1
Rating Agency MeetingsMarch 2012
2
Topics For Today
• Merger overview and update
• Regulatory update
• Business update
• Financial forecast
3
Company Attendees
• Jim Judge, SVP & Chief Financial Officer, NSTAR
• Jeff Kotkin, VP Investor Relations, NU
• Phil Lembo, VP & Treasurer, NSTAR
• Mike Ausere, VP Finance, NU
• Mark Mueller, Manager Financial Planning, NSTAR
• Emilie O’Neil, Director Corporate Finance & Cash Management, NSTAR
4
Merger Update
5
A Compelling Combination – Creates Largest Utility Company in New England
Larger, more diverse and better positioned company
Strong Balance Sheet and cash flows with enhanced business and financial profile
Best practice service quality capabilities to the largest customer base in New England
Highly experienced and complementary leadership team with proven track record
No premium or new debt issued in transaction NSTAR Electric Service Area
NSTAR Gas Service AreaNortheast Utilities Electric Service AreaNortheast Utilities Gas Service Area
ME
NY
PA
VT
NH
NJ
MA
RI
Combined Service Territory
• 3 million electric customers
• 500,000 natural gas customers
• 4,500 miles electric transmission
• 72,000 miles electric distribution
• 6,300 miles gas distribution
6
Key Merger Terms
Timing / Approvals: Expected to close by mid-April, 2012
Headquarters: Dual – Hartford and Boston
Consideration: 100% stock / 0% incremental debt
Exchange Ratio: 1.312 shares of Northeast Utilities per NSTAR share
Pro Forma Ownership: 56% Northeast Utilities shareholders 44% NSTAR shareholders
Pro Forma Dividend: At close, dividend increase for Northeast Utilities shareholders
Dividend parity for NSTAR shareholders
Governance: Chuck Shivery to be non-executive Chairman Tom May to be President and CEO 14 Board members
7 nominated by Northeast Utilities including Chuck Shivery 7 nominated by NSTAR including Tom May
7
Building A Larger, More Diverse and Better Positioned Regulated Utility Business
CT25%
FERC32%
NH12%
MA31%
Rate Base By State / Federal
Electric Generation
6%
Electric Distribution
52%
Gas Distribution
10%
Electric Transmission
32%
Rate Base By Business
Combined 2011 Rate Base: $12.4 billion
8
Management Organization Structure
Tom MayPresident &
Chief Executive Officer
Greg ButlerGeneral Counsel
David McHaleChief
Administrative Officer
Lee OlivierChief Operating
Officer
Christine Carmody
Human Resources
Jim JudgeChief Financial
Officer
Joe NolanCorporate Relations
9
Creates A Company That…
• Will focus on providing outstanding customer service
• Has diversified customer, economic and regulatory risks
• Invests in core regulated utility rate base; primarily transmission
• Is committed to strong credit quality, increasing cash flows and adequate liquidity
• Values a rigorous cost discipline and conservative financial approach
• Builds constructive regulatory relations
• Creates long-term value
10
Status of Merger Approvals
Securities and Exchange Commission
Shareholders
Department of Justice
Federal Communications Commission
Federal Energy Regulatory Commission
Maine DPUC
Nuclear Regulatory Commission
Connecticut PURA (expected April 2)
