million, respectively, which will expire on May 12, 2023. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of September 30, 2022.

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 September 30, 2022, there were intercompany loans from Eversource parent to CL&P of $26.0 million, to PSNH of $139.7 million, and to a subsidiary of NSTAR Electric of $2.8 million. As of December 31, 2021, there were intercompany loans from Eversource parent to PSNH of $110.6 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.

Availability under Long-Term Debt Issuance Authorizations: On June 14, 2022, the DPU approved NSTAR Gas’ request for authorization to issue up to $325 million in long-term debt through December 31, 2024.

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 DateMaturity DateUse of Proceeds for Issuance/
Repayment Information
NSTAR Electric 4.55% 2022 Debentures$450.0 May 2022June 2052Repaid short-term debt, paid capital expenditures and working capital
NSTAR Electric 4.95% 2022 Debentures400.0 September 2022September 2052Refinanced investments in eligible green expenditures, which were previously financed using short-term debt from October 1, 2020 through June 30, 2022
NSTAR Electric 2.375% 2012 Debentures (400.0)October 2022October 2022Paid at maturity
Eversource Parent 2.90% Series V Senior Notes650.0 February 2022March 2027
Repaid Series K Senior Notes at maturity and short-term debt
Eversource Parent 3.375% Series W Senior Notes650.0 February 2022March 2032
Repaid Series K Senior Notes at maturity and short-term debt
Eversource Parent 4.20% Series X Senior Notes900.0 June 2022June 2024Repaid short-term debt and paid working capital
Eversource Parent 4.60% Series Y Senior Notes600.0 June 2022July 2027Repaid short-term debt and paid working capital
Eversource Parent 2.75% Series K Senior Notes(750.0)March 2022March 2022Paid at maturity
Yankee Gas 8.48% Series B First Mortgage Bonds(20.0)March 2022March 2022Paid at maturity
Yankee Gas 4.31% Series U First Mortgage Bonds100.0 September 2022September 2032Repaid short-term debt, paid capital expenditures and for general corporate purposes
EGMA 4.70% Series C First Mortgage Bonds100.0 June 2022June 2052Repaid short-term debt, paid capital expenditures and for general corporate purposes
NSTAR Gas 4.40% Series V First Mortgage Bonds 125.0 July 2022August 2032Repaid short-term debt, paid capital expenditures and for general corporate purposes
Aquarion Water Company of New Hampshire 4.45% General Mortgage Bonds(5.0)July 2022July 2022Paid at maturity
Aquarion Water Company of Connecticut 4.69% Senior Notes70.0 August 2022September 2052Repaid short-term debt

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 $17.6 million of interest payments in the first nine months of 2022, and paid $43.2 million of RRB principal payments and $18.9 million of interest payments in the first nine months of 2021.

Common Share Issuances and 2022 Equity Distribution Agreement: On May 11, 2022, Eversource entered into an equity distribution agreement pursuant to which it may offer and sell up to $1.2 billion of its common shares from time to time through an “at-the-market” (ATM) equity offering program. Eversource may issue and sell its common shares through its sales agents during the term of this agreement. Shares may be offered in transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise. Sales may be made at either market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In the first nine months of 2022, Eversource issued 2,165,671 common shares, which resulted in proceeds of $197.1 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes.

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Cash Flows:  Cash flows from operating activities primarily result from the transmission and distribution of electricity, and the distribution of natural gas and water. Cash flows provided by operating activities totaled $1.69 billion in the first nine months of 2022, compared with $1.52 billion in the first nine months of 2021. Changes in Eversource’s cash flows from operations were generally consistent with changes in its results of operations, as adjusted by changes in working capital in the normal course of business and as further discussed. Operating cash flows were favorably impacted by an increase in regulatory over-recoveries (excluding storm payments) driven by the timing of collections for the non-bypassable FMCC at CL&P and other regulatory tracking mechanisms, the timing of cash payments made on our accounts payable, a decrease of $60.0 million in pension contributions made in 2022, as compared to 2021, and a $51.7 million decrease in income tax payments made in 2022, as compared to 2021. The impact of regulatory collections are included in both Regulatory Over/Under Recoveries and Amortization on the statements of cash flows. These favorable impacts were partially offset by an increase of $163.7 million in cash payments for storm costs at CL&P and NSTAR Electric, a $146.0 million increase in cost of removal expenditures, the timing of cash collections on our accounts receivable, a $76.1 million payment in the second quarter of 2022 related to withheld property taxes at NSTAR Electric, and $72.0 million of customer credits distributed to CL&P’s customers in the first nine months of 2022 as a result of the October 2021 settlement agreement and the 2021 storm performance penalty for CL&P’s response to Tropical Storm Isaias.

On September 16, 2022, our Board of Trustees approved a common share dividend payment of $0.6375 per share, paid on September 30, 2022 to shareholders of record as of September 26, 2022. In the first nine months of 2022, we paid cash dividends of $643.6 million and issued non-cash dividends of $17.4 million in the form of treasury shares, totaling dividends of $661.0 million. In the first nine months of 2021, we paid cash dividends of $603.6 million and issued non-cash dividends of $17.3 million in the form of treasury shares, totaling dividends of $620.9 million. Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.

In the first nine months of 2022, CL&P, NSTAR Electric and PSNH paid $219.3 million, $215.7 million, and $78.0 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 income/expense.  In the first nine months of 2022, investments for Eversource, CL&P, NSTAR Electric, and PSNH were $2.35 billion, $609.0 million, $691.9 million, and $346.3 million, respectively. Capital expenditures were primarily for continuing projects to maintain and improve infrastructure and operations, including enhancing reliability to the transmission and distribution systems.

Contractual Obligations: Our cash requirements from contractual obligations were reported in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2021 Form 10-K. See Note 9B, "Commitments and Contingencies – Long-Term Contractual Arrangements," to the financial statements for discussion of material changes to our cash requirements from contractual obligations. Other than as described in the footnote, there have been no material changes to our cash requirements from contractual obligations and payment schedules previously disclosed in our 2021 Form 10-K.

Credit Ratings: On September 9, 2022, Moody’s changed NSTAR Electric’s outlook from stable to negative.

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 income/expense (all of which are non-cash factors), totaled $2.52 billion in the first nine months of 2022, compared to $2.29 billion in the first nine months of 2021.  These amounts included $177.3 million and $161.2 million in the first nine months of 2022 and 2021, respectively, 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 increased by $116.5 million in the first nine months of 2022, as compared to the first nine months of 2021.  A summary of electric transmission capital expenditures by company is as follows:  
 For the Nine Months Ended September 30,
(Millions of Dollars)20222021
CL&P$284.4 $242.4 
NSTAR Electric283.0 316.1 
PSNH231.3 123.7 
Total Electric Transmission Segment$798.7 $682.2 

Our transmission projects are designed to improve the reliability of the electric grid, meet customer demand for power and increases in electrification of municipal infrastructure, strengthen the electric grid's resilience against extreme weather and other safety and security threats, and enable integration of increasing amounts of clean power generation from renewable sources, such as solar, battery storage, and offshore wind. In Connecticut, Massachusetts and New Hampshire, our transmission projects include transmission line upgrades, the installation of new transmission interconnection facilities, transmission substations and lines, and substation enhancements.

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Our transmission projects in Massachusetts include electric transmission upgrades in the greater Boston metropolitan area. Two of these upgrades, the Mystic-Woburn and the Wakefield-Woburn reliability projects, are under construction and are expected to be placed in service by the fourth quarter of 2023. Construction on the last remaining upgrade, the Sudbury-Hudson Reliability Project, is expected to commence in the fourth quarter of 2022. We spent $38.1 million during the first nine months of 2022 and we expect to make additional capital expenditures of approximately $145 million on these remaining transmission upgrades. There are also several transmission projects underway 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. We spent $11.1 million during the first nine months of 2022 and we expect to make additional capital expenditures of approximately $120 million on these transmission upgrades.

