8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2012

Commission File Number	Registrant; State of Incorporation Address; and Telephone Number	I.R.S. Employer Identification No.
1-5324	NORTHEAST UTILITIES (a Massachusetts voluntary association) One Federal Street, Building 111-4 Springfield, Massachusetts 01105 Telephone number: (413) 785-5871	04-2147929
0-7624	WESTERN MASSACHUSETTS ELECTRIC COMPANY (a Massachusetts corporation) One Federal Street, Building 111-4 Springfield, Massachusetts 01105 Telephone number: (413) 785-5871	04-1961130

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

On February 15, 2012, NSTAR and Northeast Utilities (NU) reached comprehensive merger-related agreements with both the Massachusetts Department of Energy Resources and the Office of the Attorney General of the Commonwealth of Massachusetts.

The first Settlement Agreement, between NSTAR, NU, NSTAR’s wholly-owned subsidiaries NSTAR Electric Company and NSTAR Gas Company, and NU’s wholly-owned subsidiary Western Massachusetts Electric Company (WMECO), was reached with the Office of the Attorney General of the Commonwealth of Massachusetts and the Massachusetts Department of Energy Resources (collectively, the “Settling Parties”). This agreement covers a variety of rate-making and rate design issues, including a distribution rate freeze until 2016 for NSTAR Electric, NSTAR Gas and WMECO.

NSTAR Electric Company, NSTAR Gas Company and WMECO also entered into a second Settlement Agreement with the Massachusetts Department of Energy Resources. This agreement covers a variety of matters impacting the advancement of Massachusetts clean energy goals established by the Green Communities Act and Global Warming Solutions Act.

Pursuant to the terms and provisions of the Settlement Agreements, the Settling Parties agree that the proposed merger between NSTAR and NU set forth in the Merger Agreement and proposed to be approved by the Massachusetts Department of Public Utilities is consistent with the public interest and should be approved. The Settling Parties have requested a merger approval date of April 4, 2012.

NSTAR and NU issued a joint press release highlighting the key provisions in the Settlement Agreements, which is attached hereto as Exhibit 99.1.

NU and NSTAR are also awaiting approval of the merger from the Connecticut Public Utilities Regulatory Authority.

For further information regarding the pending NU-NSTAR merger, please refer to the Registration Statement on Form S-4 (Registration No. 333-170754) filed by NU with the Securities and Exchange Commission (“SEC”) in connection with the merger; NU’s Annual Report on Form 10-K for the year ended December 31, 2010; its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011, and its Current Reports on Form 8-K filed on December 5, 2011, December 29, 2011, January 5, 2012 and January 19, 2012.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	Settlement Agreement entered into by and among NSTAR Electric Company, NSTAR Gas Company, NSTAR, Western Massachusetts Electric Company, Northeast Utilities, the Attorney General of the Commonwealth of Massachusetts and the Massachusetts Department of Energy Resources, dated February 15, 2012.
10.2	Settlement Agreement entered into by and among NSTAR Electric Company, NSTAR Gas Company, Western Massachusetts Electric Company, and the Massachusetts Department of Energy Resources, dated February 15, 2012.
99.1	Joint Press Release of Northeast Utilities and NSTAR, issued February 15, 2012.

[The remainder of this page left blank intentionally.]

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NORTHEAST UTILITIES WESTERN MASSACHUSETTS ELECTRIC COMPANY (Registrants)
February 15, 2012	By:	/s/ Jay S. Buth
		Jay S. Buth Vice President-Accounting and Controller

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EX-10.1

Exhibit 10.1

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

	)
Joint Petition for Approval of a Merger between	)	D.P.U. 10-170
NSTAR and Northeast Utilities	)
	)

SETTLEMENT AGREEMENT

	)
Joint Petition for Approval of a Merger between	)	D.P.U. 10-170
NSTAR and Northeast Utilities	)
	)

SETTLEMENT AGREEMENT

WHEREAS, this Settlement Agreement (“Settlement” or “Settlement Agreement”) is entered into by and among NSTAR Electric Company (“NSTAR Electric”) and NSTAR Gas Company (“NSTAR Gas”), along with their holding company parent, NSTAR, and Western Massachusetts Electric Company (“WMECO”), along with its holding company parent Northeast Utilities (“NU”) (the corporate entities together, and their successors, the “Joint Petitioners”), the Department of Energy Resources (“DOER”), and the Attorney General of the Commonwealth (“Attorney General”) with regard to the proposed merger transactions as set forth in the Merger Agreement between the holding companies NU and NSTAR (“Proposed Merger”).

WHEREAS, NU and NSTAR filed the Proposed Merger before the Department of Public Utilities (“Department”) for approval pursuant to G.L. c. 164, § 96, and the Settling Parties have engaged in discovery, hearings, briefing and negotiations concerning the Proposed Merger.

WHEREAS, the Settling Parties have raised competing and disputed claims with regard to the various issues contained in the Proposed Merger but wish to resolve those matters on mutually agreeable terms, and without establishing any new precedent or principle applicable to any other proceedings.

WHEREAS, the Settling Parties intend that both customers and shareholders receive the full value of the settled issues, and not some substitute regulatory treatment of lesser value either now or in the future, and agree that no terms of this Settlement Agreement or supporting

workpapers, calculations, or proposed tariffs will be used or interpreted to diminish, in any way, the intended customer or shareholder benefit related to this Settlement Agreement.

WHEREAS, it is the objective of the Settling Parties to ensure that the impacts of the Proposed Merger to Massachusetts customers of the merged entity will operate in a way that achieves comparability with other states with respect to merger savings, service improvements and employment impacts, and the Settling Parties have structured this Settlement Agreement to achieve such comparability.

NOW THEREFORE, in consideration of the exchange of promises and covenants herein contained, the legal sufficiency of which is hereby acknowledged, the Settling Parties agree, subject to approval by the Department as follows:

ARTICLE I: INTRODUCTION

(1) On November 24, 2010, the Joint Petitioners filed with the Department a petition for approval of the Proposed Merger as set forth in their Merger Agreement dated October 16, 2010, as amended on November 1, 2010 and December 16, 2010.