Massachusetts DPU (expected April 4)
Approvals Received
Applications Pending
New Hampshire PUCDetermined Not To Have Jurisdiction
11
Massachusetts Settlement Agreements – Key Provisions
• Settlement Agreement – MA Attorney General and DOER (Feb. 15, 2012)• One-time $21M rate credit (NSTAR Elec. $15M, Gas $3M, WMECo $3M)• Distribution rate freeze until 2016 – does not apply to transmission rates,
exogenous items or rate reconciling mechanisms (pension adjustment mechanism, bad debts, decoupling (WMECo), energy efficiency, etc)
• Recovery of lost base revenues (NSTAR Electric)• Hurricane Irene & October Nor’easter Storm costs recoverable in rates
• NSTAR Electric – $38M recovered over 5 years commencing 1/1/14 with Prime Rate carrying charge
• WMECo – recovery as approved by the DPU in its last rate order
• Safety & Reliability program spending and recovery of $15M/yr (NSTAR Electric)• Amortization of merger-related costs (for rate-making) over 10 years
• Settlement Agreement – MA Department of Energy Resources (DOER)• 15-year contract for energy related to 129MW (27.5%) of Cape Wind (NSTAR)
• Costs fully recoverable in rates with 4% remuneration
• Issue RFP for 10-year “Mass. Qualified” solar contracts for up to 10MW (NSTAR)
• DPU Decision on April 4th
12
Connecticut Settlement Agreement – Key Provisions
• Settlement Agreement – CT Attorney General and Office of Consumer Counsel (March 13, 2012)
• One-time $25M rate credit for CL&P customers• Distribution rate freeze until December 1, 2014 – does not apply to rate
reconciling mechanisms, transmission rates, exogenous items or trackers currently in place
• Hurricane Irene & October Nor’easter Storm costs recoverable in rates• Recovery limited to $40M less than total storm costs ($263.3M)
• 6 year recovery period commencing 12/1/14
• System Resiliency Program – Multi-year plan for $300M of spending• $100M of spending and $25M of revenue recovered in rates during 2013-2014
• $15M set aside to advance state energy goals (e.g. energy efficiency, electric vehicles, microgrids and renewable projects)
• PURA Decision on April 2nd – Draft decision on March 26, 2012
13
Significant Portion of Rates Unaffected by Distribution Rate Freeze
• Transmission Rate
• Energy Supply Charge
• Tracker Charges
• Rate Decoupling Mechanism
• Pension Adjustment Mechanism
• Energy Efficiency Factor
• Lost Base Revenues
• Transition Charge
• Bad Debt Recovery Factor
Base25%
Energy52%
Transmission9%
Trackers14%
Base34%
Energy51%
Trackers6%
Transmission9%
NSTAR Electric
CL&P
14
Transmission Projects Update
15
Southwest Connecticut Reliability: Projects Complete
Connecticut Borders (MA, RI):NEEWS Projects Under Way
Excellent Transmission Opportunities into Largest New England Load Centers
Hydro-Québec-HVDC Line
Southeastern Massachusetts (MA):•Cape Cod Canal Line (Siting Approval in April)•Mid Cape Line (under consideration)
Load Center Populations (1)
Greater Boston: 4,600,000Hartford: 1,200,000Fairfield County: 900,000
___________________________1. Source: IHS Global Insight Winter 2009 – 2010, US Markets: State Economies, U.S. Census Bureau 2009 estimates.