On June 17, 2022, FERC approved a transmission support agreement between NSTAR Electric and Park City Wind LLC (PCW). The agreement commits NSTAR Electric to construct certain transmission facilities required to interconnect PCW’s future 800 MW offshore wind generation facility to NSTAR Electric’s transmission system. Of the total estimated $196 million project, NSTAR Electric will finance an estimated $152 million and earn a return on those specific investments over a ten-year period once the facility is in operation based on the authorized return that is in effect at the applicable time for regional transmission service under the ISO-NE Open Access Transmission Tariff. The interconnection transmission facilities are currently expected to be in-service in 2026.

Distribution Business:  A summary of distribution capital expenditures is as follows:
For the Nine Months Ended September 30,
(Millions of Dollars) CL&P NSTAR Electric PSNH Total Electric Natural GasWater Total
2022
Basic Business$186.6 $118.3 $40.2 $345.1 $135.6 $9.5 $490.2 
Aging Infrastructure150.7 159.7 47.1 357.5 378.8 87.4 823.7 
Load Growth and Other39.9 121.8 20.5 182.2 43.2 0.7 226.1 
Total Distribution377.2 399.8 107.8 884.8 557.6 97.6 1,540.0 
Solar— 0.2 — 0.2 — — 0.2 
Total$377.2 $400.0 $107.8 $885.0 $557.6 $97.6 $1,540.2 
2021
Basic Business$160.2 $111.7 $39.5 $311.4 $140.8 $11.0 $463.2 
Aging Infrastructure110.5 162.7 44.3 317.5 358.3 77.7 753.5 
Load Growth and Other51.2 108.5 15.2 174.9 59.0 0.5 234.4 
Total Distribution321.9 382.9 99.0 803.8 558.1 89.2 1,451.1 
Solar— (0.7)— (0.7)— — (0.7)
Total$321.9 $382.2 $99.0 $803.1 $558.1 $89.2 $1,450.4 

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 Torrington Water Company: On October 3, 2022, Aquarion acquired The Torrington Water Company (TWC) following the receipt of all required approvals. The acquisition was structured as a stock-for-stock exchange, and Eversource issued 925,264 treasury shares at closing for a purchase price of approximately $72 million. TWC provided regulated water service to approximately 10,100 customers in Connecticut.

Offshore Wind Business: Our offshore wind business includes a 50 percent ownership interest in North East Offshore, which holds PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as an undeveloped offshore lease area. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted.

The offshore leases include a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island and a separate, adjacent 300-square-mile ocean lease located approximately 25 miles south of the coast of Massachusetts. In aggregate, these ocean lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy.

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As of September 30, 2022 and December 31, 2021, Eversource's total equity investment balance in its offshore wind business was $1.82 billion and $1.21 billion, respectively. This equity investment includes capital expenditures for the three projects, as well as capitalized costs related to future development, acquisition costs of offshore lease areas, and capitalized interest.

Strategic Review of Offshore Wind Investments: On May 4, 2022, we announced that we have initiated a strategic review of our offshore wind investment portfolio. As part of that review, we are exploring strategic alternatives that could result in a potential sale of all, or part, of our 50 percent interest in our offshore wind partnership with Ørsted. In late July, we started preliminary and targeted outreach to potential buyers. We continue to work with potential buyers through this ongoing process and expect to complete this review during 2022. If the recommended path forward following the strategic review is a sale of all, or part, of our interest in the partnership, we expect potential proceeds from such transaction would likely be used to support our regulated investments in strengthening, modernizing and decarbonizing our regulated energy and water delivery systems. As the strategic review proceeds, we remain committed to continue providing oversight of the siting and construction of onshore elements of our South Fork Wind, Revolution Wind and Sunrise Wind offshore wind projects.

Contracts, Permitting and Construction of Offshore Wind Projects: The following table provides a summary of the Eversource and Ørsted major projects with announced contracts:
Wind ProjectState ServicingSize (MW)Term (Years)Price per MWhPricing TermsContract Status
Revolution WindRhode Island40020$98.43Fixed price contract; no price escalationApproved
Revolution WindConnecticut30420$98.43 - $99.50Fixed price contracts; no price escalationApproved
South Fork WindNew York (LIPA)9020$160.332 percent average price escalationApproved
South Fork WindNew York (LIPA)4020$86.252 percent average price escalation
Approved
Sunrise WindNew York (NYSERDA)92425
$110.37 (1)
Fixed price contract; no price escalationApproved

(1)    Index Offshore Wind Renewable Energy Certificate (OREC) strike price.

Revolution Wind and Sunrise Wind projects are subject to receipt of federal, state and local approvals necessary to construct and operate the projects. The federal permitting process is led 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 could adversely impact the timing of these projects' in-service dates.

Federal Siting and Permitting Process: The federal siting and permitting process for each of our offshore wind projects commence with the filing of a Construction and Operations Plan (COP) application with BOEM. The first major milestone in the BOEM review process is an issuance of a Notice of Intent (NOI) to complete an Environmental Impact Statement (EIS). BOEM then provides a final review schedule for the project’s COP approval. BOEM conducts environmental and technical reviews of the COP. The EIS assesses the environmental, social, and economic impacts of constructing the project and recommends measures to minimize impacts. The Final EIS will inform BOEM in deciding whether to approve the project or to approve with modifications and BOEM will then issue its Record of Decision. BOEM issues its final approval of the COP following the Record of Decision.

Revolution Wind and Sunrise Wind filed their COP applications with BOEM in March 2020 and September 2020, respectively. On April 30, 2021, Revolution Wind received BOEM’s NOI to prepare an EIS for the review of the COP submitted by Revolution Wind. For Revolution Wind, a final EIS is expected in the second quarter of 2023, the Record of Decision in the third quarter of 2023, and final approval is expected in the fourth quarter of 2023. On September 2, 2022, BOEM released its Draft EIS for the Revolution Wind project, which analyzes the potential environmental impacts of the project and the alternatives to the project 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 Revolution Wind project would still meet the contractual output under its PPA. On August 31, 2021, Sunrise Wind received BOEM’s NOI to prepare an EIS for the review of the COP. For Sunrise Wind, a final EIS and Record of Decision are expected in the third quarter of 2023, and final approval is expected in the fourth quarter of 2023.

South Fork Wind, Revolution Wind and Sunrise Wind are each 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 projects’ permitting timelines.

State and Local Siting and Permitting Process: State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind were filed in December 2020. On July 8, 2022, the Rhode Island Energy Facilities Siting Board issued a Final Decision and Order approving the Revolution Wind project and granting a license to construct and operate. The Sunrise Wind state siting application was deemed complete on July 1, 2021, initiating the formal review process, and Sunrise Wind filed a formal notice of intent to commence settlement negotiations towards a Joint Proposal on August 31, 2021. On September 23, 2022, Sunrise Wind filed the Joint Proposal to the New York State Public Service Commission. Among other things, the Joint Proposal includes proposed mitigation for certain environmental, community and construction impacts associated with constructing the project. The Joint Proposal was signed by the New York Departments of Public Service, Environmental Conservation, Transportation and State as well as the Office of Agriculture and Markets and the Long Island Commercial Fisheries Association.

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Construction Process - South Fork Wind: South Fork Wind received all required approvals to start construction and the project entered the construction phase in early 2022. Onshore activities for the project’s underground onshore transmission line and construction of the onshore interconnection facility located in East Hampton, New York are underway. Offshore activities are expected to begin in the fourth quarter of 2022 with construction of the sea-to-shore conduit system. Other marine construction activities, including the project’s monopile foundations, 11-megawatt wind turbines, cable installation, and offshore substation, are expected to occur in 2023. Construction-related purchase agreements with third-party contractors and materials contracts have largely been secured. South Fork Wind faces several challenges and appeals of New York State and federal agency approvals, however it believes it is probable it will be able to overcome these challenges.

