Edgar Filing: CONNECTICUT LIGHT & POWER CO

March 2011 Form 10-Q

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

FORM 10-Q


[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended March 31, 2011
	OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ____________ to ____________


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

1-5324	NORTHEAST UTILITIES (a Massachusetts voluntary association) One Federal Street Building 111-4 Springfield, Massachusetts 01105 Telephone: (413) 785-5871	04-2147929

0-00404	THE CONNECTICUT LIGHT AND POWER COMPANY (a Connecticut corporation) 107 Selden Street Berlin, Connecticut 06037-1616 Telephone: (860) 665-5000	06-0303850

1-6392	PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (a New Hampshire corporation) Energy Park 780 North Commercial Street Manchester, New Hampshire 03101-1134 Telephone: (603) 669-4000	02-0181050

0-7624	WESTERN MASSACHUSETTS ELECTRIC COMPANY (a Massachusetts corporation) One Federal Street Building 111-4 Springfield, Massachusetts 01105 Telephone: (413) 785-5871	04-1961130

______________________________________________________________________________

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


	Yes	No

	ü

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 registrant was required to submit and post such files).


	Yes	No

	ü

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (check one):


	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer

Northeast Utilities	ü
The Connecticut Light and Power Company			ü
Public Service Company of New Hampshire			ü
Western Massachusetts Electric Company			ü

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


	Yes	No

Northeast Utilities		ü
The Connecticut Light and Power Company		ü
Public Service Company of New Hampshire		ü
Western Massachusetts Electric Company		ü

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


Company - Class of Stock	Outstanding as of April 30, 2011
Northeast Utilities Common shares, $5.00 par value	176,776,656 shares

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

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

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

Northeast Utilities holds all of the 6,035,205 shares, 301 shares, and 434,653 shares of the outstanding common stock of The Connecticut Light and Power Company, Public Service Company of New Hampshire and Western Massachusetts Electric Company, respectively.

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


GLOSSARY OF TERMS
The following is a glossary of abbreviations or acronyms that are found in this report.

CURRENT OR FORMER NU COMPANIES, SEGMENTS OR INVESTMENTS:

Boulos	E.S. Boulos Company
CL&P	The Connecticut Light and Power Company
HWP	HWP Company, formerly the Holyoke Water Power Company
NGS	Northeast Generation Services Company and subsidiaries
NPT	Northern Pass Transmission LLC, a jointly owned limited liability company, held by NU Transmission Ventures, Inc. and NSTAR Transmission Ventures, Inc. on a 75 percent and 25 percent basis, respectively
NU or the Company	Northeast Utilities and subsidiaries
NU Enterprises	NU Enterprises, Inc., the parent company of Select Energy, NGS, NGS Mechanical, Inc., Select Energy Contracting, Inc. and Boulos
NUSCO	Northeast Utilities Service Company
NU parent and other companies	NU parent and other companies is comprised of NU parent, NUSCO and other subsidiaries, including HWP, RRR (a real estate subsidiary), and the non-energy-related subsidiaries of Yankee (Yankee Energy Services Company, and Yankee Energy Financial Services Company)
PSNH	Public Service Company of New Hampshire
Regulated companies	NU's Regulated companies, comprised of the electric distribution and transmission segments of CL&P, PSNH and WMECO, the generation activities of PSNH and WMECO, Yankee Gas, a natural gas local distribution company, and NPT
RRR	The Rocky River Realty Company
Select Energy	Select Energy, Inc.
WMECO	Western Massachusetts Electric Company
Yankee	Yankee Energy System, Inc.
Yankee Gas	Yankee Gas Services Company

REGULATORS:

DOE	U.S. Department of Energy
EPA	U.S. Environmental Protection Agency
DPU	Massachusetts Department of Public Utilities
DPUC	Connecticut Department of Public Utility Control
FERC	Federal Energy Regulatory Commission
MA DEP	Massachusetts Department of Environmental Protection
NHPUC	New Hampshire Public Utilities Commission
SEC	Securities and Exchange Commission


OTHER:

2010 Form 10-K	The Northeast Utilities and subsidiaries combined 2010 Annual Report on Form 10-K as filed with the SEC
2010 Healthcare Act	Patient Protection and Affordable Care Act
2010 Tax Act	Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act
AFUDC	Allowance For Funds Used During Construction
AMI	Advanced metering infrastructure
ARO	Asset Retirement Obligation
C&LM	Conservation and Load Management
CSC	Connecticut Siting Council
CTA	Competitive Transition Assessment
CWIP	Construction work in progress
EIA	Energy Independence Act
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974
ES	Default Energy Service
ESOP	Employee Stock Ownership Plan
ESPP	Employee Stock Purchase Plan
FASB	Financial Accounting Standards Board
Fitch	Fitch Ratings
FMCC	Federally Mandated Congestion Charge
FTR	Financial Transmission Rights
GAAP	Accounting principles generally accepted in the United States of America
GHG	Greenhouse Gas
GSC	Generation Service Charge
GSRP	Greater Springfield Reliability Project
GWh	Giga-watt Hours
HG&E	Holyoke Gas and Electric, a municipal department of the town of Holyoke, MA
HQ	Hydro-Québec, a corporation wholly-owned by the Québec government, including its divisions that produce, transmit and distribute electricity in Québec, Canada
HVDC	High voltage direct current
Hydro Renewable Energy	H.Q. Hydro Renewable Energy, Inc., a wholly-owned subsidiary of Hydro-Québec
IPP	Independent Power Producers
ISO-NE	ISO New England, Inc., the New England Independent System Operator
KV	Kilovolt
KWh	Kilowatt-Hours
LNG	Liquefied natural gas
LOC	Letter of Credit
LRS	Last resort service
MGP	Manufactured Gas Plant
Money Pool	Northeast Utilities Money Pool
Moody's	Moody's Investors Services, Inc.
MW	Megawatt
MWh	Megawatt-Hours
NEEWS	New England East-West Solution
Northern Pass	The high voltage direct current transmission line project from Canada into New Hampshire
NU supplemental benefit trust	The NU Trust Under Supplemental Executive Retirement Plan
PBO	Projected Benefit Obligation
PBOP	Postretirement Benefits Other Than Pension
PBOP Plan	Postretirement Benefits Other Than Pension Plan that provides certain retiree health care benefits, primarily medical and dental, and life insurance benefits
PCRBs	Pollution Control Revenue Bonds
Pension Plan	Single uniform noncontributory defined benefit retirement plan
PPA	Pension Protection Act
RECs	Renewable Energy Certificates
Regulatory ROE	The average cost of capital method for calculating the return on equity related to the distribution and generation business segments excluding the wholesale transmission segment
ROE	Return on Equity
RRB	Rate Reduction Bond or Rate Reduction Certificate
RSUs	Restricted share units
S&P	Standard & Poor's Financial Services LLC
SBC	Systems Benefits Charge
SCRC	Stranded Cost Recovery Charge
SERP	Supplemental Executive Retirement Plan
SS	Standard service
TCAM	Transmission Cost Adjustment Mechanism
TSA	Transmission Service Agreement
UI	The United Illuminating Company
VIE	Variable interest entity
WWL Project	The construction of a 16-mile gas pipeline between Waterbury and Wallingford, Connecticut and the increase of vaporization output of Yankee Gas' LNG plant
Yankee Companies	Connecticut Yankee Atomic Power Company, Yankee Atomic Electric Company and Maine Yankee Atomic Power Company