Northeastern Massachusetts (MA):•Greater Boston Solution (under consideration)
16
NEEWS Projects – Status Update
Interstate Reliability Project
• Joint project with National Grid (NU in CT; NGrid in MA & RI)
• ISO-NE confirmed need: August 2010
• Siting application filed in CT in December 2011
• Siting decisions: Connecticut decision in early 2013; others by end of 2013
• Commence construction: late 2013/early 2014
• Projected in-service: late 2015
• Total projected NU cost: $218 million
Central Connecticut Reliability Project
• ISO NE expected to issue preliminary need results and transmission solutions in 2013
• Projected in-service: 2017
• Total projected NU cost: $301 million
SPRINGFIELD
HARTFORD
345-kV SubstationGeneration Station345-kV ROW
115-kV ROW
Central ConnecticutReliability Project
InterstateReliability Project
Greater SpringfieldReliability Project
Greater Springfield Reliability Project
• Substation construction commenced in MA in December 2010; in CT in summer 2011
• Projected in-service: late 2013
• Total projected NU cost: $718 million
• Project more than 55% complete as of 2/24/12
Under Construction
In Siting/Assessment
In Planning Phase
17
Cape Cod Canal Transmission Line
New 345kV Transmission Line
Existing Transmission Line
• New 345kV, 18 mile overhead transmission line
• NE-ISO approved the line for reliability
• January 2012 Energy Facilities Siting Board (EFSB) & the Cape Cod Commission approved the line, (EFSB) order expected in April
• Cost estimated at $110M-$120M
• Construction 2012-2013
• In-service early 2013
• FERC ROE of 11.64%
Cape Cod Canal
18
Northern Pass Transmission Project Will Provide Significant Environmental and Economic Benefits to the Region
• To be owned by Northern Pass Transmission LLC
• 1,200 MW carbon free power, Northern terminus of DC line at Des Cantons (Québec), southern terminus in Franklin (New Hampshire)
• 345kV AC leg from Franklin to Deerfield, NH
• “Participant funded” TSA approved by FERC
• Permitting process continues with U.S. DOE, U.S. Forest Service
• Continued progress in securing alternate route in northern New Hampshire
–Community outreach ongoing
• Eminent domain legislation signed by NH Governor Lynch
• Capital cost estimate for US segment - $1.1B
• Completion projected for fourth quarter 2016
Des Cantons
HVDC Line
HVDC Converter Station
345-kV Line
Existing Deerfield Substation
Deerfield
Franklin
19
$128$174
$108
$255$68
$66$125
$142$237$193
$132
$111
$190$90
$162
$100
$0
$100
$200
$300
$400
$500
$600
$700
2011 Actual 2012E 2013E 2014E
NSTAR
WMECO
PSNH
CL&P
Transmission Capital Expenditures (Combined)In
Mill
ion
s
$595 $598
$465
$623
20
Review of FERC-Approved Transmission ROEs
10.00%
10.50%
11.00%
11.50%
12.00%
12.50%
13.00%
13.50%
Local NetworkService
RegionalNetwork Service
Base
Northern Pass 2005-2008RegionalProjects
NEEWS M-NUnderground
Local Network Service Tariff ROE
NE RTO Incentive adder of 50 basis points on PTF assets
ISO-NE Planned Regional PTF projects in-service before 1/1/09 (D.C. Circuit Court rejected appeal on 1/29/10)
Middletown-Norwalk advanced technical underground cable system - NU
125 basis point NEEWS incentive (request for reconsideration denied by FERC on 6/28/11) - NU
142 basis point Northern Pass incentive (request for reconsideration denied by FERC on 8/5/11)
11.14%
12.64%
12.89%13.10%
12.56%
11.64%
21
Distribution Businesses
22
Overall Positive JD Power Customer Satisfaction Results
2011 JD Power Electric Company Survey2011 JD Power Gas Company Survey
23
Regulatory Update - Connecticut
CL&P
• Two-year rate plan approved 6/29/11
• Initial $0.5MM rate decrease effective 7/20/11 and $6.7MM rate increase effective 7/1/12
• Modified ADIT ruling added approximately $700,000/year in revenues
• Added $54 million Waterbury-Wallingford line to rate base
• Approved increase to $40 million/year in pipe replacement expenditures