Projected In-Service Dates: We expect the South Fork Wind project to be in-service by the end of 2023. For Revolution Wind and Sunrise Wind, based on the BOEM permit schedule included in each respective NOI outlining when BOEM will complete its review of the COP, we currently expect in-service dates in 2025 for both projects.

Projected Investments: For Revolution Wind and Sunrise Wind, 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. Construction of South Fork Wind is underway. Construction-related purchase agreements with third-party contractors and materials contracts have largely been secured. Subject to advancing our final project designs and federal, state and local permitting processes and construction schedules, we currently expect to make investments in our offshore wind business between $0.9 billion and $1.0 billion in 2022 and expect to make investments for our three projects in total between $3.0 billion and $3.6 billion from 2023 through 2026. These estimates assume that the three projects are completed and are in-service by the end of 2025, as planned. These projected investments could be impacted by the strategic review of our offshore wind investment discussed above.

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, FERC issued Opinion No. 531-A and 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 September 30, 2022 and December 31, 2021. 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 September 30, 2022 and December 31, 2021.

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

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

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

On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos 569-A and 569-B were appealed to the Court. On August 9, 2022, the Court issued its decision vacating MISO ROE FERC Opinions 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return. At
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this time, Eversource cannot predict how and when FERC will address the Court’s findings on the remand of the MISO FERC opinions or any potential associated impact on the NETOs’ four pending ROE complaint 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 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. Prospectively from the date of a final FERC order implementing a new base ROE, based off of estimated 2022 rate base, a change of 10 basis points to the base ROE would impact Eversource’s future annual after-tax earnings by approximately $5 million 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.

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.

On April 15, 2021, FERC issued a Supplemental NOPR that proposes to eliminate the existing 50 basis point return on equity for utilities that have been participating in a regional transmission organization (RTO ROE incentive) for more than three years. On June 25, 2021, the NETOs jointly filed comments strongly opposing FERC’s proposal. On July 26, 2021, the NETOs filed Supplemental NOPR reply comments responding to various parties advocating for the elimination of the RTO Adder. If FERC issues a final order eliminating the RTO ROE incentive as proposed in the Supplemental NOPR, the estimated annual impact (using 2022 estimated rate base) on Eversource's after-tax earnings is approximately $18 million. The Supplemental NOPR contemplates an effective date 30 days from the final order.

At this time, Eversource cannot predict the ultimate outcome of these proceedings, including possible appellate review, and the resulting impact on its transmission incentives.

Regulatory Developments and Rate Matters

Electric, Natural Gas and Water Utility Base Distribution Rates: The regulated companies’ distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first nine months of 2022, changes made to the regulated companies’ rates did not have a material impact on their earnings, financial position, or cash flows.  For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2021 Form 10-K.

Connecticut:

CL&P Advanced Metering Infrastructure Filing: On July 31, 2020, CL&P submitted to PURA its proposed $512 million Advanced Metering Infrastructure investment and implementation plan. On August 17, 2021, PURA issued a Notice of Request for Amended EDC Advanced Metering Infrastructure Proposal. CL&P submitted an Amended Proposal in response to this request on November 8, 2021 with an updated schedule for the years 2022 through 2028, which included additional information as required by the PURA. As required, the plan includes a full deployment of advanced metering functionality and a composite business case in support of the Advanced Metering Infrastructure plan. The procedural schedule includes briefs that were filed on April 29, 2022, written comments that were filed July 20, 2022, and a technical session on September 14, 2022.

Aquarion Water Company of Connecticut Distribution Rate Case: On August 29, 2022, Aquarion Water Company of Connecticut (AWC-CT) filed an application with PURA to amend its existing rate schedules to address an operating revenue deficiency. AWC-CT’s rate application requested approval of rate increases of $27.5 million, an additional $13.6 million, and an additional $8.8 million, effective March 15, 2023, 2024, and 2025, respectively. A final decision from PURA is expected March 15, 2023.
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Massachusetts:

NSTAR Electric Distribution Rate Case: On January 14, 2022, NSTAR Electric filed an application with the DPU for approval of an $89 million increase in base distribution rates, with new rates anticipated to be effective January 1, 2023. On September 27, 2022, NSTAR Electric updated its requested increase to approximately $93 million. As part of this filing, NSTAR Electric is requesting a renewal of the performance-based ratemaking plan originally authorized in its last rate case for up to a ten-year term, alignment with state electrification policy, storm fund refinements, and Advanced Metering Infrastructure tariff approval. A final decision from the DPU is expected on December 1, 2022.

NSTAR Electric Grid Modernization and Advanced Metering Infrastructure Filing: On July 1, 2021, NSTAR Electric submitted for DPU approval its four-year $198.8 million Grid Modernization Plan for the years 2022 through 2025 and proposed $620 million Advanced Metering Infrastructure investment and implementation plan (including program operating costs) for the years 2022 through 2028. As required, the plan includes a ten-year vision, five-year strategic plan, including a full deployment of advanced metering functionality, separate four-year grid-facing and customer-facing short-term investment plans, and a composite business case in support of the Advanced Metering Infrastructure plan. On October 7, 2022, the DPU issued an order approving the continuing investments from the initial 2018 to 2021 plan that were included in the 2022 to 2025 Grid Modernization Plan. The DPU established a preauthorized total budget cap of $162.6 million over the four-year plan period, with targeted cost recovery through NSTAR Electric’s annual grid modernization factor filings. NSTAR Electric expects DPU guidance for the new grid modernization investments and the Advanced Metering Infrastructure implementation plan in the fourth quarter of 2022. For Advanced Metering Infrastructure investments, additional guidance on the cost recovery mechanism is expected as part of the NSTAR Electric base distribution rate case by December 1, 2022.

NSTAR Gas Distribution Rates: As part of an inflation-based mechanism, NSTAR Gas submitted its second annual Performance Based Rate Adjustment filing on September 15, 2022 and on October 31, 2022, the DPU approved a $21.7 million increase to base distribution rates for effect on November 1, 2022. The increase is inclusive of a $4.5 million permanent increase related to exogenous property taxes and a $5.4 million increase related to an October 6, 2021 mitigation plan filing that delayed recovery of a portion of a base distribution rate increase originally scheduled to take effect November 1, 2021. The DPU also approved the recovery of historical exogenous property taxes incurred from November 1, 2020 through October 31, 2022 of $8.2 million over a two-year period through a separate tracking mechanism for effect on November 1, 2022.

EGMA Distribution Rates: As established in an October 7, 2020 EGMA Rate Settlement Agreement approved by the DPU, on September 16, 2022 EGMA filed for its second base distribution rate increase and on October 31, 2022, the DPU approved a $6.7 million increase to base distribution rates and a $3.3 million increase to the Tax Act Credit Factor for effect on November 1, 2022. The DPU also approved the recovery of historical exogenous property taxes incurred from November 1, 2020 through October 31, 2022 of $8.6 million over a two-year period through a separate tracking mechanism for effect on November 1, 2022. EGMA will request recovery of incremental property taxes incurred after October 31, 2022 in future exogenous filings.

New Hampshire:

PSNH Distribution Rates: In connection with an October 9, 2020 settlement agreement, PSNH was permitted three step increases to reflect qualifying plant additions in calendar years 2019, 2020 and 2021. The first two step adjustments had effective dates of January 1, 2021 and August 1, 2021, respectively. On October 20, 2022, the NHPUC approved the third step adjustment for 2021 plant in service to recover a revenue requirement of $8.9 million, with rates effective November 1, 2022.