NORTHEAST UTILITIES AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

TABLE OF CONTENTS


	Page

PART I - FINANCIAL INFORMATION

ITEM 1 - Unaudited Condensed Consolidated Financial Statements for the Following Companies:

Northeast Utilities and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited) - March 31, 2011 and December 31, 2010	1

Condensed Consolidated Statements of Income (Unaudited) - Three Months Ended March 31, 2011 and 2010	3

Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2011 and 2010	4

The Connecticut Light and Power Company and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited) - March 31, 2011 and December 31, 2010	5

Condensed Consolidated Statements of Income (Unaudited) - Three Months Ended March 31, 2011 and 2010	7

Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2011 and 2010	8

Public Service Company of New Hampshire and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited) - March 31, 2011 and December 31, 2010	9

Condensed Consolidated Statements of Income (Unaudited) - Three Months Ended March 31, 2011 and 2010	11

Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2011 and 2010	12

Western Massachusetts Electric Company and Subsidiary

Condensed Consolidated Balance Sheets (Unaudited) - March 31, 2011 and December 31, 2010	13

Condensed Consolidated Statements of Income (Unaudited) - Three Months Ended March 31, 2011 and 2010	15

Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2011 and 2010	16

Combined Notes to Condensed Consolidated Financial Statements (Unaudited - all companies)	17

Report of Independent Registered Public Accounting Firm	39

iii


	Page

ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for the following companies:

Northeast Utilities and Subsidiaries		40

The Connecticut Light and Power Company and Subsidiaries		56

Public Service Company of New Hampshire and Subsidiaries		59

Western Massachusetts Electric Company and Subsidiary		61

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk		63

ITEM 4 - Controls and Procedures		63

PART II - OTHER INFORMATION

ITEM 1 - Legal Proceedings		64

ITEM 1A - Risk Factors		64

ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds		64

ITEM 6 - Exhibits		65

SIGNATURES		67

This Page Intentionally Left Blank


NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
Cash and Cash Equivalents	$	15,359	$	23,395
Receivables, Net		540,127		523,644
Unbilled Revenues		166,505		208,834
Taxes Receivable		86,695		89,638
Fuel, Materials and Supplies		202,561		244,043
Regulatory Assets		221,029		238,699
Marketable Securities		79,337		78,306
Prepayments and Other Current Assets		95,352		100,441
Total Current Assets		1,406,965		1,507,000

Property, Plant and Equipment, Net		9,716,414		9,567,726

Deferred Debits and Other Assets:
Regulatory Assets		2,683,788		2,756,580
Goodwill		287,591		287,591
Marketable Securities		52,854		51,201
Derivative Assets		88,554		123,242
Other Long-Term Assets		182,366		179,261
Total Deferred Debits and Other Assets		3,295,153		3,397,875



Total Assets	$	14,418,532	$	14,472,601



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


NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable to Banks	$	189,000	$	267,000
Long-Term Debt - Current Portion		66,286		66,286
Accounts Payable		352,606		417,285
Obligations to Third Party Suppliers		76,509		74,659
Accrued Taxes		116,226		107,067
Accrued Interest		76,852		74,740
Regulatory Liabilities		114,216		99,403
Derivative Liabilities		84,836		71,501
Other Current Liabilities		130,656		167,206
Total Current Liabilities		1,207,187		1,345,147

Rate Reduction Bonds		164,704		181,572

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes		1,709,012		1,636,750
Regulatory Liabilities		313,256		339,655
Derivative Liabilities		885,680		909,668
Accrued Pension		810,265		802,195
Other Long-Term Liabilities		694,672		695,915
Total Deferred Credits and Other Liabilities		4,412,885		4,384,183

Capitalization:
Long-Term Debt		4,630,724		4,632,866

Noncontrolling Interest in Consolidated Subsidiary:
Preferred Stock Not Subject to Mandatory Redemption		116,200		116,200

Equity:
Common Shareholders' Equity:
Common Shares		979,876		978,909
Capital Surplus, Paid In		1,781,419		1,777,592
Retained Earnings		1,518,099		1,452,777
Accumulated Other Comprehensive Loss		(41,267)		(43,370)
Treasury Stock		(352,792)		(354,732)
Common Shareholders' Equity		3,885,335		3,811,176
Noncontrolling Interests		1,497		1,457
Total Equity		3,886,832		3,812,633
Total Capitalization		8,633,756		8,561,699



Total Liabilities and Capitalization	$	14,418,532	$	14,472,601


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


NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended March 31,
(Thousands of Dollars, Except Share Information)		2011		2010

Operating Revenues	$	1,235,251	$	1,339,420

Operating Expenses:
Fuel, Purchased and Net Interchange Power		474,109		603,349
Other Operating Expenses		251,978		248,273
Maintenance		67,764		45,637
Depreciation		73,951		78,656
Amortization of Regulatory Assets/(Liabilities), Net		34,407		(8,327)
Amortization of Rate Reduction Bonds		17,282		59,570
Taxes Other Than Income Taxes		88,403		85,599
Total Operating Expenses		1,007,894		1,112,757
Operating Income		227,357		226,663

Interest Expense:
Interest on Long-Term Debt		57,399		57,270
Interest on Rate Reduction Bonds		2,578		6,690
Other Interest		(1,428)		3,302
Interest Expense		58,549		67,262
Other Income, Net		10,313		8,057
Income Before Income Tax Expense		179,121		167,458
Income Tax Expense		63,537		79,857
Net Income		115,584		87,601
Net Income Attributable to Noncontrolling Interests		1,429		1,390
Net Income Attributable to Controlling Interests	$	114,155	$	86,211

Basic and Diluted Earnings Per Common Share	$	0.64	$	0.49

Dividends Declared Per Common Share	$	0.28	$	0.26

Weighted Average Common Shares Outstanding:
Basic		177,188,207		176,349,762
Diluted		177,480,996		176,537,472

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


NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


		Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Activities:
Net Income	$	115,584	$	87,601
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense		4,947		9,556
Depreciation		73,951		78,656
Deferred Income Taxes		52,429		33,248
Pension and PBOP Expense, Net of PBOP Contributions		28,231		23,331
Regulatory Overrecoveries, Net		44,420		6,066
Amortization of Regulatory Assets/(Liabilities), Net		34,407		(8,327)
Amortization of Rate Reduction Bonds		17,282		59,570
Derivative Assets and Liabilities		(3,651)		(2,594)
Other		(1,776)		(41,434)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net		8,199		(7,258)
Fuel, Materials and Supplies		42,990		48,431
Taxes Receivable/Accrued		18,312		4,639
Accounts Payable		(29,278)		(46,188)
Other Current Assets and Liabilities		(33,281)		(19,594)
Net Cash Flows Provided by Operating Activities		372,766		225,703

