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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2021
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. About Eversource, CL&P, NSTAR Electric and PSNH Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and Eversource Gas Company of Massachusetts (EGMA) (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.4 million electric, natural gas and water customers through ten regulated utilities in Connecticut, Massachusetts and New Hampshire. On October 9, 2020, Eversource acquired certain assets and liabilities that comprised the NiSource Inc. (NiSource) natural gas distribution business in Massachusetts, which was previously doing business as Columbia Gas of Massachusetts (CMA), pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp. The cash purchase price was $1.1 billion, plus a working capital amount of $68.6 million, as finalized in the first quarter of 2021. Eversource's consolidated financial information includes the results of the acquisition of the assets of CMA beginning on October 9, 2020. See Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," for further information. Eversource, CL&P, NSTAR Electric and PSNH are reporting companies under the Securities Exchange Act of 1934. Eversource Energy is a public utility holding company under the Public Utility Holding Company Act of 2005. Arrangements among the regulated electric companies and other Eversource companies, outside agencies and other utilities covering interconnections, interchange of electric power and sales of utility property are subject to regulation by the FERC. Eversource's regulated companies are subject to regulation of rates, accounting and other matters by the FERC and/or applicable state regulatory commissions (the PURA for CL&P, Yankee Gas and Aquarion, the DPU for NSTAR Electric, NSTAR Gas, EGMA and Aquarion, and the NHPUC for PSNH and Aquarion). CL&P, NSTAR Electric and PSNH furnish franchised retail electric service in Connecticut, Massachusetts and New Hampshire, respectively. NSTAR Gas and EGMA are engaged in the distribution and sale of natural gas to customers within Massachusetts and Yankee Gas is engaged in the distribution and sale of natural gas to customers within Connecticut. Aquarion is engaged in the collection, treatment and distribution of water in Connecticut, Massachusetts and New Hampshire. CL&P, NSTAR Electric and PSNH's results include the operations of their respective distribution and transmission businesses. The distribution business also includes the results of NSTAR Electric's solar power facilities. Eversource Service, Eversource's service company, and several wholly-owned real estate subsidiaries of Eversource, provide support services to Eversource, including its regulated companies. B. Basis of Presentation The consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying consolidated financial statements of Eversource, NSTAR Electric and PSNH and the financial statements of CL&P are herein collectively referred to as the "financial statements." The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Eversource consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements. Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method. In accordance with accounting guidance on noncontrolling interests in consolidated financial statements, the Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric, which are not owned by Eversource or its consolidated subsidiaries and are not subject to mandatory redemption, have been presented as noncontrolling interests in the financial statements of Eversource. The Preferred Stock of CL&P and the Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities and permanent shareholders' equity on the balance sheets of Eversource, CL&P and NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR Electric Boards of Directors, respectively, should certain conditions exist, such as if preferred dividends are in arrears for a specified amount of time. The Net Income reported in the statements of income and cash flows represents net income prior to apportionment to noncontrolling interests, which is represented by dividends on preferred stock of CL&P and NSTAR Electric. Eversource's utility subsidiaries' electric, natural gas and water distribution and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information. COVID-19 has adversely affected customers, workers and the U.S. economy. We provide a critical service to our customers and have taken extensive measures to maintain its safety and reliability. We continue to address the impacts of the COVID-19 pandemic and how the related developments affect Eversource. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses. See Note 1F, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for an evaluation of the allowance for doubtful accounts as of December 31, 2021 in light of the COVID-19 pandemic. As of December 31, 2021, we did not identify indicators or triggering events for impairments to our goodwill, long-lived assets, available-for-sale debt securities, or equity method investment carrying values. Certain reclassifications of prior year data were made in the accompanying financial statements to conform to the current year presentation. As of December 31, 2021 and 2020, Eversource's carrying amount of goodwill was $4.48 billion and $4.45 billion, respectively. Eversource performs an assessment for possible impairment of its goodwill at least annually. Eversource completed its annual goodwill impairment assessment for each of its reporting units as of October 1, 2021 and determined that no impairment exists. See Note 25, "Goodwill," for further information. C. Accounting Standards Accounting Standards Recently Adopted: On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The ASU did not have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric and PSNH. D. Impairment of Northern Pass Transmission Northern Pass was Eversource's planned 1,090 MW HVDC transmission line that would have interconnected from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. As a result of a final decision received on July 19, 2019 from the New Hampshire Supreme Court, whereby the court denied Northern Pass’ appeal and affirmed the NHSEC’s denial of Northern Pass’ siting application on NPT, Eversource concluded that construction of NPT was no longer probable and that there was no constructive path forward for the project. In 2019, Eversource terminated the project and permanently abandoned any further development. As a result, substantially all of the capitalized project costs, which totaled $318 million, certain of which were subject to cost reimbursement agreements, were impaired. Based on the conclusion that the construction of Northern Pass was no longer probable, Eversource recorded an impairment charge in 2019 for all of the project costs associated with Northern Pass, which were primarily engineering design, siting, permitting and legal costs, along with appropriate allowances for funds used during construction, and recognized a receivable for certain cost reimbursement agreements. Additionally, Eversource recorded an impairment charge associated with the land acquired to construct Northern Pass in order to recognize the land at its estimated fair value based on assessed values and transaction costs. In total, this resulted in a pre-tax impairment charge of $239.6 million within Operating Income on the statement of income for the year ended December 31, 2019 and was reflected in the Electric Transmission segment. The after-tax impact of the impairment charge was $204.4 million, or $0.64 per share, after giving effect to the estimated fair value of the related land, reimbursement agreements, and the impact of expected income tax benefits associated with the impairment charge. As a result of the decision to terminate the NPT project and permanently abandon any further development, Eversource does not expect any future cash expenditures associated with this project. E. Cash Cash includes cash on hand. At the end of each reporting period, any overdraft amounts are reclassified from Cash to Accounts Payable on the balance sheets. F. Allowance for Uncollectible Accounts Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs, and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts). Receivables are presented net of expected credit losses at estimated net realizable value by maintaining an allowance for uncollectible accounts. The current expected credit loss (CECL) model, which was implemented on January 1, 2020 (ASU 2016-13) is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded. The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, and management's assessment of