Edgar Filing: CONNECTICUT LIGHT & POWER CO

June 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 June 30, 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 July 30, 2011
Northeast Utilities Common shares, $5.00 par value	176,893,612 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 NUTV and NSTAR Transmission Ventures, Inc. on a 75 percent and 25 percent basis, respectively
NUTV	NU Transmission Ventures, Inc.
NU or the Company	Northeast Utilities and subsidiaries
NU Enterprises	NU Enterprises, Inc., the parent company of Select Energy, NGS, NGS Mechanical, 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:

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

OTHER:

2010 Form 10-K	The Northeast Utilities and subsidiaries 2010 combined 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
AOCI	Accumulated Other Comprehensive Income/(Loss)
AFUDC	Allowance For Funds Used During Construction
C&LM	Conservation and Load Management
CTA	Competitive Transition Assessment
CWIP	Construction work in progress
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974
ES	Default Energy Service
ESOP	Employee Stock Ownership 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
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
IASB	International Accounting Standards Board
IPP	Independent Power Producers
ISO-NE	ISO New England, Inc., the New England Independent System Operator
ISO-NE Tariff	ISO-NE FERC Transmission, Markets and Services Tariff
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
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
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
RMR	Reliability Must Run
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
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) - June 30, 2011 and December 31, 2010	1

Condensed Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2011 and 2010	3

Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2011 and 2010	4

The Connecticut Light and Power Company and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited) - June 30, 2011 and December 31, 2010	5

Condensed Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2011 and 2010	7

Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2011 and 2010	8

Public Service Company of New Hampshire and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited) - June 30, 2011 and December 31, 2010	9

Condensed Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2011 and 2010	11

Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2011 and 2010	12

Western Massachusetts Electric Company and Subsidiary

Condensed Consolidated Balance Sheets (Unaudited) - June 30, 2011 and December 31, 2010	13

Condensed Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2011 and 2010	15

Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2011 and 2010	16

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

Report of Independent Registered Public Accounting Firm	40

iii


	Page

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

Northeast Utilities and Subsidi aries		41

The Connecticut Light and Power Company and Subsidiaries		57

Public Service Company of New Hampshire and Subsidiaries		60

Western Massachusetts Electric Company and Subsidiary		63

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk		65

ITEM 4 - Controls and Procedures		65

PART II - OTHER INFORMATION

ITEM 1 - Legal Proceedings		66

ITEM 1A - Risk Factors		66

ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds		67

ITEM 6 – Exhibits		68

SIGNAT URES		70

This Page Intentionally Left Blank


NORTHEAST UTILITIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

		June 30,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
	Cash and Cash Equivalents	$	15,107	$	23,395
	Receivables, Net		470,921		523,644
	Unbilled Revenues		154,370		208,834
	Taxes Receivable		49,130		89,638
	Fuel, Materials and Supplies		230,754		244,043
	Regulatory Assets		242,137		238,699
	Marketable Securities		74,680		78,306
	Prepayments and Other Current Assets		100,763		100,441
Total Current Assets			1,337,862		1,507,000

Property, Plant and Equipment, Net			9,863,789		9,567,726

Deferred Debits and Other Assets:
	Regulatory Assets		2,656,093		2,756,580
	Goodwill		287,591		287,591
	Marketable Securities		58,154		51,201
	Derivative Assets		86,730		123,242
	Other Long-Term Assets		152,127		179,261
Total Deferred Debits and Other Assets			3,240,695		3,397,875



Total Assets		$	14,442,346	$	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)

		June 30,		December 31,
(Thousands of Dollars)		2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable to Banks		$	137,000	$	267,000
Long-Term Debt - Current Portion			336,991		66,286
Accounts Payable			373,799		417,285
Obligations to Third Party Suppliers			74,522		74,659
Accrued Taxes			104,125		107,067
Accrued Interest			69,582		74,740
Regulatory Liabilities			152,956		99,403
Derivative Liabilities			105,583		71,501
Other Current Liabilities			121,469		167,206
Total Current Liabilities			1,476,027		1,345,147