Investing Activities:
Investments in Property, Plant and Equipment		(236,689)		(202,487)
Proceeds from Sales of Marketable Securities		38,646		21,331
Purchases of Marketable Securities		(39,230)		(21,825)
Other Investing Activities		328		(478)
Net Cash Flows Used in Investing Activities		(236,945)		(203,459)

Financing Activities:
Cash Dividends on Common Shares		(48,588)		(45,088)
Cash Dividends on Preferred Stock		(1,390)		(1,390)
Decrease in Short-Term Debt		(78,000)		-
Issuance of Long-Term Debt		-		95,000
Retirements of Rate Reduction Bonds		(16,868)		(66,569)
Other Financing Activities		989		(1,137)
Net Cash Flows Used in Financing Activities		(143,857)		(19,184)
Net (Decrease)/Increase in Cash and Cash Equivalents		(8,036)		3,060
Cash and Cash Equivalents - Beginning of Period		23,395		26,952
Cash and Cash Equivalents - End of Period	$	15,359	$	30,012

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


THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
Cash	$	3,812	$	9,762
Receivables, Net		318,905		317,530
Accounts Receivable from Affiliated Companies		825		822
Unbilled Revenues		90,141		116,392
Taxes Receivable		3,288		48,360
Regulatory Assets		156,523		157,530
Materials and Supplies		65,224		63,811
Prepayments and Other Current Assets		38,027		27,466
Total Current Assets		676,745		741,673

Property, Plant and Equipment, Net		5,644,846		5,586,504

Deferred Debits and Other Assets:
Regulatory Assets		1,684,849		1,721,416
Derivative Assets		81,085		115,870
Other Long-Term Assets		98,971		89,729
Total Deferred Debits and Other Assets		1,864,905		1,927,015



Total Assets	$	8,186,496	$	8,255,192



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


THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable to Banks	$	10,000	$	-
Notes Payable to Affiliated Companies		25,175		6,225
Long-Term Debt - Current Portion		62,000		62,000
Accounts Payable		172,154		204,868
Accounts Payable to Affiliated Companies		53,133		53,207
Obligations to Third Party Suppliers		69,685		68,692
Accrued Taxes		100,989		92,061
Accrued Interest		33,982		42,548
Regulatory Liabilities		72,301		75,716
Derivative Liabilities		63,272		46,781
Other Current Liabilities		50,764		46,209
Total Current Liabilities		713,455		698,307

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes		1,106,275		1,068,344
Regulatory Liabilities		179,208		206,394
Derivative Liabilities		862,070		883,091
Accrued Pension		41,093		42,486
Other Long-Term Liabilities		317,544		321,793
Total Deferred Credits and Other Liabilities		2,506,190		2,522,108

Capitalization:
Long-Term Debt		2,521,295		2,521,102

Preferred Stock Not Subject to Mandatory Redemption		116,200		116,200

Common Stockholder's Equity:
Common Stock		60,352		60,352
Capital Surplus, Paid In		1,605,604		1,605,275
Retained Earnings		666,002		734,561
Accumulated Other Comprehensive Loss		(2,602)		(2,713)
Common Stockholder's Equity		2,329,356		2,397,475
Total Capitalization		4,966,851		5,034,777



Total Liabilities and Capitalization	$	8,186,496	$	8,255,192


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


THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Revenues	$	673,682	$	794,980

Operating Expenses:
Fuel, Purchased and Net Interchange Power		255,369		362,820
Other Operating Expenses		134,262		134,813
Maintenance		40,782		21,838
Depreciation		39,475		47,525
Amortization of Regulatory Assets, Net		19,343		1,671
Amortization of Rate Reduction Bonds		-		43,283
Taxes Other Than Income Taxes		58,468		57,531
Total Operating Expenses		547,699		669,481
Operating Income		125,983		125,499

Interest Expense:
Interest on Long-Term Debt		33,328		33,632
Interest on Rate Reduction Bonds		-		3,032
Other Interest		(3,575)		1,863
Interest Expense		29,753		38,527
Other Income, Net		4,606		4,933
Income Before Income Tax Expense		100,836		91,905
Income Tax Expense		36,499		43,493
Net Income	$	64,337	$	48,412

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


THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


		Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Activities:
Net Income	$	64,337	$	48,412
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense		679		2,832
Depreciation		39,475		47,525
Deferred Income Taxes		28,592		18,956
Pension and PBOP Expense, Net of PBOP Contributions		6,075		3,602
Regulatory Overrecoveries/(Underrecoveries), Net		22,972		(230)
Amortization of Regulatory Assets, Net		19,343		1,671
Amortization of Rate Reduction Bonds		-		43,283
Other		(20,129)		(21,431)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net		16,187		8,773
Materials and Supplies		(1,412)		2,706
Taxes Receivable/Accrued		57,078		340
Accounts Payable		(14,135)		(25,350)
Other Current Assets and Liabilities		(14,099)		(7,250)
Net Cash Flows Provided by Operating Activities		204,963		123,839

Investing Activities:
Investments in Property, Plant and Equipment		(106,829)		(97,725)
Decrease in NU Money Pool Lending		-		63,100
Other Investing Activities		(45)		2,275
Net Cash Flows Used in Investing Activities		(106,874)		(32,350)

Financing Activities:
Cash Dividends on Common Stock		(131,507)		(35,849)
Cash Dividends on Preferred Stock		(1,390)		(1,390)
Increase in Short-Term Debt		10,000		-
Increase in NU Money Pool Borrowings		18,950		-
Retirements of Rate Reduction Bonds		-		(50,686)
Other Financing Activities		(92)		(82)
Net Cash Flows Used in Financing Activities		(104,039)		(88,007)
Net (Decrease)/Increase in Cash		(5,950)		3,482
Cash - Beginning of Period		9,762		45
Cash - End of Period	$	3,812	$	3,527

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


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
Cash	$	3,348	$	2,559
Receivables, Net		93,281		105,070
Accounts Receivable from Affiliated Companies		898		858
Notes Receivable from Affiliated Companies		16,100		-
Unbilled Revenues		43,005		48,691
Taxes Receivable		2,056		12,564
Fuel, Materials and Supplies		101,540		116,074
Regulatory Assets		28,594		39,215
Prepayments and Other Current Assets		19,118		20,098
Total Current Assets		307,940		345,129

