Transmission Business ReviewWall Street Access/Berenson & Co.

JANUARY 11, 2007

Lee Olivier – President NU Transmission Group

Energy / Growth / Leadership

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Safe Harbor Provisions

This presentation contains statements concerning NU’s expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, a listener can identify these forward-looking statements by words such as “estimate”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “forecast”, “should”, “could”, and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in the forward-looking statements. Factors that may cause actual results to differ materially from those included in the forward-looking statements include, but are not limited to, actions by state and federal regulatory bodies; competition and industry restructuring; changes in economic conditions; changes in weather patterns; changes in laws, regulations or regulatory policy; expiration or initiation of significant energy supply contracts; changes in levels of capital expenditures; developments in legal or public policy doctrines; technological developments; volatility in electric and natural gas commodity markets; effectiveness of our risk management policies and procedures; changes in accounting standards and financial reporting regulations; fluctuations in the value of electricity positions; the methods, timing and results of the disposition of competitive businesses; actions of rating agencies; terrorist attacks on domestic energy facilities; and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in our reports to the Securities and Exchange Commission. We undertake no obligation to update the information contained in any forward-looking statements to reflect developments or circumstances occurring after the statement is made.

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Agenda for Today

1. National Transmission Issues and Trends2. New England Overview3. NU Transmission Update

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About Northeast Utilities Transmission…

Operating Company

Transmission Circuit Miles

Transmission Substations

Projected 12/31/06

Rate Base($ Millions)

Projected 12/31/11

Rate Base($ Millions)

CL&P 1,766 103 862 2,428

WMECO 489 36 76 245

PSNH 1,003 52 134 322

Total NU 3,258 191 1,072 2,995

Comparative Ranking of NU (miles) • Largest in New England

• 4th largest in 11 northeast states

• Nearly 2.4 million retail customers

• About 280 miles of new transmission planned

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Transmission Will Grow to Become a Bigger Portion of NU’s Rate Base

Transmission to comprise much larger share of total rate base

2005 Rate Base Composition 2005 Rate Base: $3.3 billion

18%

14%

68% TransmissionGasDist. & Reg. Generation

2011E Rate Base Composition 2011E Rate Base: $7.9 billion

38%

9%

53%

TransmissionGasDist. & Reg. Generation

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The August 2003 Blackout …

Illustrative only

… Led Congress to Pass the Energy Policy Act of 2005

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Implementation of Mandatory Reliability Standards Creates Potential Challenges and Opportunities

Challenges: Must demonstrate compliance with standards through the ERO

and Regional Entities or face civil penalties Higher costs associated with compliance Reputational and financial risk should there be poor performance

Opportunities: Small transmission operators, or those with limited management

talent or constrained capital may wish to exit this business, thereby leading to some industry consolidation

Regulatory changes may create opportunities for top-performing utilities – those with the financial and organizational resources to mitigate risks

Additional capital investment in areas with identified reliability needs may be required

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What Will it Take to Build New Transmission?

Who will make the investments needed? Merchant transmission – disappointing track record to date due to high risk of

cost recovery Transcos – good business model, however comprising only 3% of all

transmission Investor-owned utilities – represent the lion’s share of the assets

0123456789$ Billions

(inflation adjusted)

Annual Transmission Investments (2005$)

Source: 1976-2005 EEI Statistical Yearbook/2005 Data2006-2009 EEI Electric Transmission & Capital Budget and Forecast Survey

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Our View on the Necessary Enablers for New Transmission

Regulatory certainty around the following:

Clear, enforceable national and regional reliability standards

An independent regional planning process that integrates and prioritizes needs

Timely, efficient siting process with federal back stop siting as appropriate

Well defined cost allocation rules

Level and timing of financial incentives

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New England is Seeing Significant Investment in Transmission

ISO-New England 2006 Regional System Plan – Highlights Complete transmission projects ($3.4 billion in reliability projects) Other RSP initiatives:

Need for new generation resources by 2009 Encourage more demand response and energy efficiency Enhance fuel diversity Improve reliability of natural gas resources Develop new gas supplies Improve monitoring and control of the grid Improve coordination with neighboring systems Comply with ERO and regional reliability standards

7% NGRID

4% Bangor Hydro 1% Central Maine Power

59% NU

12% Vermont

9% UI

8% NStar

Source: ISO-New England 2006 Regional System Plan

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Status of Connecticut Transmission Infrastructure

Within Connecticut transmission constraints exist that limit the flow of power from external sources

Significant transmission enhancements are under construction in SW Connecticut to meet that area’s needs

Future projects are in the planning phase to address power flows into Connecticut

345-kV Lines

Norwalk-Stamford

Southwest Connecticut

Connecticut

Boundaries of Major Constraints

Power Moves into Connecticut Power Moves into Connecticut and SWCT from MA and RIand SWCT from MA and RI

345-kV Lines under construction

Percentage of Peak Load that Could Be Served by Transmission Imports

0%

20%

40%

60%

80%

100%

NH VT RI MA ME CT

With import capability of only 2,500 MW, CT is the

least interconnected state in New England.

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Four Major SW Connecticut Projects – A $1.65 Billion Investment

SWCT improvements have been a top priority in each of ISO-NE’s last four regional transmission expansion plans. Our four major

projects there total about $1.65 billion in investment.