Rate Reduction Bonds			147,252		181,572

Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes			1,777,163		1,636,750
Regulatory Liabilities			273,909		339,655
Derivative Liabilities			884,283		909,668
Accrued Pension			798,467		802,195
Other Long-Term Liabilities			696,040		695,915
Total Deferred Credits and Other Liabilities			4,429,862		4,384,183

Capitalization:
Long-Term Debt			4,356,052		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		979,884		978,909
	Capital Surplus, Paid In		1,785,907		1,777,592
	Retained Earnings		1,546,493		1,452,777
	Accumulated Other Comprehensive Loss		(45,791)		(43,370)
	Treasury Stock		(351,387)		(354,732)
Common Shareholders' Equity			3,915,106		3,811,176
Noncontrolling Interests			1,847		1,457
Total Equity			3,916,953		3,812,633
Total Capitalization			8,389,205		8,561,699



Total Liabilities and Capitalization		$	14,442,346	$	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				Six Months Ended
(Thousands of Dollars, Except Share Information)			June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010

Operating Revenues			$	1,047,481	$	1,111,426	$	2,282,732	$	2,450,845

Operating Expenses:
	Fuel, Purchased and Net Interchange Power			340,300		442,230		814,409		1,045,578
	Other Operating Expenses			262,818		206,664		514,796		454,937
	Maintenance			78,825		66,817		146,589		112,454
	Depreciation			73,637		79,075		147,588		157,731
	Amortization of Regulatory Assets, Net			17,262		8,893		51,669		566
	Amortization of Rate Reduction Bonds			17,086		54,997		34,367		114,567
	Taxes Other Than Income Taxes			79,419		74,406		167,823		160,005
		Total Operating Expenses		869,347		933,082		1,877,241		2,045,838
Operating Income				178,134		178,344		405,491		405,007

Interest Expense:
	Interest on Long-Term Debt			57,044		58,522		114,444		115,791
	Interest on Rate Reduction Bonds			2,293		5,633		4,871		12,324
	Other Interest			2,897		3,042		1,468		6,343
		Interest Expense		62,234		67,197		120,783		134,458
Other Income, Net				7,334		1,552		17,647		9,608
Income Before Income Tax Expense				123,234		112,699		302,355		280,157
Income Tax Expense				44,515		39,351		108,052		119,209
Net Income				78,719		73,348		194,303		160,948
Net Income Attributable to Noncontrolling Interests				1,441		1,402		2,870		2,792
Net Income Attributable to Controlling Interests			$	77,278	$	71,946	$	191,433	$	158,156

Basic and Diluted Earnings Per Common Share			$	0.44	$	0.41	$	1.08	$	0.90

Dividends Declared Per Common Share			$	0.28	$	0.26	$	0.55	$	0.51

Weighted Average Common Shares Outstanding:
	Basic			177,347,374		176,571,189		177,267,791		176,460,476
	Diluted			177,626,992		176,736,532		177,553,995		176,637,003

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)


			Six Months Ended June 30,
(Thousands of Dollars)			2011		2010

Operating Activities:
	Net Income		$	194,303	$	160,948
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Bad Debt Expense		9,374		17,176
		Depreciation		147,588		157,731
		Deferred Income Taxes		95,293		37,850
		Pension and PBOP Expense, Net of PBOP Contributions		51,324		25,529
		Pension Contribution		(19,200)		-
		Regulatory Overrecoveries, Net		40,434		21,569
		Amortization of Regulatory Assets, Net		51,669		566
		Amortization of Rate Reduction Bonds		34,367		114,567
		Derivative Assets and Liabilities		(9,272)		(5,640)
		Other		(7,192)		(29,707)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		80,696		34,703
		Fuel, Materials and Supplies		12,992		52,024
		Taxes Receivable/Accrued		48,933		(3,856)
		Accounts Payable		(23,981)		(53,480)
		Other Current Assets and Liabilities		(20,633)		3,799
Net Cash Flows Provided by Operating Activities				686,695		533,779