• 8.83% ROE and 52.2% equity in capital structure (earned 9.3% in 2011)
Yankee Gas
• Two-year CL&P rate plan approved 6/30/10
• $63.4 million rate increase and reduced depreciation effective 7/1/10
• $38.5 million increase effective 7/1/11
• Cash increase deferred until 1/1/11; recovery complete as of 6/30/12
• 9.4% authorized ROE (earned 9.4% in 2011)
• 49.2% equity in capital structure
24
Regulatory Update – New Hampshire
Distribution
• Fully tracking cost recovery with same capital structure as Distribution
• 9.81% authorized ROE
• Per legislation, all prudently incurred Clean Air Project (Scrubber) costs recoverable from customers
• Scrubber in-service 9/28/11, project expected to be fully complete in mid-2012, $35M below $457M budget
• Temporary rates expected to take effect 4/1/12 reflecting about 2/3rds of total costs
• Full costs expected to be reflected in energy rates as of 1/1/13 following regulatory review in 2nd half 2012
• Helps PSNH serve the 64% of overall load that has not switched to competitive suppliers
• Sharply reduced cap-ex going forward
Generation
• Five year settlement effective 7/01/10 through 6/30/15
• $45.5 million increase on 7/1/10
• $2.3 million decrease on 7/1/11 due to expiration of recoupment period
• Projected increases of $6.5 million on 7/1/12 and $11.1 million on 7/1/13 for net plant additions
• 9.67% ROE on authorized equity ratio of 52.4% (combined D&G ROE of 9.7% in 2011)
25
2011 Tropical Storm Irene and October Nor’easter Impacts
• CL&P – Recovery stipulated in March 13, 2012 Settlement Agreement• Will limit recovery to $40M less than total storm costs (i.e. $223.3M)• Costs recoverable in rates over a six year period beginning in 12/1/2014
• NSTAR – Recovery stipulated in February 15, 2012 Settlement Agreement• Costs recoverable in rates over a five year period with a carrying charge (prime
rate) beginning in 2014
• WMECo – Recovery stipulated in February 15, 2012 Settlement Agreement• Costs recoverable in rates under storm recovery mechanism approved by DPU in
last rate case
• PSNH – Currently recovering $9.3 million/year through distribution rates. Expect to request recovery of deferred storm costs, below, in 2013
Company Deferred ($M)
CL&P $263.3
NSTAR $38.0
WMECO $26.7
PSNH $21.9
Total $349.9
26
72%
53%48% 47%
31%
0%
20%
40%
60%
80%
% o
f p
en
etr
ati
on
of
na
tura
l ga
s
Natural gas penetration vs. other states
CTNJ NY RI MA
Natural Gas: A Compelling Growth Opportunity
• Yankee Gas has experienced 33 percent increase in firm gas sales since 2006
• WWL project in CT:• Expands natural gas access, removes gas
constraints• Pursues further oil-to-gas conversions• Accelerates cast iron and bare steel pipe
replacement to $40 million/year
• Increasing penetration to 50 percent would yield long-term benefits
• Significant customer savings• Reduced emissions• Reduction in oil demand
• In 2010, Yankee Gas converted approximately 1,000 single-family homes and multi-unit apartments to natural gas.
• In 2011, that number doubled to 2,000
• In 2010, NSTAR Gas converted 867 single-family homes and multi-unit apartments to natural gas.
• In 2011, that number more than doubled to 2,020.
$0
$10
$20
$30
$40
$50
$60
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
CT Wholesale #2 Heating Oil
Henry Hub + Tport
CT Wholesale Propane
No
min
al $
/MM
Btu
Difference increases from $9 to $28 per
MMbtu
Price Differential Forecast $ per MMBTU
Price differentials, can lead to homeowner savings of $1,000 - $1,500 per year
27
Electric Distribution Companies – Return on Equity
2009 2010 2011 2009 2010 2011
2009 2010 2011 2009 2010 2011
NSTAR Electric
11.3% 11.6%10.8% Allowed
10.5%+/-2%
7.3%7.9%
9.4% Allowed9.4%
8.4%
4.6%
9.0%
Allowed9.6%
7.2%
10.2% 9.7% Allowed9.67% -9.81%
Connecticut Light & Power
WMECO PSNH
28
Gas Distribution Companies – Return on Equity