Legislative:

Massachusetts: On August 11, 2022, Governor Baker signed into law climate-related legislation which, among other things, affirms the state’s commitment to contract for 5,600 MW of offshore wind by June 30, 2027, modifies the bidding process to encourage more competition among offshore wind developers, and provides incentives to increase the manufacturing and assembly of offshore wind components in Massachusetts. The law also provides incentives to encourage the sale and leasing of electric vehicles, promotes energy storage and electrification technologies, directs electric companies to develop grid modernization plans to upgrade distribution and transmission facilities, and initiates a pilot program that would allow up to ten communities in the state to restrict fossil fuel use in new buildings. Additionally, for long-term contracts that are approved by the DPU between developers of offshore wind generation and the contracting electric distribution company, the law provides for an annual remuneration for the distribution company equal to 2.25 per cent of the annual payments under the contract to compensate the distribution company for accepting the financial obligation of the long-term contract.

Federal: On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law. This is a broad package of legislation that includes incentives and support for clean energy resource development. Most notable for Eversource, the investment tax credit (ITC) on offshore wind projects increases from 30 percent to 40 percent if certain requirements for labor and domestic content are met. The act also re-establishes the production tax credit for solar and wind energy projects, gives increased credit for projects in certain communities, and sets credits for qualifying clean energy generation and energy storage projects. The tax provisions of the IRA provide additional incentives for offshore wind projects and could reduce retail electricity costs for our customers related to those clean energy investments. The IRA includes other tax provisions focused on implementing a 15 percent minimum tax on adjusted financial statement income and a 1 percent excise tax on corporate share repurchases. The Department of Treasury is expected to issue Treasury Regulations and additional guidance with respect to the application of the newly enacted IRA provisions. We will continue to monitor and evaluate impacts on our consolidated financial statements and we currently do not expect the alternative minimum tax change to have a material impact on our earnings, financial condition or cash flows.

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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 that we believed were the most critical in nature were reported in the Eversource 2021 Form 10-K.  There have been no material changes with regard to these critical accounting policies.

Other Matters

Web Site:  Additional financial information is available through our website at www.eversource.com.  We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's and PSNH's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed.  Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three and nine months ended September 30, 2022 and 2021 included in this combined Quarterly Report on Form 10-Q:  

For the Three Months Ended September 30,For the Nine Months Ended September 30,
(Millions of Dollars)20222021Increase20222021Increase
Operating Revenues$3,215.6 $2,432.8 $782.8 $9,259.6 $7,381.2 $1,878.4 
Operating Expenses:    
Purchased Power, Fuel and Transmission1,388.0 880.6 507.4 3,718.3 2,529.2 1,189.1 
Operations and Maintenance454.3 389.1 65.2 1,378.9 1,265.8 113.1 
Depreciation302.1 276.8 25.3 885.7 822.2 63.5 
Amortization111.3 45.2 66.1 418.6 158.9 259.7 
Energy Efficiency Programs162.5 143.8 18.7 498.7 460.8 37.9 
Taxes Other Than Income Taxes240.1 213.9 26.2 683.5 623.8 59.7 
Total Operating Expenses2,658.3 1,949.4 708.9 7,583.7 5,860.7 1,723.0 
Operating Income557.3 483.4 73.9 1,675.9 1,520.5 155.4 
Interest Expense178.1 148.0 30.1 491.6 431.2 60.4 
Other Income, Net89.8 43.8 46.0 255.3 124.6 130.7 
Income Before Income Tax Expense469.0 379.2 89.8 1,439.6 1,213.9 225.7 
Income Tax Expense117.7 94.1 23.6 349.3 294.5 54.8 
Net Income351.3 285.1 66.2 1,090.3 919.4 170.9 
Net Income Attributable to Noncontrolling Interests1.9 1.9 — 5.6 5.6 — 
Net Income Attributable to Common Shareholders$349.4 $283.2 $66.2 $1,084.7 $913.8 $170.9 

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: 
ElectricFirm Natural GasWater
 Sales Volumes (GWh)Percentage
Increase
Sales Volumes (MMcf)Percentage
(Decrease)/Increase
Sales Volumes (MG)Percentage
Increase
Three Months Ended September 30:202220212022202120222021
Traditional2,140 2,097 2.1 %— — — %596 397 50.1 %
Decoupled and Special Contracts (1)
12,545 12,197 2.9 %15,751 16,545 (4.8)%8,379 6,856 22.2 %
Total Sales Volumes14,685 14,294 2.7 %15,751 16,545 (4.8)%8,975 7,253 23.7 %
Nine Months Ended September 30:
Traditional5,927 5,901 0.4 %— — — %1,227 967 26.9 %
Decoupled and Special Contracts (1)
33,358 33,071 0.9 %109,163 107,337 1.7 %17,965 16,863 6.5 %
Total Sales Volumes39,285 38,972 0.8 %109,163 107,337 1.7 %19,192 17,830 7.6 %

(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.

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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.

Operating Revenues: Operating Revenues by segment increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, as follows:
(Millions of Dollars)Three Months Ended Nine Months Ended
Electric Distribution$739.9 $1,553.7 
Natural Gas Distribution40.1 291.6 
Electric Transmission50.5 131.5 
Water Distribution3.3 7.2 
Other17.4 63.6 
Eliminations(68.4)(169.2)
Total Operating Revenues$782.8 $1,878.4 

Electric and Natural Gas (excluding EGMA) Distribution Revenues:
Base Distribution Revenues:
Base electric distribution revenues increased $9.0 million and $37.4 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the impact of base distribution rate increases at NSTAR Electric effective January 1, 2022 resulting from its annual Performance Based Rate Adjustment filing and at PSNH effective August 1, 2021 to reflect plant additions in calendar year 2020 included in its revenue requirement.

Base natural gas distribution revenues (excluding EGMA) increased $1.7 million and $15.2 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to a base distribution rate increase at NSTAR Gas effective November 1, 2021.

Electric distribution revenues at CL&P also increased $93.4 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due to the absence of a 2021 reserve established to provide bill credits to customers as a result of CL&P’s settlement agreement on October 1, 2021 and a storm performance penalty assessed by PURA. In the 2021 settlement agreement, CL&P agreed to provide a total of $65 million of customer credits, which were distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards that was provided as credits to customers on electric bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement.

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.  Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return 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), certain capital tracking mechanisms for infrastructure improvements, and additionally for the Massachusetts utilities, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and the sale of RECs to various counterparties.

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Tracked distribution revenues increased/(decreased) for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the following:
Electric DistributionNatural Gas Distribution
(Millions of Dollars)Three Months Ended Nine Months EndedThree Months EndedNine Months Ended
Retail Tariff Tracked Revenues:
Energy supply procurement$390.8 $702.7 $22.2 $91.0 
Retail transmission65.3 224.0 — — 
Energy Efficiency27.8 37.9 (0.9)(6.1)
Stranded costs(15.3)(59.9)— — 
Other distribution tracking mechanisms(2.2)19.5 5.4 21.2 
Wholesale Market Sales Revenue183.3 515.1 7.0 20.7 

The increase in energy supply procurement within electric distribution for the three months ended September 30, 2022, as compared to the same period in 2021, was driven primarily by higher average prices and higher average supply-related sales volumes. The increase in energy supply procurement within electric distribution for the nine months ended September 30, 2022, as compared to the same period in 2021, was driven primarily by higher average prices, partially offset by lower average supply-related volumes. The increase in energy supply procurement within natural gas distribution for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, was driven primarily by higher average prices and higher average supply-related sales volumes.

Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power, Fuel and Transmission Expense" below.

The increase in electric distribution wholesale market sales revenue for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, was due primarily to higher average electricity market prices received for wholesale sales at CL&P, NSTAR Electric and PSNH. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 91 and 116 percent for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, driven primarily by higher natural gas prices in New England. The increase in both periods was also due to higher wholesale sales at CL&P resulting from the sale of output generated by the Seabrook PPA beginning in the first quarter of 2022. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the FMCC rate. The increase in electric distribution wholesale market sales revenues in both periods was also driven by higher proceeds from the sale of transmission rights over a one year period under CL&P’s, NSTAR Electric’s and PSNH’s Hydro-Quebec transmission support agreements. Proceeds from these sales are credited back to customers.

