EEI Spring ConferenceMay 23, 2007Energy / Growth / Leadership

Safe Harbor ProvisionsThis presentation contains statements concerning NUs 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 or transactions by local, state and federal regulatory bodies; competition and industry restructuring; changes in economic conditions; changes in weather patterns; changes in laws, regulations or regulatory policy; changes in levels or timing of capital expenditures; 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; 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. 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.

Agenda for TodayFirst quarter 2007 results2007 guidanceRegulated investment strategyRate casesLegislative update

2007 ResultsDistribution and Regulated GenerationTransmissionParent/OtherIn MillionsCompetitiveTotal

Distribution/Regulated Generation ResultsCL&PPSNHWMECOIn MillionsYankee Gas

2007 GuidancePrimary Drivers 2006 Actual2007 Guidance In 2007

Distribution/Regulated Generation$0.75*$0.80 - $0.90PSNH, Yankee Gas, WMECO rate case resolution, retail sales

Transmission$0.39$0.50 - $0.60Increased investment

Parent & Other Affiliates$0.02$0.00 - $0.05Cash from generation sale

Total, Excluding Competitive Businesses$1.16$1.30 - $1.55All the above*Excludes CL&P PLR and impact of competitive generation sale

Steady Dividend GrowthQuarterly Dividends Per Share

2007-2011 Projected Capital ExpendituresDistribution CapexTransmission Capex2006 Actual20072010201120082009$908*$779*$874*$1,183*$1,126*$880**Excludes approximately $18 million per year at corporate service companies

Projected Distribution and Regulated Generation Year-End Rate BaseProjected Distribution & Generation Rate Base CAGR of 7%$ Millions

Major Distribution/Regulated Generation ProjectsYankee Gass 1.2 Bcf liquid natural gas production facility in Waterbury, CT$108 million costMore than 91 percent completeLNG expected to be injected in JuneScheduled to be in service for 2007-2008 heating seasonWill enhance reliability, help insulate customers from price volatilityConversion of PSNHs 50 MW Schiller unit in Portsmouth, NH from coal to wood$74 million costCommenced operation in DecemberEnhances fuel diversity, reduces sulfur, NOx, mercury emissions

Growing Transmission Business

The Next Five Years: Transmission Capital ExpendituresHistoricForecast$ MillionsUp To $2.5 Billion $1,062 Million $1.1 Billion of major SW CT projects in 2007-2011 forecast period; $1.65 billion in totalNEEWS, Springfield projects estimated at $710 million during the 2007-2011 forecast period

Projected Transmission Year-End Rate BaseTransmission Rate Base2006-2011CAGR of 23%$ Millions*Reflects FERC approved 50% CWIP for southwest CT projects***

Four Major SW Connecticut Projects A $1.65 Billion InvestmentSWCT improvements have been a top priority in each of ISO-NEs last four regional transmission expansion plans. Our four major projects there total about $1.65 billion in investment.50% of CT LoadBethel-Norwalk 345 kV Underground& Overhead$350 Million21 miles 345kV (56% underground)10 miles 115kV (100% underground)Completed October 2006 at a cost of $340 millionMiddletown-Norwalk 345 kVUnderground & Overhead$1,047 Million (NU Share)Glenbrook Cables115 kV underground$183 Million9 miles 115kV undergroundProjected in-service date: 200830% completeLong Island Cable138 kV cross sound$72 Million (NU share)11 miles 138kV submarine cableJoint project with LIPAProjected in-service date: 200833% complete69 miles 345kV (35% underground)57 miles 115kV (1% underground)Joint project with United IlluminatingProjected in-service date: 200924% completeCOMPLETE

Springfield 115-kV Projects

Preferred Routes For NEEWS Have Been SelectedThe four 345-kV components, identified to date, are:

Ability To Finance Growth3/31/07Strong balance sheetStrong cash and liquidity positionStrong access to capitalApproximately $450 million of NU parent cash available for investment in utilities$1 billion unused bank, accounts receivable linesSolid credit ratings at parent, subsidiariesSuccessful debt financingsMinimal equity requirements