2009 2010 2011
2009 2010 2011
NSTAR Gas
7.12% 6.88% 6.47%
6.6%
8.6%9.3%
Allowed8.83%
Yankee Gas
Allowed13.0%
29
Financial Policies & Liquidity
30
Post Merger – Financial Policies
• Maintain long-term, adequate credit facilities with high quality banks
• Expect to have a new multi-year NU consolidated credit facility in place by mid-September
• Continue to maintain short-term liquidity facilities at multiple entities• Establish a NU commercial paper program if cost effective
• Maintain strong credit metrics and conservative equity ratios at each Operating Company and at the consolidated level
• Capital programs at each entity will be financed primarily by the entities own cash flows and balance sheet
• Internal dividend policy will be conservative and consistent, while external payout will be moderate and grow in-line with earnings
31
Combined Liquidity of $1.9 Billion
Borrower Facility Size Maturity Comments
1. NU Parent $500M 9/24/2013
2. NU Operating Companies $400M 9/24/2013Sublimits: Connecticut Light & Power $300M Public Service Co. of New Hampshire $300M Western MA Electric Co. $200M Yankee Gas $200M
3. Connecticut Light & Power $300M 3/26/2017 New facility
4. NSTAR Parent $175M 12/31/2012 Extension in process
5. NSTAR Electric $450M 12/31/2012 Extension in process
6. NSTAR Gas $75M 6/8/2012 Extension in process
32
$89$129
$50
$94$64
$50
$88$80
$80$88
$65$88
$75
$75$75
$75
$252$209
$205$163
$159$152
$140$115
$88$65$65$65$64
$50$50
$30$30
$88
$65$65
$0 $100 $200 $300
CitigroupBank of America
Wells FargoUnion Bank
Bank of New York/MellonJP Morgan Chase
TD BankGoldman Sachs
Barclays Bank, PlcCredit Suisse
Morgan StanleyUBS Loan Finance
Key BankRBS Citizens Bank
Tokyo-Mitsubishi TrustState Street
US Bank
NSTAR
NU
CL&P
Well Established, Diverse Bank Group Support Revolving Credit Facilities
33
Expect to Continue Each Company’s Long History of Earnings Growth and Conservative Dividend Payouts
• Post-merger dividend increases expected to be in-line with earnings growth
• Target 50-55% equity levels at operating subs
• Maintain common equity ratios appropriate for strong rating level
$2.161
$0.95
$1.91
$1.025
$2.382
1 Excludes NU tax settlement, NU-NSTAR merger costs2 Excludes merger costs and CL&P storm fund reserve
$1.303
EPS 2011 total dividend per share
Per
Sha
re
NSTAR and NU Earnings and Common Dividends: 2009-2011
$2.37
$2.561
$1.50 $1.60$1.70
1 Excludes merger costs, MATEP sale and RCN tax adjustment2 Excludes merger costs
Per
Sha
re
$2.652
EPS Dividend per share
NSTAR NU
$1.10
34
Synergy Savings & Integration
35
Integration Planning – Well Planned, Controlled and Executed
• Formal integration planning kicked off in February 2011• Extensive involvement of NU and NSTAR officers, directors and
managers• 11 functional teams; over 175 subject matter experts involved
• Process coordinated and supported by experienced outside consultants
• Objectives and focus of integration planning on:• Preparing for merger close (planning and execution of Day One
requirements)• 129 Day One action items identified and completed pending merger close
• Developing deep understanding of both companies’ “as-is” operations and organization, and identifying significant integration opportunities
• Parallel process to develop high-level organization structure and select the next level of officers by early April
36
Projected Net Merger Savings $784 Million in First Ten Years
$9.0$21.8
$35.6$45.6 $49.6 $52.2 $54.8 $57.4 $60.0 $63.2
$14.7
$19.1
$23.6
$26.9$28.5 $29.6
$30.8 $32.0 $33.2$37.6
$9.0
$12.1
$15.1
$18.0$20.9
$23.7$26.5
$29.2$31.9
$36.5
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Labor Savings Corporate and Administrative Savings Purchasing Savings
In M
illio
ns
$32.8
$90.5
$74.3
$52.9
$105.6$99.0
$112.1
$125.1
$137.3
$118.6
Note: Savings reflected above exclude $164.3 million merger integration costs.