Property, Plant and Equipment, Net		2,088,560		2,053,281

Deferred Debits and Other Assets:
Regulatory Assets		376,982		395,203
Other Long-Term Assets		82,901		85,508
Total Deferred Debits and Other Assets		459,883		480,711



Total Assets	$	2,856,383	$	2,879,121



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


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable to Banks	$	20,000	$	30,000
Notes Payable to Affiliated Companies		-		47,900
Accounts Payable		53,986		85,324
Accounts Payable to Affiliated Companies		39,439		20,007
Accrued Interest		16,055		10,231
Regulatory Liabilities		13,666		8,365
Derivative Liabilities		9,835		12,834
Other Current Liabilities		39,810		36,726
Total Current Liabilities		192,791		251,387

Rate Reduction Bonds		125,549		138,247

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes		325,977		314,996
Regulatory Liabilities		57,881		58,631
Accrued Pension		264,550		261,096
Other Long-Term Liabilities		92,961		91,952
Total Deferred Credits and Other Liabilities		741,369		726,675

Capitalization:
Long-Term Debt		836,392		836,365

Common Stockholder's Equity:
Common Stock		-		-
Capital Surplus, Paid In		599,729		579,577
Retained Earnings		360,228		347,471
Accumulated Other Comprehensive Income/(Loss)		325		(601)
Common Stockholder's Equity		960,282		926,447
Total Capitalization		1,796,674		1,762,812



Total Liabilities and Capitalization	$	2,856,383	$	2,879,121


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


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Revenues	$	269,470	$	258,568

Operating Expenses:
Fuel, Purchased and Net Interchange Power		87,132		103,771
Other Operating Expenses		56,422		63,125
Maintenance		18,704		16,002
Depreciation		17,907		15,968
Amortization of Regulatory Assets/(Liabilities), Net		15,567		(5,694)
Amortization of Rate Reduction Bonds		13,135		12,391
Taxes Other Than Income Taxes		13,667		13,079
Total Operating Expenses		222,534		218,642
Operating Income		46,936		39,926

Interest Expense:
Interest on Long-Term Debt		8,624		9,512
Interest on Rate Reduction Bonds		1,893		2,721
Other Interest		(60)		179
Interest Expense		10,457		12,412
Other Income, Net		4,459		2,412
Income Before Income Tax Expense		40,938		29,926
Income Tax Expense		13,474		14,116
Net Income	$	27,464	$	15,810

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


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


		Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Activities:
Net Income	$	27,464	$	15,810
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense		1,850		2,496
Depreciation		17,907		15,968
Deferred Income Taxes		3,672		8,474
Pension and PBOP Expense, Net of PBOP Contributions		5,854		6,911
Regulatory Underrecoveries, Net		(1,271)		(2,073)
Amortization of Regulatory Assets/(Liabilities), Net		15,567		(5,694)
Amortization of Rate Reduction Bonds		13,135		12,391
Other		4,140		(15,719)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net		10,077		378
Fuel, Materials and Supplies		16,043		14,971
Taxes Receivable/Accrued		18,971		6,275
Accounts Payable		(2,160)		(1,599)
Other Current Assets and Liabilities		8,361		14,085
Net Cash Flows Provided by Operating Activities		139,610		72,674

Investing Activities:
Investments in Property, Plant and Equipment		(57,718)		(54,139)
Increase in NU Money Pool Lending		(16,100)		-
Other Investing Activities		369		(2,760)
Net Cash Flows Used in Investing Activities		(73,449)		(56,899)

Financing Activities:
Cash Dividends on Common Stock		(14,707)		(12,645)
Decrease in Short-Term Debt		(10,000)		-
Decrease in NU Money Pool Borrowings		(47,900)		(14,300)
Capital Contributions from NU Parent		20,000		23,456
Retirements of Rate Reduction Bonds		(12,697)		(11,962)
Other Financing Activities		(68)		(51)
Net Cash Flows Used in Financing Activities		(65,372)		(15,502)
Net Increase in Cash		789		273
Cash - Beginning of Period		2,559		1,974
Cash - End of Period	$	3,348	$	2,247

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


WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
Cash	$	354	$	1
Receivables, Net		41,287		37,585
Accounts Receivable from Affiliated Companies		1,009		505
Unbilled Revenues		15,285		16,578
Taxes Receivable		5		7,346
Materials and Supplies		3,717		3,664
Regulatory Assets		19,934		19,531
Marketable Securities		31,931		33,194
Prepayments and Other Current Assets		1,901		1,968
Total Current Assets		115,423		120,372

Property, Plant and Equipment, Net		850,611		817,146

Deferred Debits and Other Assets:
Regulatory Assets		195,319		207,584
Marketable Securities		25,173		23,860
Other Long-Term Assets		29,924		30,597
Total Deferred Debits and Other Assets		250,416		262,041



Total Assets	$	1,216,450	$	1,199,559



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


WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,		December 31,
(Thousands of Dollars)		2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable to Banks	$	10,000	$	-
Notes Payable to Affiliated Companies		23,400		20,400
Accounts Payable		45,748		48,344
Accounts Payable to Affiliated Companies		9,097		7,848
Accrued Interest		2,006		6,787
Regulatory Liabilities		10,514		7,959
Accumulated Deferred Income Taxes		5,324		5,902
Other Current Liabilities		12,411		9,842
Total Current Liabilities		118,500		107,082

Rate Reduction Bonds		39,155		43,325

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes		223,210		218,063
Regulatory Liabilities		17,265		15,048
Other Long-Term Liabilities		56,761		58,169
Total Deferred Credits and Other Liabilities		297,236		291,280

Capitalization:
Long-Term Debt		400,329		400,288

Common Stockholder's Equity:
Common Stock		10,866		10,866
Capital Surplus, Paid In		248,101		248,044
Retained Earnings		102,147		98,757
Accumulated Other Comprehensive Income/(Loss)		116		(83)
Common Stockholder's Equity		361,230		357,584
Total Capitalization		761,559		757,872



Total Liabilities and Capitalization	$	1,216,450	$	1,199,559


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


WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Revenues	$	106,684	$	100,207

Operating Expenses:
Fuel, Purchased and Net Interchange Power		40,204		43,632
Other Operating Expenses		26,230		23,226
Maintenance		4,771		4,542
Depreciation		6,338		5,953
Amortization of Regulatory Liabilities, Net		(600)		(1,570)
Amortization of Rate Reduction Bonds		4,146		3,895
Taxes Other Than Income Taxes		4,543		4,084
Total Operating Expenses		85,632		83,762
Operating Income		21,052		16,445

Interest Expense:
Interest on Long-Term Debt		4,754		3,881
Interest on Rate Reduction Bonds		684		937
Other Interest		136		126
Interest Expense		5,574		4,944
Other Income, Net		739		604
Income Before Income Tax Expense		16,217		12,105
Income Tax Expense		6,251		6,446
Net Income	$	9,966	$	5,659