Rate Case UpdateTariffs forward-looking and adjusted every 6 months with trueupsAll 3 distribution companies have transmission trackers (assuming PSNH settlement approval)FERC set going-forward New England ROE at 10.94% plus 0.50% for joining an RTO and 1.0% for new regional transmissionStill subject to rehearingFERC incentive philosophy reaffirmed April 19, 2007Joint settlement filed before NHPUC in FebruaryEffective 7/1/079.67% ROETransmission tracker$24.5 temporary increase effective 7/1/06 made permanentAdditional $37.7 million estimated increase on 7/1/07$26.5 million for distribution$11.2 million for transmission$8.8 million to recoup revenues not collected between 7/1/06 and 6/30/07Joint settlement filed 5/16/07$39.3 million base rate increase$19.4 million net revenue increase after pipeline-related savings10.1% authorized ROEExpected to be effective 7/1/07

TransmissionPSNHYankee Gas

Legislative UpdateConnecticut2005: Energy Independence ActGrants/loans for customer-side generation$200/kw one-time incentives to host utilities15-year capacity-only conventional generation contracts with utilities$25/kw one-time incentives to utilitiesWinning bids approved May 2; final contract approval set for August 15, 20072007: LegislationGovernor and legislative leadership identified energy as one of top 3 prioritiesFocus initially on conservation, renewable energy, incenting new generation, possible tax reductionsSession ends June 6New Hampshire2006: LegislationApproved enabling bill to install scrubber at Merrimack by 7/1/132007: LegislationRenewable portfolio standard legislation signed by Governor Lynch on May 144% by 2008 rising to 23.8% by 2025Senate has approved bill to encourage northern New Hampshire transmission upgrades, develop new rules for siting renewable facilities, direct Energy Policy Committee to examine utility-owned renewable generation

NUs Transformation Producing Solid Results, ProspectsFinancial performance consistent with projectionsTransmission business is growing rapidly to meet customer needsDistribution results improving as reasonable rate case outcomes are implementedAdditional infrastructure needs being identifiedFinancial flexibility is significantly improved

