Company: CNLHP
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000072741-25-000007
Chunk: 214

Company: CONNECTICUT LIGHT & POWER CO
Filing Date: 2025-02-14
Form: 10-K
Item: Item 7
Chunk 214
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1 N/AN/A

Goodwill:  Goodwill is recognized on our balance sheet from previous mergers and acquisitions to the extent that the consideration paid exceeded the net fair value of the identified assets and liabilities acquired in each business combination.  We are required to test goodwill balances for impairment at least annually by considering the fair values of the reporting units, which requires us to use estimates and judgments.  Additionally, we monitor all relevant events and circumstances during the year to determine if an interim impairment test is required.  We have selected October 1st of each year as the annual goodwill impairment test date.  Goodwill impairment is deemed to exist if the carrying amount of a reporting unit exceeds its estimated fair value.  If goodwill were to be impaired, it would be written down in the current period to the extent of the impairment.  

We have identified our reporting units for purposes of allocating and testing goodwill as Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution.  The Electric Distribution and Electric Transmission reporting units include carrying values for the respective components of CL&P, NSTAR Electric and PSNH.  The Natural Gas Distribution reporting unit includes the carrying values of NSTAR Gas, Yankee Gas and EGMA.  The Water Distribution reporting unit includes the Aquarion water utility businesses.  As of December 31, 2024, goodwill was allocated to the reporting units as follows: $2.54 billion to Electric Distribution, $577 million to Electric Transmission, and $451 million to Natural Gas Distribution.  Goodwill allocated to Water Distribution of $663 million is classified as held for sale.

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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 we perform the qualitative assessment but determine it is more likely than not that a reporting unit’s fair value is less than its carrying amount, we perform a quantitative test to compare the fair value of the reporting unit to its carrying amount, including goodwill.  If the carrying amount of the reporting unit exceeds its fair value, we record an impairment loss as a reduction to goodwill and a charge to operating expenses, but the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. 

We performed the annual impairment assessment of goodwill as of October 1, 2024 for the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reporting units.  Our qualitative assessment included an evaluation of multiple factors that impact