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


WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


		Three Months Ended March 31,
(Thousands of Dollars)		2011		2010

Operating Activities:
Net Income	$	9,966	$	5,659
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Bad Debt Expense		1,337		1,567
Depreciation		6,338		5,953
Deferred Income Taxes		4,507		2,935
Pension and PBOP Expense, Net of PBOP Contributions		1,096		565
Regulatory Overrecoveries/(Underrecoveries), Net		7,620		(2,748)
Amortization of Regulatory Liabilities, Net		(600)		(1,570)
Amortization of Rate Reduction Bonds		4,146		3,895
Other		(1,370)		(465)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net		(2,384)		(1,768)
Materials and Supplies		(53)		(1,049)
Taxes Receivable/Accrued		10,019		(129)
Accounts Payable		(4,584)		(75)
Other Current Assets and Liabilities		(4,466)		(4,019)
Net Cash Flows Provided by Operating Activities		31,572		8,751

Investing Activities:
Investments in Property, Plant and Equipment		(33,037)		(19,111)
Proceeds from Sales of Marketable Securities		32,414		11,086
Purchases of Marketable Securities		(32,510)		(11,175)
Increase in NU Money Pool Lending		-		(5,700)
Other Investing Activities		(333)		(123)
Net Cash Flows Used in Investing Activities		(33,466)		(25,023)

Financing Activities:
Cash Dividends on Common Stock		(6,576)		(3,721)
Increase in Short-Term Debt		10,000		-
Issuance of Long-Term Debt		-		95,000
Increase/(Decrease) in NU Money Pool Borrowings		3,000		(136,100)
Retirements of Rate Reduction Bonds		(4,170)		(3,921)
Capital Contributions from NU Parent		-		66,143
Other Financing Activities		(7)		(1,129)
Net Cash Flows Provided by Financing Activities		2,247		16,272
Net Increase in Cash		353		-
Cash - Beginning of Period		1		1
Cash - End of Period	$	354	$	1

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

NORTHEAST UTILITIES AND SUBSIDIARIES

THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES

WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

COMBINED NOTES TO CONDENSED CONSOLIDATED 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 consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Proposed Merger with NSTAR

On October 18, 2010, NU and NSTAR announced that each company's Board of Trustees unanimously approved a Merger Agreement (the "agreement"), under which NSTAR will become a direct wholly owned subsidiary of NU. Shareholders of both NU and NSTAR approved the proposed merger at special meetings of shareholders held on March 4, 2011. The transaction is structured as a merger of equals in a tax-free exchange. The post-transaction company will provide electric and natural gas energy delivery service to approximately 3.5 million electric and natural gas customers through six regulated electric and natural gas utilities in Connecticut, Massachusetts and New Hampshire.

Under the terms of the agreement, NSTAR shareholders will receive 1.312 NU common shares for each NSTAR common share that they own (the "exchange ratio"). The exchange ratio was structured to result in a no premium merger based on the average closing share price of each company's common shares for the 20 trading days preceding the announcement. Based on the number of NU common shares and NSTAR common shares estimated to be outstanding immediately prior to the closing of the merger, upon such closing NU shareholders will own approximately 56 percent of the post-transaction company and former NSTAR shareholders will own approximately 44 percent of the post-transaction company. It is anticipated that NU will issue approximately 137 million common shares to the NSTAR shareholders as a result of the merger. Subject to the conditions in the agreement, NU’s first quarterly dividend per common share declared after the completion of the merger will be increased to an amount that is equivalent, after adjusting for the exchange ratio, to NSTAR's last quarterly dividend paid prior to the closing.

At closing, NU will acquire NSTAR and, in accordance with accounting standards for business combinations, account for the transaction as an acquisition of NSTAR by NU.

Completion of the merger is subject to various customary conditions, including, among others, receipt of all required regulatory approvals.

Presentation

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the entirety of this combined Quarterly Report on Form 10-Q and the combined 2010 Annual Report on Form 10-K of NU, CL&P, PSNH, and WMECO, which was filed with the SEC (NU 2010 Form 10-K). The accompanying unaudited condensed consolidated financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly NU's and the above companies' financial positions as of March 31, 2011 and December 31, 2010 and the results of operations and cash flows for the three months ended March 31, 2011 and 2010. The results of operations and cash flows for the three months ended March 31, 2011 and 2010 are not necessarily indicative of the results expected for a full year.

The unaudited condensed consolidated financial statements of NU, CL&P, PSNH and WMECO include the accounts of all their respective subsidiaries. Intercompany transactions have been eliminated in consolidation.

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

As of March 31, 2011, NU, CL&P, PSNH and WMECO have adjusted the presentation of Regulatory Assets and Liabilities to reflect the current portions, and related deferred tax amounts, as current assets and liabilities on the unaudited condensed consolidated balance sheets. Amounts as of December 31, 2010 have been reclassified to conform to the March 31, 2011 presentation. For additional information, see Note 2, "Regulatory Accounting" to the unaudited condensed consolidated financial statements.

Certain other reclassifications of prior period data were made in the accompanying unaudited condensed consolidated statements of cash flows for all companies presented. These reclassifications were made to conform to the current period's presentation.

NU evaluates events and transactions that occur after the balance sheet date but before financial statements are issued and recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the balance sheet date and discloses but does not recognize in the financial statements subsequent events that provide evidence

about the conditions that arose after the balance sheet date but before the financial statements are issued. NU did not identify any such events that required recognition or disclosure under this guidance.

Restricted Cash

As of March 31, 2011, PSNH had $6.4 million of restricted cash held with a trustee related to insurance proceeds received on bondable property, which was included in Prepayments and Other Current Assets on the accompanying unaudited condensed consolidated balance sheet. There was no restricted cash held as of December 31, 2010.

Provision for Uncollectible Accounts

NU, including CL&P, PSNH and WMECO, maintains a provision for uncollectible accounts to record receivables at an estimated net realizable value. This provision is determined based upon a variety of factors, including applying an estimated uncollectible account percentage to each receivable aging category, based upon historical collection and write-off experience and management's assessment of collectibility from individual customers. Management reviews at least quarterly the collectibility of the receivables, and if circumstances change, collectibility estimates are adjusted accordingly. Receivable balances are written-off against the provision for uncollectible accounts when the accounts are terminated and these balances are deemed to be uncollectible.

The provision for uncollectible accounts, which are included in Receivables, Net on the accompanying unaudited condensed consolidated balance sheets, is as follows:


(Millions of Dollars)	As of March 31, 2011		As of December 31, 2010
NU	$	41.1	$	39.8
CL&P		16.4		17.2
PSNH		7.8		6.8
WMECO		6.9		6.0

Special Deposits and Counterparty Deposits

NU, including CL&P, PSNH, and WMECO, records special deposits and counterparty deposits posted under master netting agreements as an offset to a derivative asset or liability if the related derivatives are recorded in a net position. For further information, see Note 4, "Derivative Instruments," to the unaudited condensed consolidated financial statements.