(2) A copy of the supporting testimony, discovery responses and exhibits for the Proposed Merger is filed with the Department as the evidentiary record in this proceeding.

(3) This Settlement Agreement is intended to resolve only those issues as specified in Article II and Article III.

ARTICLE II

(1) APPROVAL OF THE PROPOSED MERGER: The Settling Parties agree that the Proposed Merger between NSTAR and NU set forth in the Merger Agreement and proposed to be approved by the Department in this proceeding is consistent with the public interest as

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required by G.L. c. 164, § 96; that approval of the Proposed Merger does not constitute approval of the merger or consolidation of the separate Operating Companies, NSTAR Electric, NSTAR Gas or WMECO, each of which will remain legally and functionally separate companies and independently subject to the Department’s jurisdiction under G.L. c. 164, § 1 et seq. on and after the closing of the Proposed Merger, until such time that a proposal may be made to the Department under G.L. c. 164, § 96 for consolidation of one or more of the Operating Companies and the proposal is subsequently approved by the Department; that following the Proposed Merger, the Operating Companies will continue to be subject to the same obligations that were respectively held by each of those companies prior to the Proposed Merger; and that further action, pursuant to G.L. c. 164, § 21, is not required to consummate the Proposed Merger.

(2) MERGER RATE CREDIT: The Operating Companies shall provide a one-time, non-recoverable $21 million rate credit to customers to be applied on the first billing cycle in the next billing month following the closing of the Proposed Merger. The Operating Companies shall allocate the credit as follows: $15 million for NSTAR Electric customers, $3 million for NSTAR Gas customers, and $3 million for WMECO customers. The credit at the Operating Company level will be allocated to retail customer classes (i.e., residential, small commercial & industrial and large commercial and industrial) based upon their proportional share of the monthly customer charges and will appear on the bill as a uniform dollar amount credit for each separate customer class as a separate line item, along with an explanatory bill message. For each individual Operating Company, all customers within a retail customer class shall receive the same

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rate credit dollar amount. The application of this credit shall not prevent customers from enjoying any other rate reductions or benefits related to the Proposed Merger.

(3) BASE DISTRIBUTION RATE FREEZE: The base distribution rates of the Operating Companies in effect on January 1, 2012, shall be frozen for forty-four (44) months, but in no event shall new rates go into effect earlier than January 1, 2016 (the “Base Rate Freeze Period”). Rate reconciling mechanisms and other formula rates now pending or approved by the Department as of January 1, 2012, will not be affected by this Settlement Agreement. The Operating Companies shall not file for approval of or propose new formula rates, tariffs, or other charges, including but not limited to: earning sharing mechanisms, capital trackers, or revenue decoupling mechanisms during the Base Rate Freeze Period under G.L. c. 164, § 94, or pursuant to the Settlement Agreement approved in D.T.E. 05-85, as applicable (“Prohibited Filings”), unless specifically mandated by statutes enacted after the date of this Settlement Agreement; provided that if a new formula rate, tariff, or other charge is implemented pursuant to a statutory mandate enacted after the date of this Settlement Agreement, no costs recoverable under the new formula rate, tariff, or other charge may be also recoverable as exogenous costs. The Operating Companies also hereby relinquish and waive any right to file for approval of Prohibited Filings from January 1, 2012, to the commencement of the Base Rate Freeze Period. Prohibited Filings by the Operating Companies exclude the filings made pursuant to Article II, §§ (4) through (9), below.

(4) RATE CASE MANAGEMENT. No more than two of the Operating Companies may have base distribution rate proceedings for changes to distribution rates effective after December 31, 2015 filed pursuant to G.L. c. 164, § 94 pending before the Department. If

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two of the Operating Companies have filings for a change in base distribution rates effective after December 31, 2015 pending before the Department, then the Operating Companies agree that a petition for a base-rate change for the third company shall be lagged for a period of at least six months from the later date of the initial filings for either of the first two Operating Companies, exclusive of the initial fourteen-day period after filing during which G.L. c. 164, § 94 prohibits schedules of rates, prices and charges from becoming effective. This provision on rate-case management shall apply only to the first base-rate cases filed for effect after the expiration of the Base Rate Freeze Period.

(5) EXOGENOUS ADJUSTMENTS: During the Base Rate Freeze Period, distribution rates shall be subject to adjustment up or down for exogenous factors. Eligibility for exogenous cost recovery or rate credit shall be allowed in accordance with the exogenous factors established by the Department in Boston Gas Company, D.P.U. 96-50 (Phase I) (1996) and shall be applicable only for factors that occur after the approval of this Settlement Agreement. The dollar threshold for qualification as an exogenous factor in any calendar year covered by this Settlement Agreement shall be determined by multiplying the total distribution revenues of that year by a factor of 0.003212. Regarding property tax cost changes associated solely with the change in valuation methodology affirmed by the Massachusetts Supreme Judicial Court in Boston Gas Company v. Board of Assessors of Boston, 458 Mass. 715 (2011), and established by the Appellate Tax Board by ruling issued on April 21, 2011 in Docket F275055, F275056, the Companies are not precluded, despite the date of the Supreme Judicial Court ruling, from filing for exogenous cost recovery for these costs. The Attorney General and DOER reserve all rights regarding disputing the substance of any such exogenous cost filings made by the Companies.