37
38
Key Takeaways
• Very enthusiastic and confident about the merger
• A truly compelling transaction combining two very strong companies with complementary skill sets
• Offers significant customer and environmental benefits
• Strong commitment to credit quality
• Strong overall financial condition combined with a low-risk, well diversified business profile
• Track record of top performance
39
Financial Forecast
40
41
Appendix
42
President & Chief Executive Officer
Tom May
Chief Administrative Officer
David McHale
General Counsel Greg Butler
Senior Vice PresidentHuman ResourcesChristine Carmody
Chief Financial Officer
Jim Judge
Chief Operating Officer
Lee Olivier
Senior Vice PresidentCorporate Relations
Joe Nolan
Regulatory Policy (FERC)
Internal Audit & Security
Deputy General Counsel
Secretary/Compliance
Compensation
Human Resources Consulting
Employee & Labor Relations
Benefits &Human Resources
Operations
Organization & Talent Development
Diversity, Inclusion & Ethics
Corporate Strategy& Environmental
Affairs
Supply Chain, Real Estate & Prop.
Management
Unregulated Businesses
Information Technology
Customer Care
Energy Supply
Integration Planning
Business Financial Services & Corporate Performance Mgmt
Financial Planning & Analysis
Treasurer
Investor Relations
Controller &Chief Accounting
Officer
Rates & RevenueRequirements
StateLegislative &
Regulatory Affairs
Ops & Transmission Communications &
Community Relations
Media Relations
Corporate Communications
OperationsServices
Transmission Business Unit
Connecticut Light & Power
GasBusiness Unit
NSTARElectric
WesternMassachusetts
Electric
Public Service ofNew Hampshire
Yankee Gas
NSTAR Gas
Federal Legislative Affairs
Deputy General Counsel
Post-Close Organizational Chart*
LegislativeAffairs
Regulatory Affairs
* Announced February 23, 2012
43
New Northeast Utilities
CL&P100%
PSNH100%
WMECO100%
Yankee Energy Systems
Holding Co. – 100%
NSTAR LLC100%
NU Enterprises Incorporated
100%
NU Services Company
100%
CL&P Funding 100% - Financing
Properties Inc100% - Real
Estate
Nutmeg Power Corp
100% - inactive
Electric Power Incorporated
100% - inactive
Connecticut Steam Company
100% - inactive
PSNH Funding 2100% - Inactive
PSNH Funding100% - Financing
WMECO Funding100% - Financing
Yankee Gas Services Co
100%
Yankee Energy Services Co
100% - Energy Related Services
Yankee Energy Financial Services
100%
Advanced Energy Systems
100%
NSTAR Electric100%
NSTAR Gas Co100%
Hopkington LNG100%
HEEC100%
CEC Funding100% - Financing
BEC Funding 2100% - Financing
NSTAR Communications
100%
NSTAR Gas and Electric100%
Northeast Generation Services Co
100%
Select Energy100%
E.S. Boulos CoTransmission Const – 100%
MGM Mechanical Services Co
100%
Acumentrics CorpFuel Cell Dev.
NUEI 7.4%
Mode 1 Communications100% - Inactive
Select Energy Contracting Co
100%
Rocky River RealtyReal Estate
100%
North Atlantic Energy Services100% - Inactive
North Atlantic Energy
100% - Inactive
HWP CompanyReal Estate
100%
Northeast Nuclear Energy Company100% - Inactive
NU Transmission Ventures – 100%
Northern Pass Transmission LLC
100%
Northern Realty100%
Merged Company Legal Structure
44
45
Transmission Year-End Rate Base Forecast
$2,100 $2,149 $2,091 $2,211
$866 $949 $1,079$1,135
$390$407
$524$654$467
$615$722
$747
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2011Actual
2012E 2013E 2014E
WMECO
PSNH
NSTAR
CL&P
In M
illio
ns
$4,120
$4,416$4,747
$3,823
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