Standard disclosureThese are the topics I will cover today.We released our year-end financial results Thursday and I will review those results. I will review our 2007 earnings guidance, which remains the same as what we unveiled at EEI in November I will update you on our capital projects and review our current rate cases, which are key to financial improvement at our distribution businesses. I will review various ongoing rate cases both at FERC and in our states.Finally, I will provide you with an update on the Connecticut and New Hampshire legislative sessions.Here is a summary of our first quarter results.Earnings at our regulated distribution and generation businesses were up by $6.4 million, or about 15 percent. The following slide will provide more detail, but they key takeaway is that this is the area that has been underearning in recent years and we think our earnings growth potential here is significant due both to achieving our allowed ROEs and rate base growth.Transmission earnings rose by 25% over first quarter 2006 levels. This continues a trend of higher earnings flowing through as we invest in our transmission infrastructure.Parent results changed from a $2 million loss to a $6 million gain. This is directly the results of the nearly $1 billion of cash the parent company carried for most of the quarter as a result of last years generation sale. That money was lent both externally and to the utilities through our money pool. This quarter is as good as it gets. We paid about $400 million of taxes March 15 and parent cash levels are now just below $500 million and will continue to decline over the balance of the year as more equity is infused into the utilities resulting in lower interest income.Competitive businesses recorded a large loss last year as it wrote down the retail marketing business in advance of its June 1 sale. This year we saw $1.5 million of after-tax market-to-market gains and several other small positive entries as we continued to wind down the other businesses.Here is a review of the distribution companies.CL&P was the only company that was down. You are seeing the positive $4.9 million impact of a state tax settlement in 2006 not recurring this year. You are also seeing some higher interest and other operating costs and the loss of our fixed procurement fee, which brought us about $7 million in annual earnings in 2004-2006. This was all partially offset by a small distribution rate increase that was effective January 1, 2007 and a 1.6 percent (flat weather-adjusted) increase in electric sales.As I mentioned, PSNH was the big gainer. This was due to last Julys interim $25 million rate increase, a 2.7 percent increase in electric sales (1.4% weather-adjusted), and a lower effective tax rate. In 2006, the accounting for the end of Part 3 stranded costs recovery caused our tax rate to be higher in the first, third and fourth quarters and much lower in the second quarter. You are seeing a more normal quarter here.WMECOs improvement was due to last years rate settlement, which resulted in a $1 million distribution rate increase, but more importantly, tracking mechanisms for pensions and other post-retirement benefits, certain capital, and other items, WMECOs sales were also up 1.7% (0.4% weather-adjusted) from the first quarter of 2006. Yankees improvement was all about sales. Firm sales were up 10.9 percent, mostly driven by normal first quarter weather, compared with a very mild 2006 when heating degree days were 10% below normal.Its worth noting that despite this improvement we are still earning well below our allowed ROEs at every company except for WMECO.This breaks down where we see earnings headed in 2007, and as I said earlier, these estimates are unchanged from our EEI presentation.We expect improvement at our distribution businesses, particularly at PSNH where we were hurt by both the higher effective tax rate last year and the lack of a transmission tracker. We expect the rate settlement there to be decided in the second quarter and new rates implemented by mid-year.Better PSNH earnings and improved Yankee results, where we also expect to have new rates implemented by mid-year, are the drivers for higher distribution results. CL&Ps upcoming rate case wont benefit us until 2008.At WMECO, we expect the new rates to maintain ROEs in the 9-10% and at CL&P we expect regulatory ROEs to actually decline to 6-6.5% from 7.5% in 2006 as a result of inadequate rate relief.Our transmission business earnings are not sales dependent and our tariffs are fully tracking, so as we invest $700 million this year into a rate base that started the year at around $1.05 billion, earnings should rise. You can see that we are looking toward improvement of 11-21 cents/share.As I mentioned earlier, the parents $0.04 of profits in the first quarter should be our high-water mark. Results will decline over the balance of the year as investible cash declines.At the competitive businesses, since our wholesale positions are largely hedged and marked-to-market, we expect breakeven results, though on a cash basis, we expect about $40 million negative.These capital investments should produce the transmission rate base growth shown above. The cumulative annual growth rate is about 23%.You can see that the most significant growth is at CL&P, primarily due to our SW Connecticut investments.You may also notice that the rate base numbers for 2007 and 2008 are somewhat below what we showed you at EEI. This is NOT the result of any change in our capital investment plans.Rather it is a change in our expectations concerning Construction Work in Progress. At EEI, we had anticipated that we would file at FERC to place 100% of our SW Connecticut capital expenditures in rate base, rather than the 50% we are currently authorized. After reviewing FERCs October 31, 2006 New England ROE decision, at this time we are not projecting such an application. This results in some interest and equity returns on those projects being capitalized, so it results in a somewhat higher rate base level when we are complete, but lower levels when the projects are under construction.Because under our FERC tariffs, we can book AFUDC on the 50% not being immediately rate based, this does not have a meaningful impact on our transmission earnings trajectory.You can see though that overall, we expect transmission rate base to nearly triple by the end of 2011.This is the capital program we seek to fund off that stronger balance sheet.You can see that the program is fairly balanced between transmission and distribution expenditures with the transmission program clearly larger in the next two years as we complete most of our work in SW Connecticut.In 2007, we expect about $700 million of capital expenditures in transmission and $500 million in distribution and regulated generation.Cap ex in the first quarter was about $220 million, but that quarter is traditionally the lightest for cap ex due to weather constraints.These distribution rate base projections are pretty much the same we showed you at EEI.They reflect the distribution capital program we showed you earlier.We have significant distribution investment projected at CL&P, where we have significant upgrades planned for an aging distribution infrastructure, particularly in urban and rural areas. We also expect PSNH to invest heavily in its distribution infrastructure and we expect that investment to be reflected in PSNHs rate decision. WMECOs distribution rate base will grow quite modestly because we see less of a need for upgrades there, and at Yankee we have a big increase this year when our LNG facility enters rates, but more modest increases in later years.Overall, we are projecting a rate base of about $5 billion by the end of 2011, compared with about $3.5 billion today.Most of the additional distribution cap ex will be spent on general upgrades and reinforcement of the distribution systems, but we have two major projects in the rate base growth.On the right is the Northern Wood Power Project, which entered commercial operation December 1, 2006 and completed its first scheduled maintenance outage last week.Completed just under the $75 million budget.Very significant reductions in NOx, SOx, and mercury emissions.Efficient fluidized bed boiler qualifies it for selling Renewable Energy Certificates into strong MA market. Current prices of about $50/REC.Generating one MWH generates one REC and we expect the unit to generate about 350,000 MWH annually.Benefits of new revenue stream shared with customers, as is $3 million a year of federal production tax credits. We expect to need no rate increase from bringing project into rates.LNG facility will be completed this spring and we will begin filling it in June for 2007-2008 heating season. Gas will be taken off pipeline and/or trucked in.It is the centerpiece of Yankees strategy to lower pipeline capacity costsby itself, it will result in net rate reduction for customers.