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(6) CAPITAL PROJECTS SCHEDULING LIST: On the first of the month following the date of the Department’s approval of the Proposed Merger, the Capital Projects Scheduling List (“CPSL”) rate put into effect on January 1, 2012 in D.P.U. 11-90 shall be reduced to a rate of $0.00069 per kWh, which is designed to recover $15 million in annual CPSL costs. The CPSL program approved in the D.T.E. 05-85 Rate Settlement Agreement will be extended through the end of the Base Rate Freeze Period and will be limited to the recovery of no more than $15 million in annual costs. To demonstrate its CPSL activities, NSTAR Electric shall file a written report to the Department and submit copies to DOER and the Attorney General, annually, demonstrating that the annual cost of the CPSL program activities (including operating and maintenance expense and the revenue requirement for CPSL capital projects completed since January 1, 2006) is $15 million or greater; and (2) that over the four-year period 2012-2015, the aggregate number of inspections completed through CPSL for stray voltage, overhead utility poles and underground manholes shall equal the aggregate number of inspections completed over the four-year period 2007-2010, or 396,753 total inspections. If the aggregate number of inspections over the period 2012-2015 is less than 396,753 inspections, then NSTAR Electric shall credit customers with an amount equal to the percentage shortfall times $60 million. The CPSL rate shall be deemed to fully recover NSTAR Electric’s CPSL program costs and shall not be increased to collect any more than $15 million annually; provided that the CPSL rate may be reduced to recognize any disallowances of CPSL expenditures resulting from a finding that those expenditures were not reasonably or prudently incurred. The CPSL charge shall terminate with the implementation of new base rates for NSTAR Electric, and recovery of CPSL-type costs shall occur through base

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rates thereafter; except that NSTAR Electric shall be entitled to recover its full $15 million allowance for CPSL-related activities performed in 2015 in 2016, and provided that, during the Base Rate Freeze Period, adjustments to the fixed CPSL rate shall be allowed to accommodate applicable Department decisions on currently outstanding annual CPSL program filings for the years 2006-2011.

(7) LOST BASE REVENUES: During the Base Rate Freeze Period, NSTAR Electric shall recover lost base revenues (“LBR”) associated with energy efficiency savings through the Energy Efficiency Recovery Factor (“EERF”). LBR recoveries shall be based on energy efficiency savings verified through annual reports to the Department for installations made during the Base Rate Freeze Period. In order to comply substantially with the Department’s directives in D.P.U. 07-50-A to decouple base revenues from the effects of energy efficiency programs, LBR shall be calculated, beginning January 1, 2012 and for the duration of the Base Rate Freeze Period, as the product of: (1) the cumulative amount of the annual energy efficiency program kilowatt-hour savings beginning January 1, 2012, as determined, verified, and adopted by the Department in NSTAR Electric’s 2012 Energy Efficiency Annual Report (to be filed August 2013) and each Energy Efficiency Annual Report filed thereafter, multiplied by (2) the average respective rate by residential, low income and C&I segments, as approved by the Department. There shall be no offset to such savings made by subtracting savings achieved in a year prior to 2012 as is currently done in the recovery of LBRs sought by NSTAR Electric in D.P.U. 10-06 and D.P.U. 11-40. NSTAR Electric shall compute LBR based on monthly installations and shall exclude LBR associated with energy efficiency spending by Cape Light Compact. Nothing in this Settlement Agreement is intended to affect the Department’s

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determination of LBR recovery by NSTAR Electric during the D.P.U. 05-85 Rate Settlement at issue in D.P.U. 10-06, D.P.U. 11-40 and D.P.U. 12-xx (to be filed on May 1, 2012 regarding LBR in 2011). Aside from the Department’s final determinations in D.P.U. 10-06, D.P.U. 11-40 and D.P.U. 12-xx, NSTAR Electric shall not recover LBRs associated with pre-2012 energy efficiency installations for any period after December 31, 2011, other than to recovery the normal recovery lag and true-up associated with these filings. For NSTAR Gas, LBR shall be calculated using the methodology currently in place for Massachusetts local natural gas distribution companies.

(8) STORM COST RECOVERY: Storm costs incurred by NSTAR Electric in 2011 for Tropical Storm Irene and the snowstorm in October 2011 will be excluded from the storm fund calculation and will be deferred at Prime Rate, in recognition of the two year delay in recovery, to be recoverable in rates over a five-year period beginning January 1, 2014. Before those storm costs may be recovered in rates, such costs shall be subject to a Department adjudicatory hearing and reviewed for prudence and reasonableness. Storm Cost Recovery amounts shall only include incremental costs. For Storm Cost Recovery ratemaking purposes, an incremental cost is defined as those actual and required costs directly attributable to the emergency response and not otherwise represented or recoverable by the Operating Companies in any other rate, charge or tariff. Storm cost recovery for WMECO shall occur in conformance with the Department’s directives in D.P.U. 10-70; provided that WMECO shall not seek recovery for storm costs incurred in relation to the October 2011 snow storm until after the Department has issued a final order in D.P.U. 11-119-C.

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(9) RATE DESIGN: No later than November 1, 2012, WMECO shall file a revenue-neutral rate design plan with the Department to realign customer rates in a manner that coincides with the decline in the transition charge resulting from the termination of the pay-down of the securitized bonds, which is expected to occur during May of 2013, and in a manner that is consistent with the Department’s rate design principle of rate continuity and gradualism to address open rate design issues cited in the Department’s order in D.P.U. 10-70. Prior to filing with the Department, WMECO will consult with the Attorney General to develop a proposal so that the combination of this distribution rate realignment and the reduction in the transition charge preclude a cumulative increase in rates to any rate class. Furthermore, any distribution rate increase to a class shall be set on a uniform cents per kilowatt-hour basis, unless WMECO and the Attorney General agree prior to filing that customers would be more reasonably and equitably served by a different approach. WMECO shall consult with the Attorney General’s office at least 30 days prior to the filing to review and discuss the proposals that will be made in the rate design filing.