Investing Activities:
	Investments in Property, Plant and Equipment			(468,526)		(442,404)
	Proceeds from Sales of Marketable Securities			72,369		95,452
	Purchases of Marketable Securities			(73,564)		(96,546)
	Proceeds from Sale of Assets			46,841		-
	Other Investing Activities			(4,828)		(4,369)
Net Cash Flows Used in Investing Activities				(427,708)		(447,867)

Financing Activities:
	Cash Dividends on Common Shares			(97,207)		(90,194)
	Cash Dividends on Preferred Stock			(2,779)		(2,779)
	(Decrease)/Increase in Short-Term Debt			(130,000)		57,000
	Issuance of Long-Term Debt			122,000		145,000
	Retirements of Long-Term Debt			(124,086)		(4,286)
	Retirements of Rate Reduction Bonds			(34,320)		(128,600)
	Other Financing Activities			(883)		(230)
Net Cash Flows Used in Financing Activities				(267,275)		(24,089)
Net (Decrease)/Increase in Cash and Cash Equivalents				(8,288)		61,823
Cash and Cash Equivalents - Beginning of Period				23,395		26,952
Cash and Cash Equivalents - End of Period			$	15,107	$	88,775


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)

		June 30,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
	Cash	$	5,078	$	9,762
	Receivables, Net		295,688		317,530
	Accounts Receivable from Affiliated Companies		3,678		822
	Notes Receivable from Affiliated Companies		24,125		-
	Unbilled Revenues		87,486		116,392
	Taxes Receivable		24,121		48,360
	Regulatory Assets		163,917		157,530
	Materials and Supplies		73,063		63,811
	Accumulated Deferred Income Taxes		21,366		-
	Prepayments and Other Current Assets		20,180		27,466
Total Current Assets			718,702		741,673

Property, Plant and Equipment, Net			5,655,205		5,586,504

Deferred Debits and Other Assets:
	Regulatory Assets		1,668,232		1,721,416
	Derivative Assets		82,902		115,870
	Other Long-Term Assets		96,981		89,729
Total Deferred Debits and Other Assets			1,848,115		1,927,015



Total Assets		$	8,222,022	$	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)

			June 30,		December 31,
(Thousands of Dollars)			2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to Affiliated Companies		$	-		6,225
	Long-Term Debt - Current Portion			62,000		62,000
	Accounts Payable			173,098		204,868
	Accounts Payable to Affiliated Companies			46,911		53,207
	Obligations to Third Party Suppliers			67,026		68,692
	Accrued Taxes			94,841		92,061
	Accrued Interest			38,774		42,548
	Regulatory Liabilities			102,869		75,716
	Derivative Liabilities			83,442		46,781
	Other Current Liabilities			49,042		46,209
Total Current Liabilities				718,003		698,307

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			1,165,269		1,068,344
	Regulatory Liabilities			141,635		206,394
	Derivative Liabilities			863,292		883,091
	Accrued Pension			36,364		42,486
	Other Long-Term Liabilities			315,912		321,793
Total Deferred Credits and Other Liabilities				2,522,472		2,522,108

Capitalization:
	Long-Term Debt			2,521,457		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		1,606,014		1,605,275
		Retained Earnings		680,010		734,561
		Accumulated Other Comprehensive Loss		(2,486)		(2,713)
	Common Stockholder's Equity			2,343,890		2,397,475
Total Capitalization				4,981,547		5,034,777



Total Liabilities and Capitalization			$	8,222,022	$	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				Six Months Ended
(Thousands of Dollars)			June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010