EGMA Natural Gas Distribution Revenues: EGMA total operating revenues at the natural gas distribution segment increased by $5.5 million and $149.0 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021. Included in the total operating revenues increase was EGMA’s base natural gas distribution revenues increase of $0.9 million and $23.1 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to a base distribution rate increase effective November 1, 2021.

Electric Transmission Revenues:  Electric transmission revenues increased $50.5 million and $131.5 million for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.

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 in rates charged to their customers.

Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers and the cost of energy purchase contracts, as required by regulation.  These electric and natural gas supply costs and other energy-related costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs).  Purchased Power, Fuel and Transmission expense increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the following:
(Millions of Dollars)Three Months Ended Nine Months Ended
Purchased Power Costs$446.9 $832.3 
Natural Gas Costs34.5 214.8 
Transmission Costs75.9 242.7 
Eliminations(49.9)(100.7)
Total Purchased Power, Fuel and Transmission$507.4 $1,189.1 

56

The increase in purchased power expense at the electric distribution business for the three months ended September 30, 2022, as compared to the same period in 2021, was driven primarily by higher energy supply procurement costs resulting from higher average prices and higher average supply-related sales volumes. The increase in purchased power expense at the electric distribution business for the nine months ended September 30, 2022, as compared to the same period in 2021, was driven primarily by higher energy supply procurement costs resulting from higher average prices, partially offset by lower average supply-related sales volumes. The increase in both periods was also due to higher long-term contractual energy-related costs that are recovered in the non-bypassable component of the FMCC mechanism at CL&P and higher net metering costs at NSTAR Electric and CL&P.

The increase in costs at the natural gas distribution segment for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, was due primarily to higher average prices and higher average supply-related sales volumes.

The increase in transmission costs for the three months ended September 30, 2022, as compared to the same period in 2021, was primarily the result of an increase resulting from the retail transmission cost deferral, which reflects the actual cost of transmission service compared to estimated amounts billed to customers and an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in costs billed by ISO-NE that support regional grid investments. The increase in transmission costs for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily the result of an increase resulting from the retail transmission cost deferral, which was partially offset by a decrease in Local Network Service charges.

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 for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the following:
(Millions of Dollars)Three Months Ended Nine Months Ended
Base Electric Distribution (Non-Tracked Costs):
Absence in 2022 of CL&P charge for Tropical Storm Isaias response in 2021 that was reflected as reduction to Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement$28.4 $— 
General costs (including outside corporate services, insurance, fees and assessments)14.2 23.6 
Shared corporate costs (including computer software depreciation at Eversource Service)8.7 18.6 
Storm costs5.1 9.6 
Operations-related expenses (including vegetation management, outside services and vehicles)5.6 5.7 
  Absence in 2022 of CL&P charge to fund various customer assistance initiatives associated with
  the settlement agreement on October 1, 2021
(10.0)(10.0)
Other non-tracked operations and maintenance1.2 5.6 
Total Base Electric Distribution (Non-Tracked Costs)53.2 53.1 
Tracked Electric Costs (Electric Distribution and Electric Transmission) - Increases due primarily to
  higher transmission expenses
29.3 68.6 
Natural Gas Distribution:
Base (Non-Tracked Costs) - Increases due primarily to higher employee-related expenses and
  higher shared corporate costs
4.1 22.2 
Tracked Costs3.4 11.0 
Total Natural Gas Distribution7.5 33.2 
Water Distribution2.2 4.9 
Parent and Other Companies and eliminations:
Eversource Parent and Other Companies - other operations and maintenance(6.2)22.4 
Transaction and Transition Costs(3.0)(6.0)
Eliminations(17.8)(63.1)
Total Operations and Maintenance$65.2 $113.1 

Depreciation expense increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due to higher utility plant in service balances.

Amortization expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates.

Amortization increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the deferral adjustment of energy supply, energy-related and other tracked costs at CL&P (included in the non-bypassable component of the FMCC mechanism) and NSTAR Electric, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. For the nine month period, the increase was partially offset by a decrease in storm amortization expense at CL&P related to the completion of the amortization period of certain storm costs deferred assets.

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Energy Efficiency Programs expense increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to the deferral adjustment, 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 costs for the majority of the state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.

Taxes Other Than Income Taxes expense increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to an increase in property taxes as a result of higher utility plant balances and higher Connecticut gross earnings taxes.

Interest Expense increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to an increase in interest on long-term debt as a result of new debt issuances ($36.1 million and $64.6 million, respectively) and higher amortization of debt discounts and premiums, net ($1.5 million and $2.0 million, respectively). Additionally, Interest Expense increased for the nine month period as a result of an increase in interest on short-term notes payable ($3.7 million), and an increase in interest expense on regulatory deferrals ($2.7 million). These increases in interest expense were partially offset by an increase in capitalized AFUDC related to debt funds and other capitalized interest ($6.2 million and $8.8 million, respectively), lower interest resulting from the 2022 payment of withheld property taxes at NSTAR Electric ($1.8 million and $2.9 million, respectively), and a decrease in RRB interest expense ($0.3 million and $1.0 million, respectively).

Other Income, Net increased for the three and nine months ended September 30, 2022, as compared to the same periods in 2021, due primarily to an increase related to pension, SERP and PBOP non-service income components ($33.6 million and $100.6 million, respectively), an increase in interest income primarily from regulatory deferrals ($6.8 million and $13.1 million, respectively), a gain on the sale of property ($2.5 million and $2.6 million, respectively), an increase in capitalized AFUDC related to equity funds ($2.3 million and $5.0 million, respectively), and higher investment income driven by market volatility ($1.9 million and $1.7 million, respectively). Additionally, Other Income, Net increased for the nine month period as a result of an increase in equity in earnings related to Eversource's equity method investments ($7.5 million), and decreased for the three month period as a result of a decrease in equity in earnings related to Eversource’s equity method investments ($1.1 million).

Income Tax Expense increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to higher pre-tax earnings ($18.9 million), higher state taxes ($0.6 million), and an increase in return to provision adjustments ($11.2 million), partially offset by an increase in amortization of EDIT ($3.5 million) and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($3.6 million).

Income Tax Expense increased for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to higher pre-tax earnings ($47.4 million), higher state taxes ($6.6 million), lower share-based payment excess tax benefits ($1.9 million), and an increase in return to provision adjustments ($11.2 million), partially offset by an increase in amortization of EDIT ($10.1 million) and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.2 million).