collectability from customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible. As of December 31, 2021, management evaluated the adequacy of the allowance for uncollectible accounts in light of the evolving COVID-19 pandemic. This evaluation included an analysis of collection and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the length of the moratorium on disconnections in Connecticut and Massachusetts, and the economic slowdown resulting from the COVID-19 pandemic. In Connecticut, the moratorium on disconnections of commercial and non-hardship residential customers ended in June 2021 and September 2021, respectively, but is still in place for hardship residential customers. In Massachusetts, the moratorium on disconnections of commercial customers and residential customers ended in September 2020 and July 2021, respectively. Disconnection activities have resumed after these moratoria have expired, which has resulted in recent improved collection experience, more customers applying for, and receiving, hardship status, and higher write-offs of aged receivable amounts. On July 7, 2021, the NHPUC issued an order to New Hampshire utilities that concluded that recovery of incremental bad debt or waived late fees related to the COVID-19 pandemic would be addressed in a future rate case to the extent those costs are relevant at that time. As a result of the order, PSNH removed its $0.6 million deferral of net incremental COVID-19 costs in 2021. In New Hampshire, the moratorium on disconnections of non-hardship residential and commercial customers ended in late 2020 and for hardship residential customers ended in May 2021 and PSNH has resumed disconnection activities, which has resulted in improved collection of outstanding customer receivable balances. Based upon the evaluation performed, for the year ended December 31, 2021, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $24.1 million for Eversource (increase of $20.1 million for CL&P and $6.6 million at our natural gas businesses, and decrease of $1.3 million at NSTAR Electric). The COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs at our Connecticut and Massachusetts utilities or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. As of December 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $55.3 million at Eversource ($23.9 million at CL&P, $9.0 million at NSTAR Electric, and $21.4 million at our natural gas businesses). Based on the status of our COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in the jurisdictions in which we operate, we believe our state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. Management concluded that the reserve balance as of December 31, 2021 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments. The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows NSTAR Electric, NSTAR Gas and EGMA to recover in rates, amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance. The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment is as follows:
| Eversource |  | CL&P |  | NSTAR Electric |  | PSNH
(Millions of Dollars) | Hardship Accounts |  | Retail (Non-Hardship), Wholesale, and Other |  | Total Allowance |  | Hardship Accounts |  | Retail (Non-Hardship), Wholesale, and Other |  | Total Allowance |  | Hardship Accounts |  | Retail (Non-Hardship), Wholesale, and Other |  | Total Allowance |  | Total Allowance
Balance as of January 1, 2020 | $ | 143.3 |  |  | $ | 81.5 |  |  | $ | 224.8 |  |  | $ | 80.1 |  |  | $ | 17.2 |  |  | $ | 97.3 |  |  | $ | 43.9 |  |  | $ | 31.5 |  |  | $ | 75.4 |  |  | $ | 10.5 |
ASU 2016-13 Implementation Impact on January 1, 2020 | 21.6 |  |  | 2.2 |  |  | 23.8 |  |  | 21.3 |  |  | 0.9 |  |  | 22.2 |  |  | (1.6) |  |  | 0.3 |  |  | (1.3) |  |  | 0.3 |
Increase due to CMA acquisition | — |  |  | 24.2 |  |  | 24.2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Uncollectible Expense (1) | — |  |  | 53.5 |  |  | 53.5 |  |  | — |  |  | 12.9 |  |  | 12.9 |  |  | — |  |  | 15.3 |  |  | 15.3 |  |  | 5.2 |
Uncollectible Costs Deferred (2) | 43.1 |  |  | 53.9 |  |  | 97.0 |  |  | 38.2 |  |  | 10.8 |  |  | 49.0 |  |  | (1.7) |  |  | 26.4 |  |  | 24.7 |  |  | 7.4 |
Write-Offs | (14.7) |  |  | (63.3) |  |  | (78.0) |  |  | (11.9) |  |  | (17.8) |  |  | (29.7) |  |  | (0.9) |  |  | (26.3) |  |  | (27.2) |  |  | (6.9) |