Operating Revenues			$	608,013	$	707,917	$	1,281,695	$	1,502,897

Operating Expenses:
	Fuel, Purchased and Net Interchange Power			207,163		290,553		462,533		653,374
	Other Operating Expenses			139,308		120,293		273,570		255,106
	Maintenance			41,869		32,821		82,651		54,660
	Depreciation			38,442		47,944		77,917		95,469
	Amortization of Regulatory Assets, Net			13,705		20,640		33,049		22,311
	Amortization of Rate Reduction Bonds			-		38,924		-		82,207
	Taxes Other Than Income Taxes			52,727		50,585		111,193		108,114
		Total Operating Expenses		493,214		601,760		1,040,913		1,271,241
Operating Income				114,799		106,157		240,782		231,656

Interest Expense:
	Interest on Long-Term Debt			33,430		33,630		66,758		67,262
	Interest on Rate Reduction Bonds			-		2,243		-		5,275
	Other Interest			868		1,334		(2,708)		3,197
		Interest Expense		34,298		37,207		64,050		75,734
Other Income, Net				2,058		745		6,663		5,678
Income Before Income Tax Expense				82,559		69,695		183,395		161,600
Income Tax Expense				29,924		25,610		66,423		69,102
Net Income			$	52,635	$	44,085	$	116,972	$	92,498

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)


			Six Months Ended June 30,
(Thousands of Dollars)			2011		2010

Operating Activities:
	Net Income		$	116,972	$	92,498
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Bad Debt Expense		2,252		5,494
		Depreciation		77,917		95,469
		Deferred Income Taxes		60,425		11,624
		Pension and PBOP Expense, Net of PBOP Contributions		9,868		3,602
		Regulatory Overrecoveries, Net		24,142		30,459
		Amortization of Regulatory Assets, Net		33,049		22,311
		Amortization of Rate Reduction Bonds		-		82,207
		Other		(17,752)		(29,444)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		34,192		15,679
		Materials and Supplies		(11,761)		4,767
		Taxes Receivable/Accrued		31,797		12,694
		Accounts Payable		(12,078)		(38,735)
		Other Current Assets and Liabilities		9,968		22,341
Net Cash Flows Provided by Operating Activities				358,991		330,966

Investing Activities:
	Investments in Property, Plant and Equipment			(201,966)		(191,667)
	(Increase)/Decrease in NU Money Pool Lending			(24,125)		97,775
	Proceeds from Sale of Assets			46,841		-
	Other Investing Activities			(6,489)		1,463
Net Cash Flows Used in Investing Activities				(185,739)		(92,429)

Financing Activities:
	Cash Dividends on Common Stock			(168,744)		(145,992)
	Cash Dividends on Preferred Stock			(2,779)		(2,779)
	(Decrease)/Increase in NU Money Pool Borrowings			(6,225)		15,625
	Retirements of Rate Reduction Bonds			-		(96,267)
	Other Financing Activities			(188)		(170)
Net Cash Flows Used in Financing Activities				(177,936)		(229,583)
Net (Decrease)/Increase in Cash				(4,684)		8,954
Cash - Beginning of Period				9,762		45
Cash - End of Period			$	5,078	$	8,999


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)

		June 30,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
	Cash	$	2,413	$	2,559
	Receivables, Net		87,958		105,070
	Accounts Receivable from Affiliated Companies		646		858
	Unbilled Revenues		44,358		48,691
	Taxes Receivable		2,796		12,564
	Fuel, Materials and Supplies		106,371		116,074
	Regulatory Assets		38,705		39,215
	Prepayments and Other Current Assets		29,879		20,098
Total Current Assets			313,126		345,129

Property, Plant and Equipment, Net			2,135,883		2,053,281

Deferred Debits and Other Assets:
	Regulatory Assets		375,551		395,203
	Other Long-Term Assets		59,932		85,508
Total Deferred Debits and Other Assets			435,483		480,711



Total Assets		$	2,884,492	$	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)

