Company: CNLHP
Filing Date: 2025-08-04
Form Type: 10-Q
Source: 0001628280-25-037369
Chunk: 82

Company: CONNECTICUT LIGHT & POWER CO
Filing Date: 2025-08-04
Form: 10-Q
Item: Item 8
Chunk 82
---
 derivative assets and liabilities that Eversource elected to record net on the balance sheets.  These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.Derivative Contracts at Fair Value with Offsetting Regulatory AmountsCommodity Supply and Price Risk Management:  As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities.  CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI.  The combined capacities of these contracts as of June 30, 2025 and December 31, 2024 were 609 MW and 610 MW, respectively.  The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets. For the three months ended June 30, 2025 and 2024, there were losses of $0.3 million and $1.9 million, respectively.  For the six months ended June 30, 2025 and 2024, there were losses of $0.6 million and $2.9 million, respectively.  These changes in fair value associated with CL&P’s derivative contracts are deferred in Regulatory Assets on the balance sheet.NSTAR Electric is reviewing a significant anticipated power purchase obligation that is expected to be marked to market on the balance sheet as a material derivative liability in 2025.  The agreement for the purchase of clean energy and renewable energy attributes was entered into to satisfy Massachusetts legislation and is a 20-year contract with estimated total payments of $6.7 billion.  The resulting derivative liability is expected to be fully offset by a regulatory asset for recovery from NSTAR Electric’s customers.   Fair Value Measurements of Derivative InstrumentsThe fair value of derivative contracts utilizes both observable and unobservable inputs.  The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions related to exit price.  Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled capacity payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for