Recoveries Collected | 1.5 |  |  | 12.1 |  |  | 13.6 |  |  | 1.4 |  |  | 4.3 |  |  | 5.7 |  |  | — |  |  | 4.7 |  |  | 4.7 |  |  | 0.7 |
Balance as of December 31, 2020 | $ | 194.8 |  |  | $ | 164.1 |  |  | $ | 358.9 |  |  | $ | 129.1 |  |  | $ | 28.3 |  |  | $ | 157.4 |  |  | $ | 39.7 |  |  | $ | 51.9 |  |  | $ | 91.6 |  |  | $ | 17.2 |
Uncollectible Expense (1) | — |  |  | 60.9 |  |  | 60.9 |  |  | — |  |  | 13.5 |  |  | 13.5 |  |  | — |  |  | 16.6 |  |  | 16.6 |  |  | 13.1 |
Uncollectible Costs Deferred (2) | 51.9 |  |  | 58.7 |  |  | 110.6 |  |  | 32.3 |  |  | 25.5 |  |  | 57.8 |  |  | 4.3 |  |  | 15.8 |  |  | 20.1 |  |  | 3.1 |
Write-Offs | (22.0) |  |  | (107.7) |  |  | (129.7) |  |  | (18.0) |  |  | (36.2) |  |  | (54.2) |  |  | (0.7) |  |  | (36.3) |  |  | (37.0) |  |  | (10.0) |
Recoveries Collected | 1.4 |  |  | 15.3 |  |  | 16.7 |  |  | 1.2 |  |  | 5.6 |  |  | 6.8 |  |  | — |  |  | 5.7 |  |  | 5.7 |  |  | 0.9 |
Balance as of December 31, 2021 | $ | 226.1 |  |  | $ | 191.3 |  |  | $ | 417.4 |  |  | $ | 144.6 |  |  | $ | 36.7 |  |  | $ | 181.3 |  |  | $ | 43.3 |  |  | $ | 53.7 |  |  | $ | 97.0 |  |  | $ | 24.3 |
(1) Uncollectible expense associated with customer and other accounts receivable is included in Operations and Maintenance expense on the statements of income. For the year ended December 31, 2019, uncollectible expense included in Operations and Maintenance Expense was $63.4 million for Eversource, $15.9 million for CL&P, $25.1 million for NSTAR Electric and $6.7 million for PSNH. (2) These expected credit losses are deferred as regulatory costs on the balance sheets, as these amounts are ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to COVID-19 and uncollectible energy supply costs. G. Transfer of Energy Efficiency Loans CL&P transferred a portion of its energy efficiency customer loan portfolio to outside lenders in order to make additional loans to customers. CL&P remains the servicer of the loans and will transmit customer payments to the lenders, with a maximum amount outstanding under this program of $55 million. The amounts of the loans are included in Accounts Receivable, Net and Other Long-Term Assets, and are offset by Other Current Liabilities and Other Long-Term Liabilities on CL&P’s balance sheet. The current and long-term portions totaled $10.5 million and $8.3 million, respectively, as of December 31, 2021, and $12.9 million and $9.5 million, respectively, as of December 31, 2020. H. Fuel, Materials, Supplies and REC Inventory Fuel, Materials, Supplies and REC Inventory include natural gas inventory, materials and supplies purchased primarily for construction or operation and maintenance purposes, and RECs. Inventory is valued at the lower of cost or net realizable value. RECs are purchased from suppliers of renewable sources of generation and are used to meet state mandated Renewable Portfolio Standards requirements. The carrying amounts of fuel, materials and supplies, and RECs, which are included in Current Assets on the balance sheets, were as follows:
| As of December 31,
| 2021 |  | 2020
(Millions of Dollars) | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH |  | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH
Fuel | $ | 56.2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 38.2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Materials and Supplies | 148.9 |  |  | 60.3 |  |  | 55.0 |  |  | 25.2 |  |  | 151.3 |  |  | 57.9 |  |  | 62.1 |  |  | 22.5 |
RECs | 62.4 |  |  | — |  |  | 61.7 |  |  | 0.7 |  |  | 76.1 |  |  | — |  |  | 71.8 |  |  | 4.3 |
Total | $ | 267.5 |  |  | $ | 60.3 |  |  | $ | 116.7 |  |  | $ | 25.9 |  |  | $ | 265.6 |  |  | $ | 57.9 |  |  | $ | 133.9 |  |  | $ | 26.8 |
Fair Value Measurements Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" (normal) and to the marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, and AROs, and in the valuation of the acquisition of CMA’s assets in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs. Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis. The levels of the fair value hierarchy are described below: Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable. Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products. Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy. Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," Note 6, "Investments in Unconsolidated Affiliates," Note 7, "Asset Retirement Obligations," Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," Note 15, "Fair Value of Financial Instruments," Note 24, "Acquisition of Assets of Columbia Gas of Massachusetts," and Note 25, “Goodwill,” to the financial statements. J. Derivative Accounting Many of the electric and natural gas companies' contracts for the purchase and sale of energy or energy-related products are derivatives. The accounting treatment for energy contracts entered into varies and depends on the intended use of the particular contract and on whether or not the contract is a derivative. The application of derivative accounting is complex and requires management judgment in the following respects: identification of derivatives and embedded derivatives, election and designation of a contract as normal, and determination of the fair value of derivative contracts. All of these judgments can have a significant impact on the financial statements. The judgment applied in the election of a contract as normal (and resulting accrual accounting) includes the conclusion that it is probable at the inception of the contract and throughout its term that it will result in physical delivery of the underlying product and that the quantities will be used or sold by the business in the normal course of business. If facts and circumstances change and management can no longer support this conclusion, then a contract cannot be considered normal, accrual accounting is terminated, and fair value accounting is applied prospectively. The fair value of derivative contracts is based upon the contract terms and conditions and the underlying market price or fair value per unit. When quantities are not specified in the contract, the Company determines whether the contract has a determinable quantity by using amounts referenced in default provisions and other relevant sections of the contract. The fair value of derivative assets and liabilities with the same counterparty are offset and recorded as a net derivative asset or liability on the balance sheets. Regulatory assets or regulatory liabilities are recorded to offset the fair values of derivative contracts related to energy and energy-related products, as contract settlements are recovered from, or refunded to, customers in future rates. All changes in the fair value of derivative contracts are recorded as regulatory assets or liabilities and do not impact net income. For further information regarding derivative contracts, see Note 4, "Derivative Instruments," to the financial statements. K. Operating Expenses Costs related to fuel and natural gas included in Purchased Power, Fuel and Transmission on the statements of income were as follows:
| For the Years Ended December 31,
(Millions of Dollars) | 2021 |  | 2020 |  | 2019
Eversource - Natural Gas and Fuel | $ | 718.6 |  |  | $ | 464.2 |  |  | $ | 462.1 |
Allowance for Funds Used During Construction AFUDC represents the cost of borrowed and equity funds used to finance construction and is included in the cost of the electric, natural gas and water companies' utility plant on the balance sheet. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Interest Expense, and the AFUDC related to equity funds is recorded as Other Income, Net on the statements of income. AFUDC costs are recovered from customers over the service life of the related plant in the form of increased revenue collected as a result of higher depreciation expense. The average AFUDC rate is based on a FERC-prescribed formula using the cost of a company's short-term financings and capitalization (preferred stock, long-term debt and common equity), as appropriate. The average rate is applied to average eligible CWIP amounts to calculate AFUDC. AFUDC costs and the weighted-average AFUDC rates were as follows:
Eversource | For the Years Ended December 31,
(Millions of Dollars, except percentages) | 2021 |  | 2020 |  | 2019
Borrowed Funds | $ | 18.4 |  |  | $ | 23.7 |  |  | $ | 25.6 |
Equity Funds | 37.3 |  |  | 42.0 |  |  | 45.0 |
Total AFUDC | $ | 55.7 |  |  | $ | 65.7 |  |  | $ | 70.6 |
Average AFUDC Rate | 4.2 | % |  | 5.0 | % |  | 5.4 | %
| For the Years Ended December 31,
| 2021 |  | 2020 |  | 2019
(Millions of Dollars, except percentages) | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH
Borrowed Funds | $ | 2.9 |  |  | $ | 9.0 |  |  | $ | 0.8 |  |  | $ | 6.6 |  |  | $ | 9.1 |  |  | $ | 2.1 |  |  | $ | 7.1 |  |  | $ | 10.4 |  |  | $ | 2.8 |