			June 30,		December 31,
(Thousands of Dollars)			2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to Banks		$	22,000	$	30,000
	Notes Payable to Affiliated Companies			43,800		47,900
	Accounts Payable			71,278		85,324
	Accounts Payable to Affiliated Companies			19,854		20,007
	Accrued Interest			8,463		10,231
	Regulatory Liabilities			22,369		8,365
	Derivative Liabilities			9,097		12,834
	Other Current Liabilities			25,371		36,726
Total Current Liabilities				222,232		251,387

Rate Reduction Bonds				112,195		138,247

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			336,877		314,996
	Regulatory Liabilities			57,104		58,631
	Accrued Pension			253,824		261,096
	Other Long-Term Liabilities			100,518		91,952
Total Deferred Credits and Other Liabilities				748,323		726,675

Capitalization:
	Long-Term Debt			838,304		836,365

	Common Stockholder's Equity:
		Common Stock		-		-
		Capital Surplus, Paid In		599,917		579,577
		Retained Earnings		367,186		347,471
		Accumulated Other Comprehensive Loss		(3,665)		(601)
	Common Stockholder's Equity			963,438		926,447
Total Capitalization				1,801,742		1,762,812



Total Liabilities and Capitalization			$	2,884,492	$	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				Six Months Ended
(Thousands of Dollars)			June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010

Operating Revenues			$	240,191	$	238,322	$	509,661	$	496,890

Operating Expenses:
	Fuel, Purchased and Net Interchange Power			69,342		83,253		156,474		187,024
	Other Operating Expenses			54,226		56,073		110,647		119,199
	Maintenance			29,859		25,625		48,563		41,627
	Depreciation			18,122		16,020		36,030		31,988
	Amortization of Regulatory Assets/(Liabilities), Net			2,465		(11,627)		18,032		(17,322)
	Amortization of Rate Reduction Bonds			13,004		12,246		26,139		24,637
	Taxes Other Than Income Taxes			15,234		13,348		28,902		26,426
		Total Operating Expenses		202,252		194,938		424,787		413,579
Operating Income				37,939		43,384		84,874		83,311

Interest Expense:
	Interest on Long-Term Debt			8,317		9,268		16,941		18,780
	Interest on Rate Reduction Bonds			1,676		2,516		3,570		5,237
	Other Interest			408		185		346		364
		Interest Expense		10,401		11,969		20,857		24,381
Other Income/(Loss), Net				4,361		(197)		8,820		2,215
Income Before Income Tax Expense				31,899		31,218		72,837		61,145
Income Tax Expense				10,234		9,602		23,708		23,719
Net Income			$	21,665	$	21,616	$	49,129	$	37,426

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)


			Six Months Ended June 30,
(Thousands of Dollars)			2011		2010

Operating Activities:
	Net Income		$	49,129	$	37,426
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Bad Debt Expense		3,303		4,282
		Depreciation		36,030		31,988
		Deferred Income Taxes		20,773		15,486
		Pension and PBOP Expense, Net of PBOP Contributions		11,112		9,606
		Pension Contribution		(15,175)		-
		Regulatory Overrecoveries/(Underrecoveries), Net		726		(5,459)
		Amortization of Regulatory Assets/(Liabilities), Net		18,032		(17,322)
		Amortization of Rate Reduction Bonds		26,139		24,637
		Insurance Proceeds		-		10,000
		Other		(2,545)		(21,057)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		12,844		3,338
		Fuel, Materials and Supplies		11,915		30,714
		Taxes Receivable/Accrued		9,767		2,057
		Accounts Payable		(8,611)		(12,305)
		Other Current Assets and Liabilities		(16,885)		(4,558)
Net Cash Flows Provided by Operating Activities				156,554		108,833

Investing Activities:
		Investments in Property, Plant and Equipment		(111,459)		(141,709)
		Other Investing Activities		1,928		(4,367)
Net Cash Flows Used in Investing Activities				(109,531)		(146,076)