Special deposits paid by Select Energy to unaffiliated counterparties and brokerage firms not subject to master netting agreements totaled $20.3 million and $22.6 million as of March 31, 2011 and December 31, 2010, respectively. These amounts are included in Prepayments and Other Current Assets on the accompanying unaudited condensed consolidated balance sheets. There were no counterparty deposits for Select Energy as of March 31, 2011 and December 31, 2010.

NU, CL&P, PSNH and WMECO have established credit policies regarding counterparties to minimize overall credit risk. These policies require an evaluation of potential counterparties, financial condition, collateral requirements and the use of standardized agreements that allow for the netting of positive and negative exposures associated with a single counterparty. These evaluations result in established credit limits prior to entering into a contract. As of March 31, 2011 and December 31, 2010, there were no counterparty deposits for these companies.

Fair Value Measurements

NU, including CL&P, PSNH, and WMECO, applies fair value measurement guidance to all derivative contracts recorded at fair value and to the marketable securities held in the NU supplemental benefit trust and WMECO's spent nuclear fuel trust. Fair value measurement guidance is also applied to investment valuations used to calculate the funded status of NU's Pension and PBOP plans and non-recurring fair value measurements of NU's non-financial assets and liabilities, such as AROs and Yankee Gas' goodwill.

Fair Value Hierarchy: In measuring fair value, NU uses observable market data when available and minimizes the use of unobservable inputs. Unobservable inputs are needed to value certain derivative contracts due to complexities in the terms of the contracts. 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. NU evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and NU's policy is to recognize transfers between levels of the fair value hierarchy as of the end of the reporting period. The three levels of the fair value hierarchy are described below:

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

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

Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products. Significant unobservable inputs are used in the valuations, including items such as energy and energy-related product prices in future years for which observable prices are not yet available, future contract quantities under full-requirements or supplemental sales contracts, and market volatilities. Items valued using these valuation techniques are

classified according to the lowest level for which there is at least one input that is significant to the valuation. Therefore, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

Determination of Fair Value: The valuation techniques and inputs used in NU's fair value measurements are described in Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the unaudited condensed consolidated financial statements. There were no changes to the valuation methodologies for derivative instruments or marketable securities as of March 31, 2011 and December 31, 2010.

Revenues

Regulated Companies: The Regulated companies’ retail revenues are based on rates approved by the state regulatory commissions. In general, rates can only be changed through formal proceedings with the state regulatory commissions. The Regulated companies also utilize regulatory commission-approved tracking mechanisms to recover certain costs as incurred and, for WMECO beginning in 2011, a revenue decoupling mechanism to recover a pre-established level of baseline distribution delivery service revenues of $125.6 million per year, independent of actual customer usage. Such decoupling mechanisms separate, or decouple, KWhs delivered from actual revenues recognized in an effort to promote conservation of energy by WMECO customers.

Allowance for Funds Used During Construction

AFUDC is included in the cost of the Regulated companies' utility plant and represents the cost of borrowed and equity funds used to finance construction. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Other Interest Expense, and the AFUDC related to equity funds is recorded as Other Income, Net on the accompanying unaudited condensed consolidated statements of income.


	For the Three Months Ended
	March 31, 2011		March 31, 2010
(Millions of Dollars, except percentages)	NU		NU
AFUDC:
Borrowed Funds	$	3.2	$	1.9
Equity Funds		5.5		3.1
Total	$	8.7	$	5.0
Average AFUDC Rates		7.1%		6.5%


	For the Three Months Ended						For the Three Months Ended
	March 31, 2011						March 31, 2010
	CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
AFUDC:
Borrowed Funds	$	0.8	$	2.1	$	0.1	$	0.7	$	1.2	$	-
Equity Funds		1.5		3.5		0.1		1.2		1.9		-
Total	$	2.3	$	5.6	$	0.2	$	1.9	$	3.1	$	-
Average AFUDC Rates		8.1%		6.7%		7.3%		8.0%		6.3%		0.4%

The Regulated companies' average AFUDC rate is based on a FERC-prescribed formula that produces an average rate using the cost of a company's short-term financings as well as a company's capitalization (preferred stock, long-term debt and common equity). The average rate is applied to average eligible CWIP amounts to calculate AFUDC. AFUDC is recorded on 100 percent of CL&P's and WMECO's CWIP for their NEEWS projects, all of which is being reserved as a regulatory liability to reflect current rate base recovery for 100 percent of the CWIP as a result of FERC-approved transmission incentives.

Other Income, Net

The pre-tax components of other income/(loss) items are as follows:


	For the Three Months Ended
	March 31, 2011		March 31, 2010
(Millions of Dollars)	NU		NU
Other Income:
Investment Income	$	2.4	$	1.9
Interest Income		1.3		0.8
AFUDC - Equity Funds		5.5		3.1
EIA Incentives		0.1		1.3
Other		1.1		1.0
Total Other Income		10.4		8.1
Total Other Loss		(0.1)		-
Total Other Income, Net	$	10.3	$	8.1


	For the Three Months Ended
	March 31, 2011						March 31, 2010
(Millions of Dollars)	CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
Other Income:
Investment Income	$	1.6	$	0.4	$	0.3	$	1.3	$	0.3	$	0.3
Interest Income		0.7		0.6		0.1		0.6		0.2		0.1
AFUDC - Equity Funds		1.5		3.5		0.1		1.2		1.9		-
EIA Incentives		0.1		-		-		1.3		-		-
Other		0.7		-		0.2		0.5		-		0.2
Total Other Income, Net	$	4.6	$	4.5	$	0.7	$	4.9	$	2.4	$	0.6

Other Income - Other includes equity in earnings, which relates to the Company's investments, including investments of CL&P, PSNH and WMECO, in the Yankee Companies and NU's investment in two regional transmission companies.

The EIA incentives relate to incentives earned by Connecticut regulated companies from the construction of distributed generation, new large-scale generation and implementation of C&LM initiatives to reduce FMCC charges.

Other Taxes

Certain excise taxes levied by state or local governments are collected by CL&P and Yankee Gas from their respective customers. These excise taxes are shown on a gross basis with collections in revenues and payments in expenses. Gross receipts taxes, franchise taxes and other excise taxes were included in Operating Revenues and Taxes Other Than Income Taxes on the accompanying unaudited condensed consolidated statements of income as follows:


	For the Three Months Ended
(Millions of Dollars)	March 31, 2011		March 31, 2010
NU	$	38.7	$	34.2
CL&P		31.4		27.3

Certain sales taxes are also collected by CL&P, WMECO, and Yankee Gas from their respective customers as agents for state and local governments and are recorded on a net basis with no impact on the accompanying unaudited condensed consolidated statements of income.