50% of CT Load

Bethel-Norwalk 345 kV Underground& Overhead$350 Million 21 miles 345kV

(56% underground)

10 miles 115kV (100% underground)

Completed October 2006 at a cost of $340 million Middletown-Norwalk 345 kV

Underground & Overhead$1,047 Million (NU Share)Glenbrook Cables

115 kV underground$183 Million 9 miles 115kV underground

Projected in-service date: 2008

Under contract – construction under way, 10% complete

Long Island Cable138 kV cross sound$72 Million (NU share) 11 miles 138kV submarine cable

Joint project with LIPA

Projected in-service date: 2008

Under contract – cable being manufactured

69 miles 345kV (35% underground)

57 miles 115kV (1% underground)

Joint project with United Illuminating

Projected in-service date: 2009

Construction under way, 15% complete

COMPLETE

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Southern New England Transmission Reinforcement Projects Are the Next Major Undertaking

Planning

Construction

Siting

2005 2006 2007 2008 2009 2010 2011 2012 2013

The SNETR projects solve four area problems:

1. Interstate transfer capability

2. Connecticut East-West transfer capability

3. Springfield Reliability

4. New England East-West transfer capability

2006 Activities:

• Complete planning studies

• Analyze routing options

2007 Activities:

• Begin siting process in Connecticut and Massachusetts

• ISO-NE technical approval

1

4

3

2

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LUDLOW MILBURY

CARD

NORTHBLOOMFIELD

Rhode Island

Connecticut

Springfield

Interstate

FROSTBRIDGE

AGAWAM WEST FARNUM

KENT COUNTY

LAKE ROAD

We Have Selected the Southern New England Transmission Reinforcement Project Preferred Routes

The four components, identified to date, are:The four components, identified to date, are:

A Rhode Island Reliability Component

A CT East-West Reliability Component

A Springfield Reliability Component

An Interstate Reliability Component

Total Planning Grade Estimate:

$1.1 - $1.4 BillionPost-SNETR Import

Capability is expected to grow to

3600MW

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Under Construction

ISO-NE Approved

Future RegionalSystem PlanProjects

Legend

Complete

Manchester-Hopewell

Oxford Substation

Fitzwilliam Substation

Barbour Hill Substation

Frost Bridge Corridor

Gosling Road Substation

Berkshire Solution

Springfield Solution

Southern New England Transmission Reinforcement (SNETR)

Deerfield Autotransformer

Windsor Substation

Southeast CT Solution

Weare Substation

Madbury Capacitor

Scobie Substation

Tioga

Woodland Capacitor

Pleasant Capacitor

Haddam AutotransformerBethel - Norwalk

Glenbrook Statcom Shunock Substation

Glenbrook Cables

White Mountain Upgrade

Northeastern Connecticut

Middletown - Norwalk

Long Island Replacement Cable (LIRC)

Plumtree - Triangle

Norwalk Harbor Substation Controls

Scobie – Hudson Line

Timber Swamp

NU is a Major Part of New England’s Transmission Infrastructure Upgrade

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2006 NU Transmission Project Performance Summary – Excellence, Execution

Project construction milestones were on-time and spending was on-budget

Capital spending of approximately $470 million in 2006

Plant-in-service totaling $390 million -- $10 million greater than budget

We have maintained excellent safety and environmental records

We have completed and energized the $340 million Bethel-Norwalk project as of October 12, $10 million under budget

We have completed and energized the new $29 million Killingly substation in northeast Connecticut, $3 million under budget

Completion of projects will result in significant cost savings for customers

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The Next Five Years: Transmission Capital Expenditures

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Other

SNETR

Major CT

Historic Forecast$

Mill

ions

Up To $2.4 Billion

• The Southern New England Transmission Reinforcement family of projects is growing in scope and definition.

• Over the next three years, a high level of capital spending is associated with projects that have already received siting approval.

$1,062 Million $1.1 Billion of major CT projects in

2007-2011 forecast period; $1.65 billion

in total

SNETR family of projects estimated

at $710 million during the 2007-

2011 forecast period

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Looking Beyond the Five-Year Horizon

The Southern New England Transmission Reinforcement family of projects will be our next major undertaking

ISO-NE’s Regional System Plan has identified longer-term projects within our franchise ISO-NE is planning beyond the 30 GW grid to a 50 GW grid Providing added transfer capacity between Maine and New Hampshire Strengthening ties and transfer capability between southern New

Hampshire and Massachusetts

FERC/NERC mandatory reliability standards may create new projects

Replacement of aging equipment will be increasingly important

ISO-NE is evaluating stronger interconnections with Canada

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ISO-NE Forecasts Show Surplus Generation in the Eastern Provinces of Canada and Insufficient Generation in New England, New York and Ontario

Source: ISO-NE Regional System Plan (RSP) 2005 Forecast for 2014

-3,511 MW

+10,984 MW+2,800 MW

+196 MW

-2,070 MW

-4,224 MW

Ontario

Québec

Newfoundland& Labrador

NewYork

Maritimes

SURPLUS

DEFICIENCY

Connecticut -828 MW

Imports of Renewable Power from Canada May Create the Potential for Additional Investment in Transmission

Existing DC interconnection with Hydro Quebec

NewEngland

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New England Return On Equity

FERC decision on New England transmission ROE issued on October 31, 2006

Base ROE set at 10.2% for the period 2/1/2005 through 10/31/2006 and 10.9% beyond that

Incentive adders include: 50 basis points for joining an RTO 100 basis points for new transmission identified by ISO-NE within its regional

system planning process November 30th Request for Rehearing by New England transmission

owners – apparent 30 basis point error in base ROE If successful with our FERC Rehearing Request:

Our going forward ROE on the large majority of NU’s transmission capital program will be at 12.7%

As new investment enters rate base our weighted ROE will rise – from approximately 12.1% blended in 2007 to about 12.45% by the end of the forecast period