(10) ACCOUNTING FOR GOODWILL: The transaction value recorded on the books of NSTAR LLC (the post-closing holding company that will be the sole shareholder of NSTAR Electric and NSTAR Gas) upon the close of the Proposed Merger will include goodwill as defined under generally accepted accounting principles. The Settling Parties agree that the goodwill resulting from the Proposed Merger will not be recorded on the books of Operating Companies unless required by rule or directive of the Securities Exchange Commission or generally accepted accounting principles. If so required, the Operating Companies shall quantify the goodwill and its effects recorded on the financial

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books of account and shall exclude that amount from any ratemaking calculation used to set customer rates, tariffs or charges.

(11) NET BOOK VALUE OF UTILITY ASSETS: In completing the Proposed Merger transaction, the Operating Companies shall not make any accounting adjustment that has the result of increasing the net book value of utility assets for ratemaking purposes.

(12) ACCOUNTING TREATMENT OF MERGER-RELATED COSTS: No transaction costs incurred to negotiate, draft, or execute the merger agreement, or to obtain the regulatory and shareholder approvals required to consummate the Proposed Merger, shall be recorded on the books of the Operating Companies. Such transaction costs will be recorded at the parent company level and not allocated or assigned to the Operating Companies. Integration costs, such as costs incurred to identify cost-reduction opportunities, to reorganize operations, or to consolidate information systems, or that are otherwise incurred for the purpose of reducing operating costs of the Operating Companies, may be recorded on the books of the Operating Companies or charged to the Operating Companies by a service company, in an appropriate proportion.

(13) AMORTIZATION OF COSTS FOR RATEMAKING PURPOSES: For ratemaking purposes, the Operating Companies shall amortize merger-related transaction and integration costs over a 10-year period following the approval of this Settlement Agreement.

(14) FUTURE RATEMAKING FOR MERGER COSTS: Subject to Department review and approval, transaction and reasonable integration costs from the Proposed Merger shall be eligible for recovery in a future distribution rate proceeding through the retention of merger-related synergies to the extent that merger-related savings are demonstrated to equal or exceed those costs. The compensation for departing employees subsequently rehired or

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retained as outside consultants shall be excluded from the merger-related savings calculations. Merger-related payments made to officers leaving the employ of NSTAR, NU, any of the temporary or surviving entities engaged in the proposed merger transactions, the Operating Companies, or their successors (together, the “post-merger organization”) in the category of “change of control” payments, or to executives remaining with the post-merger organization in the category of “retention payments,” shall be recorded at the parent company level upon the merger close and shall not be eligible for recovery as a merger-related cost or otherwise from customers.

(15) MERGER-RELATED INTEGRATION REPORTING: Actual transaction costs by account shall be reported to the Department in a compliance filing made within ninety (90) days of the close of the Proposed Merger. In addition, the Operating Companies shall each provide to the Attorney General and to DOER, as of January 1, 2014 and 2015 (and each January 1 thereafter until each respective Operating Company files a base-rate proceeding), interim reports on the previous calendar year’s merger integration efforts organized by functional area, including but not limited to merger-related costs incurred, supporting documentation, any savings achieved attributable to the merger integration efforts and the effects the merger integration efforts had on the Operating Companies (“Annual Interim Reports”). At least 60 days prior to the filing of the first base-rate proceeding following the Base Rate Freeze Period for NSTAR Electric, NSTAR Gas or WMECo, the respective Operating Company shall submit a final merger integration report to the Attorney General and to DOER developed utilizing the same manner of information used to compile the Annual Interim Reports.

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(16) NOTICE OF FACILITY CLOSINGS OR LAYOFFS: In the event of a facility closing or layoff of employees by Operating Companies or the post-merger organization during the term of this agreement, such utility will provide 30 days’ advance notice of such action to the Attorney General and to DOER. Nothing in this Settlement Agreement shall be interpreted to abridge any collective bargaining rights regarding reductions to work force.

ARTICLE III: ADDITIONAL CONDITIONS

(1) The making of this Settlement Agreement establishes no principles and shall not be deemed to foreclose any party from making any contention in any future proceeding or investigation, except as to those issues and proceedings that are stated in this Settlement Agreement as being specifically resolved and terminated by approval of this Settlement Agreement.

(2) This Settlement Agreement shall not be deemed in any respect to constitute an admission by any party that any allegation or contention in this proceeding, or any facts relating to any other pending proceeding cited in this document, is true or false. Except as specified in this Settlement Agreement to accomplish the customer and shareholder benefits intended by this Settlement Agreement, the entry of an order by the Department approving the Settlement Agreement shall not in any respect constitute a determination by the Department as to the merits of any other issue raised in this proceeding or any proceeding cited in this document.

(3) This Settlement Agreement is the product of settlement negotiations. The Settling Parties agree that the content of those negotiations (including any workpapers or documents produced in connection with the negotiations) are confidential to the extent permissible under the Massachusetts Public Records Law, G.L. c. 66, § 10 and G.L. c. 4, § 7,

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cl. twenty-sixth, that all offers of settlement are without prejudice to the position of any party or participant presenting such offer or participating in such discussion, and, except to enforce rights related to this Settlement Agreement or defend against claims made under this Settlement Agreement, that they will not use the content of those negotiations in any manner in these or other proceedings involving one or more of the parties to this Settlement Agreement, or otherwise.

(4) The provisions of this Settlement Agreement are not severable. This Settlement Agreement is conditioned on its approval in full by the Department on, but not prior to, April 4, 2012 (“Requested Approval Date”), and any supporting information or evidence provided to the Department during any proceeding to investigate this settlement shall not interpreted to vary the express terms of this Settlement Agreement. Notwithstanding any of the foregoing provisions, the Attorney General may, in her sole discretion, or DOER may, in its sole discretion, rescind the Settlement Agreement in its entirety prior to the Department’s issuance of an order approving the Settlement Agreement; provided that notice of such rescission must be filed, or submitted electronically, in writing with the Department. The Settling Parties agree that the Requested Approval Date of this Settlement Agreement may be extended upon the mutual consent of the Settling Parties and notification of such extension to the Department.