Financing Activities:
		Cash Dividends on Common Stock		(29,414)		(25,292)
		Decrease in Short-Term Debt		(8,000)		-
		Issuance of Long-Term Debt		122,000		-
		Retirements of Long-Term Debt		(119,800)		-
		Decrease in NU Money Pool Borrowings		(4,100)		(18,900)
		Capital Contributions from NU Parent		20,000		115,428
		Retirements of Rate Reduction Bonds		(26,052)		(24,568)
		Other Financing Activities		(1,803)		(114)
Net Cash Flows (Used in)/Provided by Financing Activities				(47,169)		46,554
Net (Decrease)/Increase in Cash				(146)		9,311
Cash - Beginning of Period				2,559		1,974
Cash - End of Period			$	2,413	$	11,285


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)

		June 30,		December 31,
(Thousands of Dollars)		2011		2010

ASSETS

Current Assets:
	Cash	$	1	$	1
	Receivables, Net		37,948		37,585
	Accounts Receivable from Affiliated Companies		585		505
	Unbilled Revenues		14,539		16,578
	Taxes Receivable		8		7,346
	Materials and Supplies		4,062		3,664
	Regulatory Assets		19,454		19,531
	Marketable Securities		28,033		33,194
	Prepayments and Other Current Assets		1,624		1,968
Total Current Assets			106,254		120,372

Property, Plant and Equipment, Net			908,654		817,146

Deferred Debits and Other Assets:
	Regulatory Assets		191,939		207,584
	Marketable Securities		29,085		23,860
	Other Long-Term Assets		29,931		30,597
Total Deferred Debits and Other Assets			250,955		262,041



Total Assets		$	1,265,863	$	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)

			June 30,		December 31,
(Thousands of Dollars)			2011		2010

LIABILITIES AND CAPITALIZATION

Current Liabilities:
	Notes Payable to Banks		$	20,000	$	-
	Notes Payable to Affiliated Companies			28,100		20,400
	Accounts Payable			65,344		48,344
	Accounts Payable to Affiliated Companies			10,832		7,848
	Accrued Interest			6,736		6,787
	Regulatory Liabilities			16,579		7,959
	Accumulated Deferred Income Taxes			2,818		5,902
	Other Current Liabilities			10,957		9,842
Total Current Liabilities				161,366		107,082

Rate Reduction Bonds				35,057		43,325

Deferred Credits and Other Liabilities:
	Accumulated Deferred Income Taxes			229,399		218,063
	Regulatory Liabilities			16,904		15,048
	Other Long-Term Liabilities			55,834		58,169
Total Deferred Credits and Other Liabilities				302,137		291,280

Capitalization:
	Long-Term Debt			400,362		400,288

	Common Stockholder's Equity:
		Common Stock		10,866		10,866
		Capital Surplus, Paid In		253,360		248,044
		Retained Earnings		103,741		98,757
		Accumulated Other Comprehensive Loss		(1,026)		(83)
	Common Stockholder's Equity			366,941		357,584
Total Capitalization				767,303		757,872



Total Liabilities and Capitalization			$	1,265,863	$	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				Six Months Ended
(Thousands of Dollars)			June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010

Operating Revenues			$	98,390	$	92,473	$	205,074	$	192,680

Operating Expenses:
	Fuel, Purchased and Net Interchange Power			32,617		36,720		72,821		80,352
	Other Operating Expenses			26,376		23,067		52,606		46,293
	Maintenance			4,214		5,367		8,986		9,909
	Depreciation			6,625		5,868		12,963		11,821
	Amortization of Regulatory Assets/(Liabilities), Net			1,796		(721)		1,196		(2,290)
	Amortization of Rate Reduction Bonds			4,082		3,827		8,228		7,722
	Taxes Other Than Income Taxes			4,203		4,080		8,745		8,163
		Total Operating Expenses		79,913		78,208		165,545		161,970
Operating Income				18,477		14,265		39,529		30,710