Here is some additional detail around our transmission results over the past three years and the impact of a significant investment program.Shows how our FERC tariffs allow us to track our increasing investment in reliability. Revenues are up more than 50% from 2004-2006.With higher investment comes higher depreciation, higher taxes, and higher interest costs as we finance our investment.Also, as we invest more equity, our earnings rise since we are allowed a formulaic return on equity. They are up more than 100% over two years because we are investing so heavily in New England reliability.Other income is up since we are booking 50% AFUDC on our major SW Connecticut projects.You can see that operating expenses are rising, but at a slower rate than revenues and more capital-related costs. Thats because transmission tends to be much less costly to maintain than a large distribution system.

Beyond 2011, we expect additional transmission rate base growth as a result of a major series of projects we are designing today.This chart shows in green the major initiatives in southwest Connecticut and then a constant pattern of $100 million a year of investments elsewhere in the system. But as we move toward 2010, you can see that our recently renamed New England East West Solution will represent a majority of our transmission spending.On the next four slides I will more fully brief you on the status of SW Connecticut and NEEWS, including some 115-kv upgrades we hope to begin in the Springfield area in 2009.These capital investments should produce the transmission rate base growth shown above. The cumulative annual growth rate is about 23%.You can see that the most significant growth is at CL&P, primarily due to our SW Connecticut investments.You may also notice that the rate base numbers for 2007 and 2008 are somewhat below what we showed you at EEI. This is NOT the result of any change in our capital investment plans.Rather it is a change in our expectations concerning Construction Work in Progress. At EEI, we had anticipated that we would file at FERC to place 100% of our SW Connecticut capital expenditures in rate base, rather than the 50% we are currently authorized. After reviewing FERCs October 31, 2006 New England ROE decision, at this time we are not projecting such an application. This results in some interest and equity returns on those projects being capitalized, so it results in a somewhat higher rate base level when we are complete, but lower levels when the projects are under construction.Because under our FERC tariffs, we can book AFUDC on the 50% not being immediately rate based, this does not have a meaningful impact on our transmission earnings trajectory.You can see though that overall, we expect transmission rate base to nearly triple by the end of 2011.Our Southwest CT initiatives include four projects.They are designed to bring new and reliable power supplies into a region that has a relatively low level of generation, but 50% of Connecticuts electric load. These projects will add reliability to the region and also reduce congestion costs by an estimated $130 million a year since we will be less dependent on older, relatively inefficient units to meet peak loads.The first of the four, the 21-mile Bethel-Norwalk 345-kV line, was completed October 12, 2006, about two months ahead of schedule and more than $10 million under budget.We began construction last year with United Illuminating on the largest piece, the 69-mile Middletown-Norwalk section. It is now about 24% complete and we expect it to be about 45% complete by year-end. Our share will cost us about $1.05 billion and it is on schedule.The other two pieces are also under way. We are 30% complete building two new 115-kV underground lines to take power now reaching Norwalk and carry it deeper into Fairfield County to Stamford.Also, new replacement cables for an undersea line between Norwalk and Northport, Long Island are now being fabricated in Norway and we have completed much of the related substation work. This project is now about 1/3 complete. Heres a new slide we have not shown before.On our conference call on Thursday, Lee Olivier began to split out some significant upgrades around our Springfield, Massachusetts 115-kv system from the new 345-kv lines we expect to build with National Grid to better connect New Englands east and west grid.This project involves upgrading 16.5 linear miles of overhead 115-kv lines (2-4 circuits on each mile) and 8 linear miles of underground circuits (1-2 circuits on each mile) adding 10 miles of new underground circuits.No new transmission rights-of-way will be needed.We will expand two area substations and upgrade five others.The cost is estimated to be $250 million to $350 million.This work is needed because Springfield is a key location in the regions transmission system and much of the existing infrastructure has been in place for more than 50 years.It will resolve some current overload problems we are having in the area.Applications will be submitted to Massachusetts siting regulators later this year and we hope to begin construction in 2009.The SW Connecticut projects represent the current major initiative.While they help move power into and around Southwest Connecticut, they do not help deal with an imbalance in Southern New England between surplus generation in the east, particularly in Southeast Massachusetts and Rhode Island, and inadequate levels of generation in the west, particularly in Connecticut.These are the NEEWS projects, which involve new 345-kv lines, as opposition to the Springfield project, which is mostly rebuilding a 115-kv system.We are coordinating our work on these projects with National Grid. Work in Connecticut and western Massachusetts would be ours while work in Rhode Island and eastern Massachusetts would be Grids.We estimate that our share of this work and Springfield, assuming everything is built aboveground, would be between $1.1 billion and $1.4 billion, but probably toward the higher end. That is a very early estimate and this project requires extensive review by ISO New England before we begin the siting process in the states and the price tag clearly would rise if sections were required to be built underground.We expect to begin the siting process late this year or early next year.