Supplemental Cash Flow Information

Non-cash investing activities include capital expenditures incurred but not yet paid as follows:


(Millions of Dollars)	As of March 31, 2011		As of December 31, 2010
NU	$	91.9	$	127.9
CL&P		26.0		46.2
PSNH		25.8		35.8
WMECO		24.2		21.2

Short-term borrowings of NU, including CL&P, PSNH, and WMECO, have original maturities of three months or less. Accordingly, borrowings and repayments are shown net on the statements of cash flows.

REGULATORY ACCOUNTING

The Regulated companies continue to be rate-regulated on a cost-of-service basis, therefore, the accounting policies of the Regulated companies conform to GAAP applicable to rate-regulated enterprises and historically reflect the effects of the rate-making process.

Management believes it is probable that the Regulated companies will recover their respective investments in long-lived assets, including regulatory assets. All material net regulatory assets are earning a return, except for the majority of deferred benefit cost assets, regulatory assets offsetting derivative liabilities, securitized regulatory assets and income tax regulatory assets, all of which are not in rate base. Amortization and deferrals of regulatory assets/(liabilities) are primarily included on a net basis in Amortization of Regulatory Assets/(Liabilities), Net on the accompanying unaudited condensed consolidated statements of income.

Regulatory Assets: The components of regulatory assets are as follows:


	As of March 31, 2011		As of December 31, 2010
(Millions of Dollars)		NU		NU
Deferred Benefit Costs	$	1,064.9	$	1,094.2
Regulatory Assets Offsetting Derivative Liabilities		854.3		859.7
Securitized Assets		154.4		171.7
Income Taxes, Net		406.2		401.5
Unrecovered Contractual Obligations		117.6		123.2
Regulatory Tracker Deferrals		50.9		70.3
Storm Cost Deferrals		57.1		60.1
Asset Retirement Obligations		46.1		45.3
Losses on Reacquired Debt		21.3		21.5
Deferred Environmental Remediation Costs		36.2		36.8
Deferred Operation and Maintenance Costs		18.6		29.5
Other Regulatory Assets		77.2		81.5
Total Regulatory Assets	$	2,904.8	$	2,995.3
Less: Current Portion	$	221.0	$	238.7
Total Long-Term Regulatory Assets	$	2,683.8	$	2,756.6


	As of March 31, 2011						As of December 31, 2010
(Millions of Dollars)	CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
Deferred Benefit Costs	$	459.1	$	148.2	$	93.4	$	471.8	$	152.6	$	96.0
Regulatory Assets Offsetting Derivative Liabilities		844.1		9.8		-		846.2		12.8		-
Securitized Assets		-		116.6		37.8		-		129.8		41.9
Income Taxes, Net		331.5		32.7		16.6		328.9		31.4		16.8
Unrecovered Contractual Obligations		93.6		-		24.0		97.9		-		25.3
Regulatory Tracker Deferrals		26.1		6.4		14.7		35.5		14.7		15.2
Storm Cost Deferrals		3.2		39.1		14.8		4.0		40.7		15.4
Asset Retirement Obligations		25.5		14.8		3.1		24.9		14.7		3.0
Losses on Reacquired Debt		11.3		8.2		0.4		11.2		8.4		0.4
Deferred Environmental Remediation Costs		-		9.7		-		-		9.7		-
Deferred Operation and Maintenance Costs		18.6		-		-		29.5		-		-
Other Regulatory Assets		28.3		20.1		10.4		29.0		19.6		13.1
Total Regulatory Assets	$	1,841.3	$	405.6	$	215.2	$	1,878.9	$	434.4	$	227.1
Less: Current Portion	$	156.5	$	28.6	$	19.9	$	157.5	$	39.2	$	19.5
Total Long-Term Regulatory Assets	$	1,684.8	$	377.0	$	195.3	$	1,721.4	$	395.2	$	207.6

Additionally, the Regulated companies had $36.4 million ($0.6 million for CL&P, $26.9 million for PSNH, and $0.5 million for WMECO) and $37.5 million ($0.6 million for CL&P, $26.5 million for PSNH and $1.9 million for WMECO) of regulatory costs as of March 31, 2011 and December 31, 2010, respectively, which were included in Other Long-Term Assets on the accompanying unaudited condensed consolidated balance sheets. These amounts represent incurred costs that have not yet been approved for recovery by the applicable regulatory agency. Management believes these costs are probable of recovery in future cost-of-service regulated rates.

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


	As of March 31, 2011		As of December 31, 2010
(Millions of Dollars)		NU		NU
Cost of Removal	$	192.9	$	194.8
Regulatory Liabilities Offsetting Derivative Assets		-		38.1
Regulatory Tracker Deferrals		117.8		95.1
AFUDC Transmission Incentive		65.8		62.1
Pension Liability - Yankee Gas Acquisition		11.9		12.5
Wholesale Transmission Overcollections		12.8		13.7
Other Regulatory Liabilities		26.3		22.8
Total Regulatory Liabilities	$	427.5	$	439.1
Less: Current Portion	$	114.2	$	99.4
Total Long-Term Regulatory Liabilities	$	313.3	$	339.7


	As of March 31, 2011						As of December 31, 2010
(Millions of Dollars)	CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
Cost of Removal	$	77.7	$	56.5	$	9.4	$	78.6	$	57.3	$	9.5
Regulatory Liabilities Offsetting Derivative Assets		-		-		-		38.1		-		-
Regulatory Tracker Deferrals		84.2		11.6		7.3		79.4		6.6		4.8
AFUDC Transmission Incentive		58.0		-		7.8		56.5		-		5.6
Wholesale Transmission Overcollections		12.8		-		-		13.7		-		-
WMECO Provision For Rate Refunds		-		-		2.0		-		-		2.0
Other Regulatory Liabilities		18.8		3.5		1.3		15.8		3.1		1.1
Total Regulatory Liabilities	$	251.5	$	71.6	$	27.8	$	282.1	$	67.0	$	23.0
Less: Current Portion	$	72.3	$	13.7	$	10.5	$	75.7	$	8.4	$	8.0
Total Long-Term Regulatory Liabilities	$	179.2	$	57.9	$	17.3	$	206.4	$	58.6	$	15.0

PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION

The following tables summarize the NU, CL&P, PSNH, and WMECO investments in utility plant:


	As of March 31, 2011		As of December 31, 2010
(Millions of Dollars)	NU		NU
Distribution - Electric	$	6,274.6	$	6,197.2
Distribution - Natural Gas		1,152.0		1,126.6
Transmission		3,403.3		3,378.0
Generation		714.8		697.1
Electric and Natural Gas Utility		11,544.7		11,398.9
Other ⁽¹⁾		302.9		305.5
Total Property, Plant and Equipment, Gross		11,847.6		11,704.4
Less: Accumulated Depreciation
Electric and Natural Gas Utility		(2,903.2)		(2,862.3)
Other		(119.1)		(119.9)
Total Accumulated Depreciation		(3,022.3)		(2,982.2)
Property, Plant and Equipment, Net		8,825.3		8,722.2
Construction Work in Progress		891.1		845.5
Total Property, Plant and Equipment, Net	$	9,716.4	$	9,567.7

⁽¹⁾

These assets are primarily owned by RRR ($162.8 million and $166 million) and NUSCO ($127.2 million and $126.6 million) as of March 31, 2011 and December 31, 2010, respectively, and are mainly comprised of building improvements at RRR and software and equipment at NUSCO.