Equity Funds | 7.7 |  |  | 20.4 |  |  | 1.6 |  |  | 13.8 |  |  | 21.5 |  |  | 4.2 |  |  | 13.2 |  |  | 19.8 |  |  | 3.4 |
Total AFUDC | $ | 10.6 |  |  | $ | 29.4 |  |  | $ | 2.4 |  |  | $ | 20.4 |  |  | $ | 30.6 |  |  | $ | 6.3 |  |  | $ | 20.3 |  |  | $ | 30.2 |  |  | $ | 6.2 |
Average AFUDC Rate | 5.0 | % |  | 4.9 | % |  | 2.5 | % |  | 5.9 | % |  | 5.7 | % |  | 4.7 | % |  | 6.3 | % |  | 5.7 | % |  | 4.6 | %
M. Other Income, Net The components of Other Income, Net on the statements of income were as follows:
Eversource | For the Years Ended December 31,
(Millions of Dollars) | 2021 |  | 2020 |  | 2019
Pension, SERP and PBOP Non-Service Income Components (1) | $ | 84.4 |  |  | $ | 44.4 |  |  | $ | 31.3 |
AFUDC Equity | 37.3 |  |  | 42.0 |  |  | 45.0 |
Equity in Earnings of Unconsolidated Affiliates (2) | 14.2 |  |  | 14.2 |  |  | 42.2 |
Investment (Loss)/Income | (0.2) |  |  | 1.1 |  |  | 0.8 |
Interest Income | 25.6 |  |  | 4.8 |  |  | 12.8 |
Other | — |  |  | 2.1 |  |  | 0.7 |
Total Other Income, Net | $ | 161.3 |  |  | $ | 108.6 |  |  | $ | 132.8 |
| For the Years Ended December 31,
| 2021 |  | 2020 |  | 2019
(Millions of Dollars) | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH
Pension, SERP and PBOP Non-Service Income Components (1) | $ | 15.2 |  |  | $ | 40.2 |  |  | $ | 10.3 |  |  | $ | 3.8 |  |  | $ | 29.3 |  |  | $ | 7.0 |  |  | $ | 0.5 |  |  | $ | 23.5 |  |  | $ | 4.9 |
AFUDC Equity | 7.7 |  |  | 20.4 |  |  | 1.6 |  |  | 13.8 |  |  | 21.5 |  |  | 4.2 |  |  | 13.2 |  |  | 19.8 |  |  | 3.4 |
Equity in Earnings of Unconsolidated Affiliates | — |  |  | 0.4 |  |  | — |  |  | — |  |  | 0.4 |  |  | — |  |  | 0.1 |  |  | 0.7 |  |  | — |
Investment Income/(Loss) | 1.3 |  |  | 0.1 |  |  | 0.1 |  |  | 1.1 |  |  | (0.8) |  |  | 0.1 |  |  | 2.3 |  |  | (0.4) |  |  | 0.3 |
Interest Income | 5.9 |  |  | 13.4 |  |  | 2.4 |  |  | 2.0 |  |  | 0.9 |  |  | 2.4 |  |  | 1.5 |  |  | 0.7 |  |  | 10.5 |
Other | 0.1 |  |  | 0.3 |  |  | 0.2 |  |  | 0.1 |  |  | 0.7 |  |  | 0.1 |  |  | (0.1) |  |  | 0.3 |  |  | 0.1 |
Total Other Income, Net | $ | 30.2 |  |  | $ | 74.8 |  |  | $ | 14.6 |  |  | $ | 20.8 |  |  | $ | 52.0 |  |  | $ | 13.8 |  |  | $ | 17.5 |  |  | $ | 44.6 |  |  | $ | 19.2 |
(1) See Note 11A, "Employee Benefits – Pension Benefits and Postretirement Benefits Other Than Pension," for the components of net periodic benefit cost for the Pension, SERP and PBOP Plans. The non-service related components of pension, SERP and PBOP benefit costs, after capitalization or deferral, are presented as non-operating income and recorded in Other Income, Net on the statements of income. (2) Equity in earnings includes $2.1 million and $20.4 million of pre-tax unrealized gains for the years ended December 31, 2021 and 2019, respectively, and $2.4 million of primarily realized gains for the year ended December 31, 2020, associated with an equity method investment in a renewable energy fund. Equity in earnings of unconsolidated affiliates includes an other-than-temporary impairment of $2.8 million related to a write-off of an investment within a renewable energy fund for the year ended December 31, 2020. See Note 6, "Investments in Unconsolidated Affiliates," for further information. N. Other Taxes Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are recorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
| For the Years Ended December 31,
(Millions of Dollars) | 2021 |  | 2020 |  | 2019
Eversource | $ | 181.9 |  |  | $ | 170.6 |  |  | $ | 163.1 |
CL&P | 158.1 |  |  | 149.9 |  |  | 141.1 |
Separate from above were amounts recorded as Taxes Other Than Income Taxes at CL&P related to the remittance to the State of Connecticut of energy efficiency funds collected from customers of $21.4 million in 2019. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. These amounts were recorded separately, with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the Eversource and CL&P statements of income. As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income. O. Supplemental Cash Flow Information
Eversource (Millions of Dollars) | As of and For the Years Ended December 31,
2021 |  | 2020 |  | 2019
Cash Paid During the Year for: |  |  |  |  |
Interest, Net of Amounts Capitalized | $ | 568.7 |  |  | $ | 518.0 |  |  | $ | 532.4 |
Income Taxes | 121.6 |  |  | 48.9 |  |  | 56.0 |
