Company: CNLHP
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000072741-25-000007
Chunk: 405

Company: CONNECTICUT LIGHT & POWER CO
Filing Date: 2025-02-14
Form: 10-K
Item: Item 8
Chunk 405
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 are Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution.  These reporting units are consistent with the operating segments underlying the reportable segments identified in Note 23, "Segment Information," to the financial statements.  In assessing goodwill for impairment, an entity is permitted to first assess qualitatively whether it is more likely than not that goodwill impairment exists as of the annual impairment test date.  If after performing the qualitative assessment it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value (including goodwill), then a quantitative goodwill impairment test is performed.  A quantitative impairment test is required only if it is concluded that it is more likely than not that a reporting unit’s carrying value may not be recoverable.  The quantitative assessment compares the estimated fair value of a reporting unit to its carrying amount, and to the extent the carrying amount exceeds the fair value, an impairment of goodwill is recognized for the excess up to the amount of goodwill allocated to the reporting unit.  A resulting write-down, if any, would be charged to Operating Expenses.   Eversource completed its annual goodwill impairment assessment for the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units as of October 1, 2024 and determined that no impairment existed.  The annual goodwill assessment included a qualitative evaluation of multiple factors that impact the fair value of the reporting units, including general, macroeconomic and market conditions, and entity-specific assumptions that affect the future cash flows of the reporting units.  Key considerations include discount rates, utility sector market performance and merger transaction multiples, the Company's share price and credit ratings, analyst reports, financial performance, cost and risk factors, internal estimates and projections of future cash flows and net income, long-term strategy, the timing and outcome of rate cases, and recent regulatory and legislative proceedings.In the fourth quarter of 2024, Eversource concluded that the likely sale of Aquarion at a loss resulted in the requirement to perform an interim goodwill impairment test for Water Distribution goodwill.  Eversource compared the estimated fair value of the business from the anticipated transaction to its carrying value.  Assumptions used in the valuation were the future cash flows from the sale, including approximately $140 million of estimated income tax impacts as a result of the transaction.  Based on the interim impairment test, Eversource recorded a goodwill impairment of $297 million to write down the carrying value of the water distribution reporting unit to its estimated fair value.