	As of March 31, 2011						As of December 31, 2010
(Millions of Dollars)	CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
Distribution	$	4,239.3	$	1,386.5	$	681.9	$	4,180.7	$	1,375.4	$	673.7
Transmission		2,676.2		478.2		248.9		2,668.4		476.1		233.5
Generation		-		705.3		9.5		-		687.7		9.4
Total Property, Plant and Equipment, Gross		6,915.5		2,570.0		940.3		6,849.1		2,539.2		916.6
Less: Accumulated Depreciation		(1,528.7)		(849.7)		(232.4)		(1,508.7)		(837.3)		(228.5)
Property, Plant and Equipment, Net		5,386.8		1,720.3		707.9		5,340.4		1,701.9		688.1
Construction Work in Progress		258.0		368.3		142.7		246.1		351.4		129.0
Total Property, Plant and Equipment, Net	$	5,644.8	$	2,088.6	$	850.6	$	5,586.5	$	2,053.3	$	817.1

DERIVATIVE INSTRUMENTS

The costs and benefits of derivative contracts that meet the definition of and are designated as "normal purchases or normal sales" (normal) are recognized in Operating Expenses or Operating Revenues on the accompanying unaudited condensed consolidated statements of income, as applicable, as electricity or natural gas is delivered.

Derivative contracts that are not recorded as normal under the applicable accounting guidance are recorded at fair value as current or long-term derivative assets or liabilities. For the Regulated companies, regulatory assets or liabilities are recorded for the changes in fair values of derivatives, as these contracts are part of current regulated operating costs, or have an allowed recovery mechanism, and management believes that these costs will continue to be recovered from or refunded to customers in cost-of-service, regulated rates. Changes in fair values of NU's remaining unregulated wholesale marketing contracts are included in Net Income.

The Regulated companies are exposed to the volatility of the prices of energy and energy-related products in procuring energy supply for their customers. The costs associated with supplying energy to customers are recoverable through customer rates. The Company manages the risks associated with the price volatility of energy and energy-related products through the use of derivative contracts, many of which are accounted for as normal (for WMECO all derivative contracts are accounted for as normal) and the use of nonderivative contracts.

CL&P mitigates the risks associated with the price volatility of energy and energy-related products through the use of SS or LRS contracts, which fix the price of electricity purchased for customers for periods of time ranging from three months to three years and are accounted for as normal. CL&P has entered into derivatives, including FTR contracts, to manage the risk of congestion costs associated with its SS and LRS contracts. As required by regulation, CL&P has also entered into derivative and nonderivative contracts for the purchase of energy and energy-related products and contracts related to capacity. While the risks managed by these contracts are regional congestion costs and capacity price risks that are not specific to CL&P, Connecticut's electric distribution companies, including CL&P, are required to enter into these contracts. Management believes any costs or benefits from these contracts are recoverable from or will be refunded to CL&P's customers, and, therefore any changes in fair value are recorded as Regulatory Assets and Regulatory Liabilities on the accompanying unaudited condensed consolidated balance sheets.

WMECO mitigates the risks associated with the volatility of the prices of energy and energy-related products in procuring energy supply for its customers through the use of basic service contracts, which fix the price of electricity purchased for customers for periods of time ranging from three months to three years and are accounted for as normal.

PSNH mitigates the risks associated with the volatility of energy prices in procuring energy supply for its customers through its generation facilities and the use of derivative contracts, including energy forward contracts and FTRs. PSNH enters into these contracts in order to stabilize electricity prices for customers by mitigating uncertainties associated with the New England spot market. Management believes any costs or benefits from these contracts are recoverable from or will be refunded to PSNH's customers, and, therefore any changes in fair value are recorded as Regulatory Assets and Regulatory Liabilities on the accompanying unaudited condensed consolidated balance sheets.

NU, through Yankee Gas, mitigates the risks associated with supply availability and volatility of natural gas prices through the use of storage facilities and agreements to purchase natural gas supply for customers. The costs associated with mitigating these risks are recoverable from customers, and, therefore any changes in fair value are recorded as Regulatory Assets and Regulatory Liabilities on the accompanying unaudited condensed consolidated balance sheets.

NU, through Select Energy, has one remaining fixed price forward sales contract to serve electrical load that is part of its remaining unregulated wholesale energy marketing portfolio. NU mitigates the price risk associated with this contract through the use of forward purchase and sales contracts. The contracts are accounted for at fair value, and changes in their fair values are recorded in Operating Expenses on the accompanying unaudited condensed consolidated statements of income.

NU is also exposed to interest rate risk associated with its long-term debt. From time to time, various subsidiaries of the Company enter into forward starting interest rate swaps, accounted for as cash flow hedges, to mitigate the risk of changes in interest rates when they expect to issue long-term debt. NU parent has also entered into an interest rate swap on fixed rate long-term debt in order to manage the balance of its fixed and floating rate debt. This interest rate swap is accounted for as a fair value hedge.

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 appropriate current and long-term portions, in the accompanying unaudited condensed consolidated balance sheets. The following tables present the gross fair values of contracts and the net amounts recorded as current or long-term derivative assets or liabilities, by primary underlying risk exposures or purpose:


	As of March 31, 2011
	Derivatives Not Designated as Hedges
(Millions of Dollars)	Commodity and Capacity Contracts Required by Regulation		Commodity Supply and Price Risk Management		Hedging Instruments		Collateral and Netting ⁽¹⁾		Net Amount Recorded as Derivative Asset/(Liability)
Current Derivative Assets:
Level 2:
PSNH	$	-	$	-	$	1.5	$	-	$	1.5
WMECO		-		-		0.4		-		0.4
Other		-		-		5.1		-		5.1
Level 3:
CL&P		11.1		1.5		-		(10.9)		1.7
Other		-		2.1		-		-		2.1
Total Current Derivative Assets	$	11.1	$	3.6	$	7.0	$	(10.9)	$	10.8

Long-Term Derivative Assets:
Level 2:
Other	$	-	$	-	$	4.4	$	-	$	4.4
Level 3:
CL&P		160.5		-		-		(79.4)		81.1
Other		-		3.1		-		-		3.1
Total Long-Term Derivative Assets	$	160.5	$	3.1	$	4.4	$	(79.4)	$	88.6

Current Derivative Liabilities:
Level 2:
PSNH	$	-	$	(9.8)	$	-	$	-	$	(9.8)
Level 3:
CL&P		(63.1)		(0.2)		-		-		(63.3)
Other		-		(11.7)