(5) If the Department does not approve this Settlement Agreement in its entirety by the Requested Approval Date, or if, for any reason, the Proposed Merger is not consummated, this Settlement Agreement shall be null and void, even if already approved by the Department, and this Settlement Agreement and filed supporting documents shall

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be deemed to be withdrawn and shall not constitute a part of the record in any proceeding or used for any other purpose.

(6) To the extent permitted by law, the Department shall have its usual jurisdiction to implement the terms of this Settlement Agreement. Nothing in this Settlement Agreement, however, shall be construed to prevent or delay the Attorney General from pursuing any cause of action related to this Settlement Agreement in court under G.L. c. 93A or otherwise.

(7) Under no circumstances shall: (1) any charge under this Settlement Agreement or tariffs promulgated hereunder recover costs that are collected by the Operating Companies more than once, or through some other rate, charge or tariff; or (2) any charge recover costs more than once in any other rate, charge or tariff collected by the Operating Companies, it being acknowledged by the Settling Parties that such collection(s), unless fully refunded with interest, as soon as reasonably possible, shall constitute a breach of this Settlement Agreement when discovered and generally known and be deemed to violate the involved tariffs.

(8) Notwithstanding any provision in this Settlement Agreement to the contrary, no part of this Settlement Agreement shall be interpreted to interfere with the Attorney General’s rights to petition the Department under G.L. c. 164, § 93, or otherwise under law or regulation, for a review of the Operating Companies, the post-merger organization, or their successors for any reason.

(9) Any number of counterparts of this agreement may be executed, and each shall have the same force and effect as an original instrument, and as if all the parties to all the counterparts had signed the same instrument.

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The signatories listed below represent that they are authorized on behalf of their principals to enter into this Settlement Agreement.

MARTHA COAKLEY, COMMONWEALTH OF MASSACHUSETTS ATTORNEY GENERAL	COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF ENERGY RESOURCES
/s/ Jesse S. Reyes	/s/ Anna Blumkin
By: Jesse S. Reyes Chief, Office of Ratepayer Advocacy Office of the Attorney General One Ashburton Place Boston, MA 02108-1598	By: Anna Blumkin Acting General Counsel Department of Energy Resources 100 Cambridge Street, Suite 900 Boston, MA 02114

NSTAR NSTAR ELECTRIC COMPANY NSTAR GAS COMPANY	NORTHEAST UTILITIES WESTERN MASSACHUSETTS ELECTRIC COMPANY
/s/ James J. Judge	/s/ David R. McHale
By: James J. Judge Senior Vice President and Chief Financial Officer NSTAR 800 Boylston Street Boston, MA 02199	By: David R. McHale Executive Vice President and Chief Financial Officer Northeast Utilities 56 Prospect Street Hartford, CT 06103

Dated: February 15, 2012

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EX-10.2

Exhibit 10.2

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

	)
Joint Petition for Approval of Merger	)
Between NSTAR and Northeast Utilities,	)	D.P.U. 10-170
Pursuant to G.L. c. 164, § 96	)
	)

SETTLEMENT AGREEMENT

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

	)
Joint Petition for Approval of Merger	)
Between NSTAR and Northeast Utilities,	)	D.P.U. 10-170
Pursuant to G.L. c. 164, § 96	)
	)

SETTLEMENT AGREEMENT

WHEREAS, this Settlement Agreement is entered into by and between NSTAR Electric Company (“NSTAR Electric”), NSTAR Gas Company (“NSTAR Gas”) and Western Massachusetts Electric Company (“WMECO”) (together the “Companies”), and the Massachusetts Department of Energy Resources (“DOER”), collectively, the “Settling Parties”, with regard to the Joint Petitioners’ proposed merger application and ancillary matters pending before the Department of Public Utilities (“Department”) in the above-referenced proceeding:

WHEREAS, the Settling Parties have engaged in negotiations with regard to the matters specified in the articles of this Settlement Agreement; and

WHEREAS, the Settling Parties have raised competing and disputed claims with regard to the factors considered by the Department in reviewing a proposed merger application, including, but not limited to the impact of the merger on the advancement of the Commonwealth’s clean energy goals established by the Green Communities Act (“GCA”) and the Global Warming Solutions Act (“GWSA”); long-term strategies that will assure a reliable, cost-effective energy delivery system; the impact on rates, service quality, and post-merger financial integrity; the equitable allocation of merger benefits; the effect on competition, and societal and economic impacts, but wish to resolve those matters on mutually agreeable terms, and without establishing any new precedent or principle applicable to any other proceedings; and

WHEREAS, the Settling Parties have the mutual objective of resolving the competing and disputed claims with respect to DOER’s Renewed Motion for Stay of the Proceedings, filed with the Department on July 14, 2011, in this proceeding; and

WHEREAS, the Settling Parties have the mutual objective of establishing a regulatory framework to take effect upon the Department’s approval of the Proposed Merger in order to further the Commonwealth’s policies on the reduction of greenhouse gas emissions and to secure long-term cost savings available from the Proposed Merger for customers.

WHEREAS, it is the objective of the Settling Parties to allocate the impacts of the Proposed Merger among the various states in which the merged entity will operate in a way that achieves comparability among the states with respect to merger savings, service improvements and employment impacts, and the Settling Parties have structured this Settlement Agreement to achieve such comparability, and are committed to structuring any settlement agreements in other jurisdictions in a way that will maintain such comparability.

NOW THEREFORE, in consideration of the exchange of promises and covenants herein contained, the legal sufficiency of which is hereby acknowledged, the Settling Parties agree, subject to approval by the Department, as follows:

ARTICLE 1: MERGER-RELATED FINANCIAL BENEFITS

The Settling Parties recognize the value of providing merger savings to customers immediately, and of providing stable electric and natural gas prices over an extended period of time. Accordingly, the Settling Parties have agreed to the following provisions:

1.1. Immediate Customer Rebate: The Companies shall provide a one-time, non-recoverable $21 million rate credit to customers to be applied on the first billing cycle in the next billing month following the closing of the Proposed Merger, as also provided in a separate settlement agreement between the Companies, DOER and the Commonwealth of Massachusetts, Office of the Attorney General (“Attorney General”) (the “AG-DOER Settlement”). The Companies shall allocate the credit as follows: $15 million for NSTAR Electric customers, $3 million for NSTAR Gas customers, and $3 million for WMECO customers. For each individual company, all customers within a retail customer class shall receive the same rate credit dollar amount. The application of this credit shall not prevent customers from enjoying any other rate reductions or benefits related to the Proposed Merger.