Interest Expense:
	Interest on Long-Term Debt			4,722		4,726		9,476		8,607
	Interest on Rate Reduction Bonds			617		874		1,301		1,811
	Other Interest			121		57		257		183
		Interest Expense		5,460		5,657		11,034		10,601
Other Income, Net				242		161		981		765
Income Before Income Tax Expense				13,259		8,769		29,476		20,874
Income Tax Expense				5,088		3,520		11,339		9,966
Net Income			$	8,171	$	5,249	$	18,137	$	10,908

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)


			Six Months Ended June 30,
(Thousands of Dollars)			2011		2010

Operating Activities:
	Net Income		$	18,137	$	10,908
	Adjustments to Reconcile Net Income to Net Cash Flows
		Provided by Operating Activities:
		Bad Debt Expense		1,860		3,304
		Depreciation		12,963		11,821
		Deferred Income Taxes		7,004		5,061
		Regulatory Overrecoveries/(Underrecoveries), Net		8,754		(8,181)
		Amortization of Regulatory Assets/(Liabilities), Net		1,196		(2,290)
		Amortization of Rate Reduction Bonds		8,228		7,722
		Other		(2,034)		(3,136)
	Changes in Current Assets and Liabilities:
		Receivables and Unbilled Revenues, Net		405		(1,762)
		Materials and Supplies		(398)		(767)
		Taxes Receivable/Accrued		9,523		(80)
		Accounts Payable		1,021		605
		Other Current Assets and Liabilities		(281)		393
Net Cash Flows Provided by Operating Activities				66,378		23,598

Investing Activities:
		Investments in Property, Plant and Equipment		(76,898)		(46,354)
		Proceeds from Sales of Marketable Securities		57,746		69,196
		Purchases of Marketable Securities		(57,888)		(69,350)
		Increase in NU Money Pool Lending		-		(22,000)
		Other Investing Activities		(792)		(170)
Net Cash Flows Used in Investing Activities				(77,832)		(68,678)

Financing Activities:
		Cash Dividends on Common Stock		(13,153)		(7,441)
		Increase in Short-Term Debt		20,000		-
		Issuance of Long-Term Debt		-		95,000
		Increase/(Decrease) in NU Money Pool Borrowings		7,700		(136,100)
		Retirements of Rate Reduction Bonds		(8,268)		(7,765)
		Capital Contributions from NU Parent		5,186		102,600
		Other Financing Activities		(11)		(1,214)
Net Cash Flows Provided by Financing Activities				11,454		45,080
Net Change in Cash				-		-
Cash - Beginning of Period				1		1
Cash - End of Period			$	1	$	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. The transaction is structured as a merger of equals in a tax-free exchange of shares. 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"). Shareholders of both NU and NSTAR approved the proposed merger at special meetings of shareholders held on March 4, 2011. Post-transaction, NU 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.

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 will be owned approximately 56 percent by NU shareholders and approximately 44 percent by former NSTAR shareholders. 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 paid 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. NU has received regulatory approvals from the FCC, the FERC and the Maine Public Utilities Commission and the applicable Hart-Scott-Rodino waiting period has expired. The DPUC and the NHPUC have issued decisions stating they do not have jurisdiction over the merger. NU is awaiting approval from the DPU and the Nuclear Regulatory Commission.

Presentation

Pursuant to the rules and regulations of the SEC, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the entirety of this combined Quarterly Report on Form 10-Q, the first quarter 2011 combined Quarterly Report on Form 10-Q, and the 2010 combined 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 June 30, 2011 and December 31, 2010, the results of operations for the three and six months ended June 30, 2011 and 2010, and cash flows for the six months ended June 30, 2011 and 2010. The results of operations for the three months ended June 30, 2011 and 2010, and the results of operations and cash flows for the six months ended June 30, 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 June 30, 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 June 30, 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.

Accounting Standards Issued But Not Yet Adopted

In May 2011, the FASB and IASB issued a final Accounting Standards Update (ASU) on fair value measurement, effective January 1, 2012, that is not expected to have a material impact on NU’s financial position, results of operations or cash flows, but will require additional financial statement disclosures related to fair value measurements.

