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Transmission Leadership Forum

Transmission Leadership Forum. JANUARY 13, 2011. Safe Harbor Provisions.

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Transmission Leadership Forum

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  1. Transmission Leadership Forum JANUARY 13, 2011

  2. Safe Harbor Provisions This presentation contains statements concerning NU’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth 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 or reader can identify these forward-looking statements through the use of words or phrases such as “estimate”, “expect”, “anticipate”, “intend”, “plan”, “project”, “believe”, “forecast”, “should”, “could”, and other similar expressions. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to, actions or inaction of local, state and federal regulatory and taxing bodies; changes in business and economic conditions, including their impact on interest rates, bad debt expense and demand for our products and services; changes in weather patterns; changes in laws, regulations or regulatory policy; changes in levels and timing of capital expenditures; disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly; developments in legal or public policy doctrines; technological developments; changes in accounting standards and financial reporting regulations; fluctuations in the value of our remaining competitive electricity positions; actions of rating agencies; the effects and outcome of our pending merger with NSTAR; 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 (SEC). Any forward-looking statement speaks only as of the date on which such statement is made, and 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 or to reflect the occurrence of unanticipated events. This presentation does not include any information concerning our proposed merger with NSTAR. Please refer to our and NSTAR’s joint Registration Statement Form S-4 which was filed with the SEC on November 22, 2010 for information concerning this proposed merger. Please refer to our reports to the SEC for further details concerning the matters described in this presentation.

  3. How Investors Analyze NU Today • 2010 share price performance • Transmission, as investors see the business • Distribution rate cases and results • Generation initiatives

  4. 2010 Stock Comparisons

  5. Actual YTD TSR How Did NU Shares Perform in 2010? NU Comparator Companies Total Shareholder Return for Comparator Companies Through 12/31/10

  6. Actual YTD TSR 2008 – 2010 NU Comparator Companies Total Shareholder Return for Comparator Companies Through 12/31/10

  7. Transmission Now Represents More Than 50% of Regulated Earnings 2005 12 Months Ended September 30, 2010 25.2% 50.2% $41.1 $171.6 $170.0 74.8% $122.3 49.8% Net Income: $163.4 Regulated EPS: $1.24 Net Income: $341.6 Regulated EPS: $1.94 Regulated Net Income and EPS (In millions except EPS) Distribution/Generation Transmission

  8. 147.5% Third Quarter 2010 Results 55.1% 5.6% Earnings For Common In Millions Distribution and Generation Transmission Competitive Total Parent/Other

  9. 118.7% Third Quarter 2010 Distribution and Generation Results 176.3% 24.5% Earnings For Common In Millions CL&P Yankee Gas PSNH WMECO

  10. 2010 EPS Guidance Raised in November *Excludes a $0.09 fourth quarter non-recurring tax gain at NU Parent and approximately $0.07 of NU-NSTAR merger related expenses that will be recorded in the fourth quarter

  11. Strong Dividend Growth Continued Through 2010 Dividend policy ($) EPS Dividends paid/declared per share Payout ratios 62.5% $1.95–$2.05 $1.91 $1.86² 48.7% 49.7% $1.59 44.3% $1.16¹ $1.025 $0.95 $0.825 $0.775 $0.725 1 Excludes net income of competitive businesses, one-time CL&P tax reduction 2 Excludes litigation settlement charge

  12. Greater Springfield Reliability Project SPRINGFIELD Interstate Reliability Project HARTFORD Central Connecticut Reliability Project 345-kV Substation Generation Station 345-kV ROW 115-kV ROW Investors Watching Closely as NEEWS Projects Advance • Greater Springfield Reliability Project • Received siting approval in CT and MA • Development and Management Plans approved by CT Siting Council • Commence substation construction in MA: Dec. 2010 • Commence overhead construction in MA: Spring 2011 • Commence overhead construction in CT: early 2012 • Project in-service: late 2013 • Interstate Reliability Project • Joint project with National Grid (NU in CT; NGrid in MA & RI) • ISO-NE confirmed need date in August 2010 • ISO-NE PAC process in late 2010 • File siting application in CT in mid/late 2011 • Siting decision in CT in mid/late 2013 • Commence construction: late 2013/early 2014 • Project in-service: late 2015 • Central Connecticut Reliability Project • Awaiting completion of ISO-NE’s reassessment of need and need date • Project milestones estimated 12 months behind IRP

  13. Northern Pass Transmission – a $1.1 Billion Capital Investment ´ • To be owned by Northern Pass Transmission LLC - NU (75%) and NSTAR (25%) • 1,200 MW transfer capability • Northern terminus at Des Cantons (Québec), southern terminus in Franklin (New Hampshire) • Québec terminal will convert the power from AC to DC (rectifier) • US terminal will convert the power from DC to AC (inverter) • Capital cost estimate for US segment: $1.1 billion • TSA signed on October 4 and filed with FERC in December • Permitting process began October 14 with U.S. DOE application • PPAs under discussion Des Cantons Franklin Deerfield HVDC Line HVDC Converter Station 345-kV Line Existing Deerfield Substation

  14. Third Quarter 2010 Results Benefited From CL&P and PSNH Rate Decisions • Five-year settlement approved by NHPUC on 6/28/2010 • $45.5 million increase on 7/1/10 in addition to 8/1/09 temporary increase of $25.6 million • $2.9 million decrease on 7/1/11 • 2012 & 2013 projected increases of $9.5 million & $11.1 million • Authorized ROE remains 9.67% (trailing 12-month distribution/generation ROE of 7.7%) • Recovery of ice storm costs over 7 years PSNH CL&P WMECO • Filed 7/16/2010 • Requested $28.4 million increase effective 2/1/11 • Requested ROE: 10.5% at 6/30/10 (trailing 12-month ROE of 6.6%) • Requested capital structure: 50.7% equity; 49.3% debt • Decoupling • Capital investment recovery mechanism • Recovery of past storm costs • 2010 distribution ROE projected to be about 5% • Final decision 6/30/2010 • $63.4 million increase effective 7/1/10 • $38.5 million increase effective 7/1/11 • Authorized 9.4% ROE at 6/30/10 (trailing 12-month ROE of 5.4%) • 49.2% equity in capital structure • Deferring initial increase until 1/1/11 • Ruling on health care issue deferred to next rate case • Capex plan approved

  15. Questions

  16. 2006 – 2010 NU Consolidating EPS GAAP / Non-GAAP Reconciliation

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