1.2. Base-Rate Freeze: NSTAR Electric, NSTAR Gas and WMECO shall forego their opportunity under G.L. c. 164 § 94 to obtain a general increase in base distribution rates prior to January 1, 2016 (the “Base-Rate Freeze”), and their base distribution rates shall be frozen for a period of forty-four (44) months from the merger close for that purpose, as provided in the separate settlement agreement between the Companies, DOER and the Attorney General.

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ARTICLE 2: CORPORATE LEADERSHIP ON CLIMATE CHANGE

The Settling Parties recognize that, as a result of the merger, the Companies will be part of a regional utility having significant size and substantial impact. As such, the Companies recognize their obligation to play a strong leadership role with respect to the advancement of the Commonwealth’s climate change policies. Therefore, the Settling Parties agree as follows:

2.1 Public Outreach Campaign: Within 90 days of the merger closing, NSTAR Electric shall conduct a public outreach campaign relating to its post-merger operations. The public outreach campaign will educate customers as to transparency of the Company’s operations and climate change goals, as well as its continued commitment to the communities it serves, the continued provision of safe and reliable service to customers and the importance of the Commonwealth’s climate change goals in terms of furtherance of renewable power procurement, solar power development, energy efficiency program implementation and other policies encompassed within the Green Communities Act of 2008. The outreach campaign shall be conducted through the print media, bill inserts and other modes of public communication. In addition, NSTAR Electric shall maintain the level and types of community involvement provided prior to the merger over the Base-Rate Freeze period. The Company shall report to the Department on its public-outreach activities on a quarterly basis for a 15-month period following the merger closing

2.2 Wind Power Procurement: The Settling Parties agree that NSTAR Electric will enter into a long-term renewable power contract with Cape Wind Associates, LLC (“Cape Wind”) for a term of 15 years, which obligates NSTAR Electric to purchase the energy associated with 129 MW of Cape Wind capacity. This total purchase shall count toward the three percent procurement obligation set forth under Section 83 and 220 C.M.R. § 17.00 et seq. of the GCA. The terms of the Cape Wind Contract, including but not limited to the purchase price for the power and the purchase of RECs, shall be substantially the same as those terms approved by the Department in National Grid, D.P.U. 10-54 (2010).

Notwithstanding the foregoing, NSTAR Electric shall include as a provision in its contract with Cape Wind, and the Department shall issue an Order in this proceeding to the effect that, if Cape Wind does not commence physical construction of the facility prior to December 31, 2015, then NSTAR Electric shall terminate the Cape Wind Contract as of December 31, 2015. If the Cape Wind Contract has been terminated, then NSTAR Electric shall issue a request for proposal (“RFP”) for new Massachusetts RPS Class-I qualified renewable contract(s) with a term of at least 15 years, for approximately 2.0 percent of its 2013 electric load requirement. The RFP shall be issued no later than March 31, 2016 in accordance with the provisions of procurement obligations under Section 83 of the GCA; provided, however, that in the event that Cape Wind, its successors or assigns, or another party representing its interests, challenges the

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validity or effectiveness of NSTAR Electric’s termination of the Cape Wind Contract, NSTAR Electric shall issue such RFP, but shall not be required to execute a renewable contract(s) resulting from such RFP, until there has been a final determination that said contract has been terminated. The alternative renewable contract(s) resulting from the RFP will be proposed to the Department for review and approval. For purposes of this paragraph, “physical construction” shall mean any physical installation of equipment or materials into the seabed of the Cape Wind construction site that is integral to the assembly of the wind turbine generation units. The Cape Wind Contract shall provide that the determination as to whether physical construction has commenced shall be made by the Department, upon petition by NSTAR Electric.

2.2.1 Section 83 Remuneration: The Settling Parties agree that, consistent with the provisions of Section 83, NSTAR Electric shall receive annual remuneration equal to four percent of the annual payments under the Cape Wind Contract, or the alternative renewable contract(s) if executed, as remuneration for acceptance of the financial obligation of the long-term contract for renewable energy (“Section 83 Remuneration”). See, D.P.U. 10-54, at 316-317.

The costs associated with the Cape Wind Contract or any alternative long-term renewable contract entered into in accordance with paragraph 2.2 shall be recovered from NSTAR Electric distribution customers, with the difference between the contract price paid by NSTAR Electric and net revenues received to be charged or credited to distribution customers in accordance with Department practice.

2.2.2 Memorandum of Understanding: The Settling Parties agree that, within 20 days of the filing of this Settlement Agreement, NSTAR Electric shall file an executed Memorandum of Understanding (“MOU”) between NSTAR Electric, DOER and Cape Wind to commence the Department’s Section 83 proceeding for review and approval of a Cape Wind Contract. The terms of the MOU shall be as set forth in this Settlement Agreement.

2.2.3 Contract Approval: The Settling Parties agree that NSTAR Electric shall file an executed Cape Wind Contract with the Department, for review and approval in a Section 83 proceeding, no later than March 30, 2012; provided that the executed contract shall contain a provision stating that the contract shall not be effective until five business days from the date of the merger closing.

2.2.4 Conditions: If the Department rejects this Settlement Agreement; rejects the AG-DOER Settlement Agreement; renders a finding precluding consummation of the Proposed Merger; denies approval of the Proposed Merger, or otherwise does not issue an order in D.P.U. 10-170 consistent with this Settlement Agreement, then the MOU filed with the Department pursuant to paragraph 2.1.2, above shall be null and void, in accordance

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with terms included therein, and NSTAR Electric shall not be required to execute the Cape Wind Contract.