Restricted Cash

As of June 30, 2011, NU, CL&P, and PSNH had $15.9 million, $7.4 million, and $7 million, respectively, of restricted cash, primarily relating to amounts held in escrow related to property damage at CL&P and insurance proceeds on bondable property at PSNH, which were included in Prepayments and Other Current Assets on the accompanying unaudited condensed consolidated balance sheets. NU, CL&P, and PSNH had no restricted cash 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 June 30, 2011		As of December 31, 2010
NU	$	38.2	$	39.8
CL&P		16.4		17.2
PSNH		7.5		6.8
WMECO		5.2		6.0

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.

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.

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				For the Six Months Ended
		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
(Millions of Dollars, except percentages)		NU		NU		NU		NU
AFUDC:
	Borrowed Funds	$	3.3	$	2.3	$	6.5	$	4.2
	Equity Funds		6.3		3.8		11.9		6.9
Total		$	9.6	$	6.1	$	18.4	$	11.1
Average AFUDC Rate			7.8%		7.0%		7.4%		6.8%


		For the Three Months Ended
		June 30, 2011						June 30, 2010
(Millions of Dollars, except percentages)		CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
AFUDC:
	Borrowed Funds	$	0.7	$	2.3	$	0.1	$	0.7	$	1.5	$	0.1
	Equity Funds		1.2		4.4		0.1		1.2		2.4		0.2
Total		$	1.9	$	6.7	$	0.2	$	1.9	$	3.9	$	0.3
Average AFUDC Rate			7.9%		7.7%		6.8%		8.0%		6.7%		6.7%


		For the Six Months Ended
		June 30, 2011						June 30, 2010
(Millions of Dollars, except percentages)		CL&P		PSNH		WMECO		CL&P		PSNH		WMECO
AFUDC:
	Borrowed Funds	$	1.5	$	4.4	$	0.1	$	1.4	$	2.6	$	0.1
	Equity Funds		2.7		7.8		0.2		2.5		4.2		0.2
Total		$	4.2	$	12.2	$	0.3	$	3.9	$	6.8	$	0.3
Average AFUDC Rate			8.0%		7.3%		7.0%		8.0%		6.5%		4.1%

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 was recorded on 100 percent of CL&P's and WMECO's CWIP for their NEEWS projects through May 31, 2011, all of which was reserved as a regulatory liability to reflect rate base recovery for 100 percent of the CWIP as a result of FERC-approved transmission incentives. Effective June 1, 2011, FERC approved changes to the ISO-NE Tariff in order to include 100 percent of the NEEWS CWIP in regional rate base. As a result, CL&P and WMECO will no longer record AFUDC on NEEWS CWIP.

Other Income, Net

The other income/(loss) items included within Other Income, Net on the accompanying unaudited condensed consolidated statements of income primarily consist of investment income/(loss), interest income, AFUDC related to equity funds and 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.

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				For the Six Months Ended
(Millions of Dollars)	June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
NU	$	32.0	$	33.1	$	70.7	$	72.0
CL&P		28.8		30.2		60.2		62.2

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.


J.	Supplemental Cash Flow Information
Non-cash investing activities include capital expenditures incurred but not yet paid as follows:

(Millions of Dollars)		As of June 30, 2011		As of December 31, 2010
NU		$	109.4	$	127.9
CL&P			19.4		46.2
PSNH			29.6		35.8
WMECO			39.7		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 unaudited condensed consolidated 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.


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

	As of June 30, 2011		As of December 31, 2010
(Millions of Dollars)	NU		NU
Deferred Benefit Costs	$	1,036.1	$	1,094.2
Regulatory Assets Offsetting Derivative Liabilities		866.9		859.7
Securitized Assets		137.3		171.7
Income Taxes, Net		419.0		401.5
Unrecovered Contractual Obligations		112.4