Ive outlined for you our current capital investment plans.Now, I will discuss how we will finance them.As I mentioned earlier, the sale of our competitive generating facilities for $1.34 billion helped our balance sheet and cash levels considerably.$320 million of high-coupon debt went with the plants to the buyer and we recorded gains of $314 million of after-tax gains.Our current balance sheet shows leverage of about 52.5%, even after we paid our $400 million tax bill on the generation sale last month. We feel comfortable raising this leverage to about 60% given our lower risk profile. We have shared this leverage target with the rating agencies and believe it is incorporated into our current ratings.Recent and future debt issues will be undertaken at the utilities where we expect to keep leverage at around 55% by infusing equity from the parent.Issued $300 million of bonds at CL&P in March and expect to issue another $350 later this year across the four utilities.You notice that we currently have about $450 million of cash still at the parent, cash that is being lent internally and externally. We expect much of that to be invested this year and next year and we have no plans to issue new equity in either year.As we move on to 2009 and beyond, we expect our levels of internally generated cash to increase as our major projects enter service and are reflected in customer bills.As a result, we do not know yet if we will need to issue equity during this five year forecast. It will depend largely on construction needs and the cash flows we will receive through our tariffs.I will close by reviewing our current rate cases and legislative initiatives.Our fully-tracking transmission tariff has been in effect for several years, the results of a settlement we reach with the states of CT, NH and MA.Allowed ROEs were not part of that decision, however, and on October 31, 2006, FERC issued an ROE decision for all New England transmission owners. With incentives for new transmission, we believe it will results in ROEs of around 11.8% this year rising to around 12.2% on a much higher equity base in 2011.At PSNH, we reached a settlement with commission staff and the consumer advocate that is now being reviewed by the commission. There was no opposition to the settlement, so we expect it to be approved and in effect on July 1, 2007. It will help PSNHs ROEs to rise to the 9-10% range from the 6.5% area where it was last year. Rates would rise by about $37.7 million annually on July 1, most of that permanent and $8.8 million to recoup lost revenues from the July 1, 2006-June 30, 2007 during which the case was pending.At Yankee, we are now attempting to negotiate a resolution to a rate case, where hearings are complete and briefs are ready to be filed. We expect that if a settlement is achieved, it will be within the next couple of weeks.Regardless of whether the case is settled, we expect new rates to take effect July 1, 2007.Key drivers of the $68 million base rate increase are about $20 million to bring the LNG plant into rates and improving Yankees returns, which were below 5.8% last year.$31 million of savings associated with the LNG facility reduce the annual cost to customers to $37 million, about an 8.5% increase.Connecticut legislature is actively looking at bills currently. House and Senate have not yet agreed on a common approach, so its unclear what new legislation might be proposed.CL&P continues to book some modest earnings from 2005 Energy Independence Act initiatives ($5.5 million pre-tax last year).But this year, we lose about $7 million of earnings CL&P had from 2004 through 2006 due to the fixed procurement fee.In New Hampshire, the state seems likely to adopt a renewable portfolio standard common in most states in New England, which would require 23% of generation to come from renewable sources by ___ and likely encourage construction of new bio-mass plants, such as Northern Wood.However, we were not able to convince the Senate this year to allow more utility-owned generation. Its likely that after a study takes place later this year, we will make another attempt in 2008.

Key here is execution.Weve executed the exit from most of our competitive businesses with better results than many on the street anticipated, particularly with the generation sale.Major projects have been built on-time and on budget, despite rise in construction costsIn 2006, we hit the earnings ranges established in the fall of 2005 and our first results were on target for our 2007 earnings rangesTransmission business is proving itself to be a national leader in building and operating its transmission system. It has a clear trajectory with more than $1.5 billion of expenditures approved by state regulators and ISO.Distribution businesses require rate increases to improve their returns and we have settled 2 of 4 key cases.We believe there are additional growth opportunities beyond our 5-year forecast, such as NEEWS and the Merrimack scrubber, which are highly likely to be completed and added to rate base.We have the financial strength to accomplish this.