2.2.5 Scope of Approval: The Settling Parties agree that the Department’s approval of this Settlement Agreement shall not be deemed to constitute any form of review of the Cape Wind Contract or approval or endorsement that the Cape Wind Contract is in the best interest of ratepayers for the purposes of this pending proceeding (D.P.U 10-170). Rather, the Settling Parties agree that execution and filing of this Settlement Agreement is a demonstration by NSTAR Electric of its commitment to advance the goals of the GWSA and the GCA, consistent with the standard of review required by the Department in the D.P.U. 10-170 proceeding.

2.3 Energy Efficiency: The Settling Parties agree that NSTAR Electric will take all steps necessary to achieve an increase to the 2012 energy efficiency savings targets applicable under the three-year energy efficiency plans in place for NSTAR Electric and WMECO in 2012, as filed in D.P.U. 11-106 and D.P.U. 11-12. The increase shall raise the energy efficiency savings from 544,408 MWh to 555,296 MWh. If, by December 31, 2012, the 2012 annual energy savings results for NSTAR Electric and WMECO in the aggregate does not equal 555,296 MWh, then a penalty shall apply. The penalty shall be a reduction in NSTAR Electric’s 2012 incentive in the amount of $24.40 per MWh for each additional committed MWh not achieved.

Commencing in 2013, NSTAR Electric and WMECO shall increase their aggregate energy efficiency savings target to at least 2.5% of retail sales annually through energy efficiency, so long as there is no material change in the framework for assessing the success of the program and associated incentives, or providing for program funding. This annual commitment will remain in place until the expiration of Base-Rate Freeze period. If the Energy Efficiency Advisory Council (“EEAC”) determines that the minimum target established in the 3-year plans during this period should be increased to a level above 2.5%, and the Department approves the EEAC’s minimum savings target, NSTAR Electric and WMECO shall be required to meet that higher standard, accordingly.

2.4 Solar Investment: The Settling Parties agree that NSTAR Electric will submit proposed solar contracts to the Department for approval, each with a term of up to ten years. The solar installations will be developed and owned by third parties. The solar contracts shall be identified through an RFP process involving the issuance of two RFPs. The RFPs shall seek a total of 10 megawatts (“MW”) of Massachusetts qualified solar renewable energy credits (“SRECs”), with each RFP soliciting requests for five MW. The scope, terms and conditions of the two RFPs for SRECs shall be substantially similar to the long-term renewable RFP approved by the Department in D.P.U. 10-58. The first RFP shall be issued within three months of the merger closing and NSTAR Electric shall submit said contract(s) to the Department no later than November 1, 2012, for review and approval consistent with Section 83 requirements for renewable power

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procurement. The second RFP shall be issued no more than 30 days following the issuance of the Department’s order on the first contract and the resulting contract(s) shall be submitted to the Department for review and approval no later than 180 days after the RPF is issued.

2.5 Hydroelectric: Through December 31, 2016, neither NSTAR Electric nor WMECO shall seek to satisfy any Massachusetts Class I renewable portfolio standard obligation using power supplied by any large hydroelectric facility. Nor shall NSTAR Electric or WMECO seek to sell Massachusetts RPS Class I renewable energy credits into the Massachusetts market for electricity produced by such hydroelectric power. A large hydroelectric facility shall be defined as any hydroelectric facility with generating capacity over 25 MW. After December 31, 2016, NSTAR Electric and WMECO shall endeavor to keep energy supply costs competitive based on market conditions in the region and continue to pursue large scale hydro as a cost-competitive low carbon renewable alternative.

2.6 Electric Vehicle Pilot: The Settling Parties agree that NSTAR Electric shall develop and implement an Electric Vehicle Pilot Program (“EV Pilot”) and associated tariff in collaboration with DOER, for approval by the Department. The objective of the EV Pilot will be to identify the most cost-effective approach to establish EV charging infrastructure in the merged entity’s service area within the Commonwealth. The EV Pilot shall consider the option of collaborating with neighborhoods, municipal parking authorities and employers to set aside special areas for charging. The EV Pilot would also explore off-peak charging. The EV Pilot shall be proposed to the Department for approval within six months of the date of the Department’s approval of this Settlement Agreement.

2.7 Phase-out of Stand-by Rate Tariffs : The Settling Parties agree that, no later than six months from the date of the merger closing, NSTAR Electric shall petition the Department to open a docket to (1) review NSTAR Electric’s stand-by rate tariffs with the goal of phasing out SB-G2 and SB-G3 tariffs on a revenue neutral basis as determined by the Department and (2) evaluate, in collaboration with DOER, fall zone requirements for wind facilities. In addition, no later than six months from the date of the merger closing, NSTAR Electric will file a report with the Department for review and approval summarizing NSTAR Electric’s policies related to customer-funded upgrades for interconnection of distributed generation.

ARTICLE 3: EQUITY AND TRANSPARENCY

The Settling Parties believe that it is critical to maintain customer service levels while merger efficiencies are being achieved; that any merger-related workforce reductions should be shared equitably across the several states in which the utilities operate, and that post-merger utility reporting should meet high standards of accuracy. Accordingly, the Settling Parties commit to the following:

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3.1 Massachusetts Service Quality: By December 31, 2015, measurable improvements in service quality levels for WMECO shall be achieved as compared to the current pre-merger service-quality benchmarks calculated in accordance with the Department’s service-quality guidelines. Through December 31, 2015, NSTAR Electric shall demonstrate that it has maintained the level of service quality provided in its service territory as compared to pre-merger service-quality benchmarks, calculated in accordance with the Department’s service-quality guidelines.