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 nine months ended September 30, 2022 and 2021 included in this combined Quarterly Report on Form 10-Q:

 For the Nine Months Ended September 30,
CL&PNSTAR ElectricPSNH
(Millions of Dollars)20222021Increase20222021Increase/
(Decrease)
20222021Increase/
(Decrease)
Operating Revenues$3,690.6 $2,736.5 $954.1 $2,752.3 $2,343.1 $409.2 $1,077.1 $887.2 $189.9 
Operating Expenses:     
Purchased Power and Transmission1,585.5 1,073.7 511.8 971.8 711.7 260.1 452.0 279.5 172.5 
Operations and Maintenance515.9 465.6 50.3 475.7 421.6 54.1 194.1 168.2 25.9 
Depreciation265.0 253.1 11.9 269.9 251.5 18.4 95.0 89.5 5.5 
Amortization of Regulatory Assets, Net318.3 76.6 241.7 65.3 24.0 41.3 43.4 62.7 (19.3)
Energy Efficiency Programs103.1 100.8 2.3 255.2 226.1 29.1 28.7 30.5 (1.8)
Taxes Other Than Income Taxes290.5 275.3 15.2 185.8 163.5 22.3 73.4 69.7 3.7 
Total Operating Expenses3,078.3 2,245.1 833.2 2,223.7 1,798.4 425.3 886.6 700.1 186.5 
Operating Income612.3 491.4 120.9 528.6 544.7 (16.1)190.5 187.1 3.4 
Interest Expense125.2 124.4 0.8 119.0 106.7 12.3 43.4 42.7 0.7 
Other Income, Net61.3 21.7 39.6 101.4 58.9 42.5 23.4 11.6 11.8 
Income Before Income Tax Expense548.4 388.7 159.7 511.0 496.9 14.1 170.5 156.0 14.5 
Income Tax Expense126.3 104.6 21.7 110.7 114.6 (3.9)36.4 32.5 3.9 
Net Income$422.1 $284.1 $138.0 $400.3 $382.3 $18.0 $134.1 $123.5 $10.6 

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Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
 For the Nine Months Ended September 30,
 20222021Percentage Increase
CL&P 15,781 15,728 0.3 %
NSTAR Electric17,577 17,343 1.3 %
PSNH5,927 5,901 0.4 %

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 $954.1 million at CL&P, $409.2 million at NSTAR Electric, and $189.9 million at PSNH, for the nine months ended September 30, 2022, as compared to the same period in 2021.

Base Distribution Revenues:
CL&P's distribution revenues increased $0.4 million.
NSTAR Electric's distribution revenues increased $31.6 million due primarily to the impact of its base distribution rate increase effective January 1, 2022 resulting from its annual Performance Based Rate Adjustment filing.
PSNH's distribution revenues increased $5.4 million due primarily to the impact of its base distribution rate increase effective August 1, 2021 to reflect plant additions in calendar year 2020 included in its revenue requirement.

Electric distribution revenues at CL&P also increased $93.4 million for the nine months ended September 30, 2022, as compared to the same period in 2021, due to the absence of a 2021 reserve established to provide bill credits to customers as a result of CL&P’s settlement agreement on October 1, 2021 and a storm performance penalty assessed by PURA. In the 2021 settlement agreement, CL&P agreed to provide a total of $65 million of customer credits, which were distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards that was provided as credits to customers on electric bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement.

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.  Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return 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), certain capital tracking mechanisms for infrastructure improvements, and additionally for NSTAR Electric, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.

Tracked revenues increased/(decreased) for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)CL&PNSTAR ElectricPSNH
Retail Tariff Tracked Revenues:
Energy supply procurement$397.3 $117.0 $188.4 
Retail transmission94.8 135.3 (6.1)
Energy Efficiency4.8 31.0 2.1 
Stranded costs(2.7)(11.7)(45.5)
Other distribution tracking mechanisms1.0 19.5 (1.0)
Wholesale Market Sales Revenue378.2 98.4 38.5 

The increase in energy supply procurement at CL&P and NSTAR Electric was driven primarily by higher average prices, partially offset by lower average supply-related sales volumes. The increase in energy supply procurement at PSNH was driven primarily by higher average prices and higher average supply-related sales volumes.

Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission Expense" below.

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The increase in wholesale market sales revenue was due primarily to higher average electricity market prices received for wholesale sales at CL&P, NSTAR Electric and PSNH. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 116 percent for the nine months ended September 30, 2022, as compared to the same period in 2021, driven primarily by higher natural gas prices in New England. The increase was also due to higher wholesale sales at CL&P resulting from the sale of output generated by the Seabrook PPA beginning in the first quarter of 2022. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the FMCC rate. The increase in wholesale market sales revenues at CL&P, NSTAR Electric and PSNH was also driven by higher proceeds from the sale of transmission rights over a one year period under CL&P’s, NSTAR Electric’s and PSNH’s Hydro-Quebec transmission support agreements. Proceeds from these sales are credited back to customers.

Transmission Revenues: Transmission revenues increased $49.3 million at CL&P, $50.4 million at NSTAR Electric, and $31.8 million at PSNH for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.

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 in rates charged to their customers. The impact of eliminations decreased revenues by $55.6 million at CL&P, $58.4 million at NSTAR Electric and $18.6 million at PSNH for the nine months ended September 30, 2022, as compared to the same period in 2021.

Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH's customers and the cost of energy purchase contracts, as required by regulation.  These energy supply and other energy-related 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 for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)CL&PNSTAR ElectricPSNH
Purchased Power Costs$461.8 $182.8 $187.2 
Transmission Costs103.3 135.6 3.8 
Eliminations(53.3)(58.3)(18.5)
Total Purchased Power and Transmission$511.8 $260.1 $172.5 

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 higher energy supply procurement costs resulting from higher average prices, partially offset by lower average supply-related volumes. The increase was also due to higher long-term contractual energy-related costs and higher net metering costs that are recovered in the non-bypassable component of the FMCC mechanism.
The increase at NSTAR Electric was due primarily to higher energy supply procurement costs resulting from higher average prices, partially offset by lower average supply-related sales volumes. The increase was also due to higher net metering costs.
The increase at PSNH was due primarily to higher energy supply procurement costs resulting from higher average prices and 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 increase in transmission costs at CL&P, NSTAR Electric and PSNH was due primarily to an increase resulting from the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers and an increase in costs billed by ISO-NE that support regional grid investments. At CL&P and PSNH, this was partially offset by a decrease in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network.

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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 for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)CL&PNSTAR ElectricPSNH
Base Electric Distribution (Non-Tracked Costs): 
General costs (including outside corporate services, insurance, fees and assessments)$11.1 $8.4 $4.1 
Shared corporate costs (including computer software depreciation at Eversource Service)6.5 9.8 2.3 
Storm costs6.6 (2.8)5.8 
Operations-related expenses (including vegetation management, outside services and vehicles)5.6 (1.2)1.3 
Employee-related expenses, including labor and benefits5.3 1.7 2.8 
  Absence in 2022 of CL&P charge to fund various customer assistance initiatives associated with
  the settlement agreement on October 1, 2021
(10.0)— — 
Other non-tracked operations and maintenance(0.1)5.2 (0.7)
Total Base Electric Distribution (Non-Tracked Costs)25.0 21.1 15.6 
Tracked Costs:
Transmission expenses17.7 7.2 8.8 
Other tracked operations and maintenance7.6 25.8 1.5 
Total Tracked Costs25.3 33.0 10.3 
Total Operations and Maintenance$50.3 $54.1 $25.9 

Depreciation increased for the nine months ended September 30, 2022, as compared to the same period in 2021, for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.

Amortization of Regulatory Assets, Net expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. Amortization of Regulatory Assets, Net increased/decreased for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:

The increase at CL&P was due primarily to the deferral adjustment of energy supply, energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The increase was partially offset by a decrease in storm amortization expense related to the completion of the amortization period of certain storm cost deferred assets.
The increase at NSTAR Electric was due to the deferral adjustment of energy supply, energy-related and other tracked costs.
The decrease at PSNH was due to the deferral adjustment of energy-related and other tracked 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 for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:

The increase at CL&P and NSTAR Electric 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 PSNH was due to the deferral adjustment and the timing of the recovery of energy efficiency costs.

Taxes Other Than Income Taxes increased for the nine months ended September 30, 2022, as compared to the same period in 2021, 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 and higher gross earnings taxes.
The increases at NSTAR Electric and PSNH were due to higher property taxes as a result of higher utility plant balances.