Non-Cash Investing Activities: |  |  |  |  |
Plant Additions Included in Accounts Payable (As of) | 467.9 |  |  | 367.2 |  |  | 379.4 |
| As of and For the Years Ended December 31,
| 2021 |  | 2020 |  | 2019
(Millions of Dollars) | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH
Cash Paid During the Year for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest, Net of Amounts Capitalized | $ | 161.5 |  |  | $ | 141.6 |  |  | $ | 56.5 |  |  | $ | 149.0 |  |  | $ | 129.4 |  |  | $ | 54.5 |  |  | $ | 144.6 |  |  | $ | 121.9 |  |  | $ | 56.9 |
Income Taxes | 38.4 |  |  | 74.2 |  |  | 51.1 |  |  | 10.9 |  |  | 110.7 |  |  | 34.2 |  |  | 80.6 |  |  | 77.9 |  |  | 3.4 |
Non-Cash Investing Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Plant Additions Included in Accounts Payable (As of) | 110.6 |  |  | 120.0 |  |  | 68.7 |  |  | 101.8 |  |  | 103.2 |  |  | 33.3 |  |  | 111.3 |  |  | 116.4 |  |  | 49.9 |
Beginning in 2019, Eversource began issuing treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares. The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows:
| As of December 31,
| 2021 |  | 2020
(Millions of Dollars) | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH |  | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH
Cash as reported on the Balance Sheets | $ | 66.8 |  |  | $ | 55.8 |  |  | $ | 0.7 |  |  | $ | — |  |  | $ | 106.6 |  |  | $ | 90.8 |  |  | $ | 0.1 |  |  | $ | 0.1 |
Restricted cash included in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Special Deposits | 78.2 |  |  | 18.7 |  |  | 17.4 |  |  | 31.4 |  |  | 73.6 |  |  | 8.7 |  |  | 17.2 |  |  | 36.8 |
Marketable Securities | 31.3 |  |  | 0.3 |  |  | 0.1 |  |  | 0.5 |  |  | 41.2 |  |  | 0.3 |  |  | 0.1 |  |  | 0.6 |
Other Long-Term Assets | 44.7 |  |  | — |  |  | — |  |  | 3.2 |  |  | 43.6 |  |  | — |  |  | — |  |  | 2.1 |
Cash and Restricted Cash as reported on the Statements of Cash Flows | $ | 221.0 |  |  | $ | 74.8 |  |  | $ | 18.2 |  |  | $ | 35.1 |  |  | $ | 265.0 |  |  | $ | 99.8 |  |  | $ | 17.4 |  |  | $ | 39.6 |
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, a customer assistance fund at CL&P established under the terms of the PURA-approved October 2021 settlement agreement, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations. Restricted cash included in Other Long-Term Assets includes $41.5 million related to an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley, and an additional energy efficiency program established under the terms of the EGMA 2020 settlement agreement. P. Related Parties Eversource Service, Eversource's service company, provides centralized accounting, administrative, engineering, financial, information technology, legal, operational, planning, purchasing, tax, and other services to Eversource's companies. The Rocky River Realty Company and Properties, Inc., two other Eversource subsidiaries, construct, acquire or lease some of the property and facilities used by Eversource's companies. As of both December 31, 2021 and 2020, CL&P, NSTAR Electric and PSNH had long-term receivables from Eversource Service in the amounts of $25.0 million, $5.5 million and $3.8 million, respectively, which were included in Other Long-Term Assets on the balance sheets. These amounts related to the funding of investments held in trust by Eversource Service in connection with certain postretirement benefits for CL&P, NSTAR Electric and PSNH employees and have been eliminated in consolidation on the Eversource financial statements. Included in the CL&P, NSTAR Electric and PSNH balance sheets as of December 31, 2021 and 2020 were Accounts Receivable from Affiliated Companies and Accounts Payable to Affiliated Companies relating to transactions between CL&P, NSTAR Electric and PSNH and other subsidiaries that are wholly-owned by Eversource. These amounts have been eliminated in consolidation on the Eversource financial statements. The Eversource Energy Foundation is an independent not-for-profit charitable entity and is not included in the consolidated financial statements of Eversource as the Company does not have title to, and cannot receive contributions back from, the Eversource Energy Foundation's assets. Eversource did not make any contributions to the Eversource Energy Foundation in 2021 and 2019, and made contributions of $6.4 million in 2020.

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