Interest Expense increased for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:

The increase at CL&P was due to higher interest on long-term debt ($0.8 million), higher interest expense on regulatory deferrals ($0.8 million), and higher amortization of debt discounts and premiums, net ($0.3 million), partially offset by an increase in capitalized AFUDC related to debt funds ($1.1 million).
The increase at NSTAR Electric was due to higher interest on long-term debt ($11.8 million), higher interest expense on regulatory deferrals ($2.3 million), higher amortization of debt discounts and premiums, net ($0.5 million), and a decrease in capitalized AFUDC related to debt funds ($0.2 million), partially offset by lower interest resulting from the 2022 payment of withheld property taxes at NSTAR Electric ($2.9 million).
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The increase at PSNH was due to higher interest expense on regulatory deferrals ($1.8 million), higher interest on short-term notes payable ($1.1 million), and higher interest on long-term debt ($0.6 million), partially offset by lower amortization of debt discounts and premiums, net ($1.6 million), a decrease in RRB interest expense ($1.0 million) and an increase in capitalized AFUDC related to debt funds ($0.3 million).

Other Income, Net increased for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:

The increase at CL&P was due primarily to an increase related to pension, SERP and PBOP non-service income components ($37.1 million), an increase in capitalized AFUDC related to equity funds ($4.2 million) and an increase in interest income primarily on regulatory deferrals ($0.5 million), partially offset by investment losses in 2022 compared to investment income in 2021 driven by market volatility ($2.1 million).
The increase at NSTAR Electric was due primarily to an increase related to pension, SERP and PBOP non-service income components ($33.7 million) and an increase in interest income primarily on regulatory deferrals ($10.0 million), partially offset by a decrease in capitalized AFUDC related to equity funds ($1.1 million).
The increase at PSNH was due primarily to an increase related to pension, SERP and PBOP non-service income components ($12.2 million) and an increase in capitalized AFUDC related to equity funds ($0.5 million), partially offset by a decrease in interest income primarily on regulatory deferrals ($0.9 million).

Income Tax Expense increased/decreased for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:

The increase at CL&P was due primarily to higher pre-tax earnings ($33.5 million), higher state taxes ($0.7 million), and lower share-based payment excess tax benefits ($0.7 million), partially offset by a decrease in return to provision adjustments ($6.3 million), an increase in amortization of EDIT ($1.5 million), and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($5.4 million).
The decrease at NSTAR Electric was due primarily to an increase in amortization of EDIT ($9.7 million), partially offset by an increase in pre-tax earnings ($2.9 million), higher state taxes ($0.7 million), lower share-based payment excess tax benefits ($0.6 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.6 million).
The increase at PSNH was due primarily to higher pre-tax earnings ($3.0 million), higher state taxes ($1.8 million), a decrease in amortization of EDIT ($0.4 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.0 million), partially offset by a decrease in return to provision adjustments ($2.3 million).


EARNINGS SUMMARY

CL&P's earnings increased $138.0 million for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the absence in 2022 of the October 1, 2021 settlement agreement that resulted in a $75 million pre-tax charge to earnings and a $28.6 million pre-tax charge to earnings for a storm performance penalty imposed by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020 recorded in 2021. The after-tax impact of the settlement agreement and storm performance penalty imposed by the PURA was $85.8 million. Earnings were also favorably impacted by higher earnings from its capital tracking mechanism due to increased electric system improvements, an increase in transmission earnings driven by a higher transmission rate base, lower pension plan expense, and a lower effective tax rate resulting from the income tax return to provision adjustment in the third quarter and a decrease in permanent and flow-through income tax items. The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense, and higher property and other tax expense.

NSTAR Electric's earnings increased $18.0 million for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to the base distribution rate increase effective January 1, 2022, an increase in transmission earnings driven by a higher transmission rate base, and an increase in interest income primarily on regulatory deferrals. The earnings increase was partially offset by higher operations and maintenance expense, higher property and other tax expense, higher depreciation expense, and higher interest expense.

PSNH's earnings increased $10.6 million for the nine months ended September 30, 2022, as compared to the same period in 2021, due primarily to an increase in transmission earnings driven by a higher transmission rate base, lower pension plan expense, and the base distribution rate increase effective August 1, 2021. The earnings increase was partially offset by higher operations and maintenance expense, the absence in 2022 of a favorable impact of a new tracker mechanism at PSNH approved as part of the 2020 rate settlement agreement that was recorded in 2021, and higher depreciation expense.









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LIQUIDITY

Cash Flows: CL&P had cash flows provided by operating activities of $554.3 million for the nine months ended September 30, 2022, as compared to $450.6 million in the same period of 2021. The increase in operating cash flows was due primarily to an increase in regulatory over-recoveries (excluding storm payments) driven by the timing of collections for the non-bypassable FMCC and other regulatory tracking mechanisms, the absence in 2022 of pension contributions of $78.9 million made in 2021, and the timing of cash payments made on our accounts payable. The impact of regulatory collections are included in both Regulatory Over/Under Recoveries and Amortization of Regulatory Assets on the statements of cash flows. These favorable impacts were partially offset by the timing of cash collections on our accounts receivable, $72.0 million of customer credits distributed in the first nine months of 2022 as a result of the October 2021 settlement agreement and the 2021 storm performance penalty for CL&P’s response to Tropical Storm Isaias, an increase of $53.9 million in cash payments for storm costs, a $42.2 million increase in income tax payments made in 2022, as compared to 2021, and the timing of other working capital items.

NSTAR Electric had cash flows provided by operating activities of $634.6 million for the nine months ended September 30, 2022, as compared to $617.3 million in the same period of 2021. The increase in operating cash flows was due primarily to the timing of cash collections on our accounts receivable, a $37.0 million increase in income tax refunds received in 2022, as compared to 2021, an increase in regulatory over-recoveries (excluding storm payments) driven by the timing of collections for regulatory tracking mechanisms, cash payments made on our accounts payable, and the timing of other working capital items. The impact of regulatory collections are included in both Regulatory Over/Under Recoveries and Amortization of Regulatory Assets on the statements of cash flows. These favorable impacts were partially offset by an increase of $109.8 million in cash payments for storm costs, a $76.1 million payment in the second quarter of 2022 related to withheld property taxes, and an increase of $5.0 million in pension contributions made in 2022, as compared to 2021.

PSNH had cash flows provided by operating activities of $246.7 million for the nine months ended September 30, 2022, as compared to $237.2 million in the same period of 2021.  The increase in operating cash flows was due primarily to the timing of cash payments made on our accounts payable and an increase in regulatory over-recoveries driven by the timing of collections for regulatory tracking mechanisms. The impact of regulatory collections are included in both Regulatory Over/Under Recoveries and Amortization of Regulatory Assets on the statements of cash flows. These favorable impacts were partially offset by the timing of cash collections on our accounts receivable, the timing of other working capital items, an increase of $5.7 million in cost of removal expenditures, and a $4.0 million increase in income tax payments made in 2022, as compared to 2021.

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


RESULTS OF OPERATIONS – THE CONNECTICUT LIGHT AND POWER COMPANY

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P for the three months ended September 30, 2022 and 2021 included in this combined Quarterly Report on Form 10-Q:

 For the Three Months Ended September 30,
(Millions of Dollars)20222021Increase/(Decrease)
Operating Revenues$1,369.1 $919.6 $449.5 
Operating Expenses:   
Purchased Power and Transmission641.1 392.3 248.8 
Operations and Maintenance189.9 137.8 52.1 
Depreciation89.5 85.3 4.2 
Amortization of Regulatory Assets, Net105.8 28.9 76.9 
Energy Efficiency Programs37.9 35.7 2.2 
Taxes Other Than Income Taxes104.2 99.9 4.3 
Total Operating Expenses1,168.4 779.9 388.5 
Operating Income200.7 139.7 61.0 
Interest Expense42.4 42.7 (0.3)
Other Income, Net21.9 6.9 15.0 
Income Before Income Tax Expense180.2 103.9 76.3 
Income Tax Expense36.9 33.7 3.2 
Net Income$143.3 $70.2 $73.1 

Operating Revenues
Sales Volumes: CL&P's retail electric GWh sales volumes were 5,862 and 5,776 for the three months ended September 30, 2022 and 2021, respectively, resulting in an increase of 1.5 percent. Fluctuations in retail electric sales volumes do not impact earnings due to its PURA-approved distribution revenue decoupling mechanism.

Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $449.5 million for the three months ended September 30, 2022, as compared to the same period in 2021.
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Base Distribution Revenues: CL&P's base distribution revenues were flat.

Electric distribution revenues also increased $93.4 million for the three months ended September 30, 2022, as compared to the same period in 2021, due to the absence of a 2021 reserve established to provide bill credits to customers as a result of CL&P’s settlement agreement on October 1, 2021 and a storm performance penalty assessed by PURA. In the 2021 settlement agreement, CL&P agreed to provide a total of $65 million of customer credits, which were distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards that was provided as credits to customers on electric bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement.

Tracked Revenues: Tracked revenues increased/(decreased) for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)
Retail Tariff Tracked Revenues:
Energy supply procurement$199.2 
Retail transmission31.5 
Other distribution tracking mechanisms(5.2)
Wholesale Market Sales Revenue132.6 

The increase in energy supply procurement was driven by higher average prices and higher average supply-related sales volumes. Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission Expense" below.

The increase in electric distribution wholesale market sales revenue was due primarily to higher average electricity market prices received for wholesale sales. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 91 percent for the three months ended September 30, 2022, as compared to the same period in 2021, driven primarily by higher natural gas prices in New England. The increase was also due to higher wholesale sales at CL&P resulting from the sale of output generated by the Seabrook PPA beginning in the first quarter of 2022. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and the Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the FMCC rate. The increase in wholesale market sales revenues was also driven by higher proceeds from the sale of transmission rights over a one year period under CL&P’s Hydro-Quebec transmission support agreements. Proceeds from these sales are credited back to customers.

Transmission Revenues: Transmission revenues increased $16.2 million due primarily to a higher transmission rate base as a result of continued investment in our transmission infrastructure.

Eliminations: Eliminations are primarily related to transmission revenues derived from ISO-NE regional transmission charges to the distribution business that recover the costs of the wholesale transmission business. The impact of eliminations decreased revenues by $13.7 million.

Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P's customers and the cost of energy purchase contracts, as required by regulation.  These energy supply and other energy-related costs are recovered from customers in PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)
Purchased Power Costs$225.8 
Transmission Costs36.6 
Eliminations(13.6)
Total Purchased Power and Transmission$248.8 

The increase in purchased power costs was due primarily to higher energy supply procurement costs resulting from higher average prices and higher average supply-related volumes. The increase was also due to higher long-term contractual energy-related costs and higher net metering costs that are recovered in the non-bypassable component of the FMCC mechanism.

The increase in transmission costs was due primarily to an increase resulting from the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers. This was partially offset by a decrease in costs billed by ISO-NE that support regional grid investments.


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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 for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to the following:
(Millions of Dollars)
Base Electric Distribution (Non-Tracked Costs):
Absence in 2022 of CL&P charge for Tropical Storm Isaias response in 2021 that was reflected as reduction to Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement$28.4 
General costs (including outside corporate services, insurance, fees and assessments)9.6 
Storm costs7.8 
  Absence in 2022 of CL&P charge to fund various customer assistance initiatives associated with
  the settlement agreement on October 1, 2021
(10.0)
Other non-tracked operations and maintenance3.1 
Total Base Electric Distribution (Non-Tracked Costs)38.9 
Total Tracked Costs - Increase due primarily to higher transmission expenses13.2 
Total Operations and Maintenance$52.1 

Depreciation expense increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to a higher net plant in service balance.

Amortization of Regulatory Assets, Net expense includes the deferral 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. This deferral adjusts 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 for the three months ended September 30, 2022, as compared to the same period in 2021, due to the deferral adjustment of energy supply, energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, 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 for the three months ended September 30, 2022, as compared to the same period in 2021, 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.

Taxes Other Than Income Taxes increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to higher property taxes as a result of a higher utility plant balance and higher gross earnings taxes.

Other Income, Net increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to an increase related to pension, SERP and PBOP non-service income components ($12.0 million), an increase in capitalized AFUDC related to equity funds ($2.0 million), an increase in interest income primarily from regulatory deferrals ($0.5 million), and investment income in 2022 compared to investment losses in 2021 driven by market volatility ($0.5 million).

Income Tax Expense increased for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to higher pre-tax earnings ($16.0 million), partially offset by lower state taxes ($0.5 million), a decrease in return to provision adjustments ($6.3 million), and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($6.0 million).

EARNINGS SUMMARY

CL&P's earnings increased $73.1 million for the three months ended September 30, 2022, as compared to the same period in 2021, due primarily to the absence in 2022 of the October 1, 2021 settlement agreement that resulted in a $75 million pre-tax charge to earnings recorded in 2021. The after-tax impact of the settlement agreement was $63.2 million. Earnings were also favorably impacted by an increase in transmission earnings driven by a higher transmission rate base, higher earnings from its capital tracking mechanism due to increased electric system improvements, a lower effective tax rate resulting from the income tax return to provision adjustment and a decrease in permanent and flow-through income tax items, and lower pension plan expense. The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense, and higher property and other tax expense.






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ITEM 3.     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

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.

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 September 30, 2022, our regulated companies held collateral (letters of credit or cash) of $75.4 million from counterparties related to our standard service contracts.  As of September 30, 2022, Eversource had $35.4 million of cash posted with ISO-NE related to energy transactions.

We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 2021 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 2021 Form 10-K.

ITEM 4.    CONTROLS AND PROCEDURES

Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, evaluated the design and operation of the disclosure controls and procedures as of September 30, 2022 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC.  This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Quarterly Report on Form 10-Q.  There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.  The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric and PSNH are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric and PSNH during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.


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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are parties to various legal proceedings.  We have disclosed certain legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 2021 Form 10-K.  These disclosures are incorporated herein by reference.  There have been no material legal proceedings identified and no material changes with regard to the legal proceedings previously disclosed in our 2021 Form 10-K.

ITEM 1A.    RISK FACTORS

We are subject to a variety of significant risks in addition to the matters set forth under our forward-looking statements section in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q. We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 2021 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 2021 Form 10-K.

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

The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below.  The common shares purchased consist of open market purchases made by the Company or an independent agent.  These share transactions related to matching contributions under the Eversource 401k Plan.
PeriodTotal Number of
Shares Purchased
Average Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end)
July 1 - July 31, 2022— $— — — 
August 1 - August 31, 2022— — — — 
September 1 - September 30, 20222,430 79.15 — — 
Total2,430 $79.15 — — 

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ITEM 6.    EXHIBITS

Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
Exhibit No.Description
Listing of Exhibits (Eversource)
31
31.1
32
Listing of Exhibits (CL&P)
31
31.1
32
Listing of Exhibits (NSTAR Electric Company)
*4
4.1
31
31.1
32
Listing of Exhibits (PSNH)
31
31.1
32
Listing of Exhibits (Eversource, CL&P, PSNH)
4
Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH)
101.INSInline 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.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation
101.DEFInline XBRL Taxonomy Extension Definition
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101.LABInline XBRL Taxonomy Extension Labels
101.PREInline XBRL Taxonomy Extension Presentation
104The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL
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SIGNATURE


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

  EVERSOURCE ENERGY
    
November 4, 2022 By:/s/ John M. Moreira
   John M. Moreira
   Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)


SIGNATURE


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

  THE CONNECTICUT LIGHT AND POWER COMPANY
    
November 4, 2022 By:/s/ John M. Moreira
   John M. Moreira
   Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)


SIGNATURE


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

  NSTAR ELECTRIC COMPANY
    
November 4, 2022 By:/s/ John M. Moreira
   John M. Moreira
   Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)


SIGNATURE


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

  PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
    
November 4, 2022 By:/s/ John M. Moreira
   John M. Moreira
   Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)

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