3.2 Post-Merger Employment Levels: The Settling Parties agree that, in connection with the achievement of synergies following the merger, reductions in the Massachusetts employee work force, and/or transfer of jobs or workforce functions, shall be made on a fair, and equitable basis, giving consideration to previous work history, job experience and qualifications, and further, such workforce reductions in the Commonwealth will not be disproportionate to other jurisdictions in which the merged entity conducts operations; nor will such workforce reductions diminish customer service operations or compliance with emergency response plans approved by the Department. In the event of a facility closing or layoff of employees by Operating Companies or the post-merger organization during the term of this agreement, such utility will provide 30 days’ advance notice of such action to the Department of Energy Resources. Nothing in this Settlement Agreement shall be interpreted to abridge any collective bargaining rights regarding reductions to work force.

3.3 Accurate and Transparent Reporting: Sixty days before filing its next rate case in accordance with the AG-DOER Settlement Agreement, NSTAR Electric shall present to the Department an independent study that includes: (1) an examination and verification of the Annual Returns to the Department for the four-year period ending December 31 of the test-year period, and (2) verification of the assets contained in NSTAR Electric’s distribution rate base as of the test-year end, which shall have been developed through a systematic review as described in the NARUC Rate Case and Audit Manual.¹  The systematic review shall provide a comprehensive listing of assets. The study shall be prepared by an independent accounting firm identified through an RFP process conducted by NSTAR Electric in consultation with DOER and the Attorney General, with the selection of the independent accounting firm to be made by DOER and the Attorney General, subject to the consent of NSTAR Electric. NSTAR Electric shall be responsible for all costs and expenses associated with retaining an independent accounting firm; provided, however, that said costs shall not be entitled to recovery in any subsequent rate proceeding before the Department. The RFP process shall be

¹  The independent accounting firm selected to conduct the study shall employ the NARUC Rate Case and Audit Manual as the basis for conducting the verification of rate-base assets. The verification of rate-base assets will include: plant-in service, plant held for future use, construction work in progress, gains/losses from property sales and acquisition adjustments/goodwill.

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conducted so as to allow for the commencement of the study work no later than 240 days prior to the filing of the rate case. In relation to the Annual Return, the selected independent accounting firm shall verify the mathematical accuracy of the Annual Return; verify that the operating costs reported in the Annual Return reconcile to the Company’s financial statements, including, but not limited to, the Company’s income statement and balance sheet, as audited by the Company’s external auditing firm; confirm that the Annual Return is rendered in accordance with regulatory accounting standards and requirements, as applicable.

ARTICLE 4: DEPARTMENT APPROVALS

4.1 Settlement Approval: The Settling Parties assert that, if the Department does not approve this Settlement Agreement in its entirety on April 4, 2012, this filing shall be deemed to be withdrawn and shall not constitute a part of the record in any proceeding or used for any other purpose.

4.2 Merger Approval: The Settling Parties agree that the merger proposed by the Joint Petitioners in this proceeding is consistent with the public interest as required by G.L. c. 164, § 96. Therefore, this Settlement Agreement is contingent upon the Department’s simultaneous approval of: (1) this Settlement Agreement, (2) the AG-DOER Settlement Agreement referenced in paragraph 4.3, below, and (3) the Proposed Merger, on April 4, 2012.

4.3 Post-Merger Rate Levels: The Settling Parties recognize that DOER has sought in this proceeding to ensure that customers receive the benefit of savings associated with the Proposed Merger. Accordingly, the Settling Parties assert that the provisions of this Settlement Agreement are contingent upon the Department’s simultaneous approval of the AG-DOER Settlement Agreement, simultaneously filed with the Department in this proceeding.

ARTICLE 5: OTHER CONDITIONS

5.1 The Settling Parties assert that the provisions of this Settlement Agreement are not severable. This Settlement Agreement is conditioned on its full approval by the Department without additional conditions or requirements. The Settling Parties Agree that the Department will undertake a thorough review of this Settlement Agreement, that the Department is not obligated to approve this settlement agreement and that its ruling will be based on a finding that the terms contained herein are consistent with the public interest as required by G.L. c. 164, § 96. Notwithstanding any of the foregoing provisions, DOER may, in its sole discretion, rescind the Settlement Agreement in its entirety prior to the Department’s issuance of an order approving the Settlement Agreement; provided that such rescission must be filed in writing with the Department. The Settling Parties agree that the expiration date for the Department’s review and approval of this Settlement Agreement may only be extended upon motion by DOER to the

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Department seeking such extension for two (2) business days following a final determination rendered in other jurisdictions.

5.2 If, for any reason, the Proposed Merger is not consummated, the terms of this Settlement Agreement shall no longer apply even if already approved by the Department subject to the terms set forth herein.

5.3 This Settlement Agreement shall not be deemed in any respect to constitute an admission by any party that any allegation or contention in this proceeding is true or false. Except as specified in this Settlement Agreement to accomplish the customer benefit intended by this Settlement Agreement, the entry of an order by the Department approving the Settlement Agreement shall not in any respect constitute a determination by the Department as to the merits of any other issue raised in this proceeding.

5.4 The making of this Settlement Agreement establishes no principles and shall not be deemed to foreclose any party from making any contention in any future proceeding or investigation, except as to those issues and proceedings that are stated in this Settlement Agreement as being specifically resolved and terminated by approval of this Settlement Agreement.

5.5 This Settlement Agreement is the product of settlement negotiations. The Settling Parties agree that the content of those negotiations (including any workpapers or documents produced in connection with the negotiations) are confidential, that all offers of settlement are without prejudice to the position of any party or participant presenting such offer or participating in such discussion, and, except to enforce rights related to this Settlement Agreement, comply with the Public Records Law or defend against claims made under this Settlement Agreement, that they will not use the content of those negotiations in any manner in these or other proceedings involving one or more of the parties to this Settlement Agreement, or otherwise.

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The signatories listed below represent that they are authorized on behalf of their principals to enter into this Settlement Agreement.

Commonwealth of Massachusetts Department of Energy Resources	For: NSTAR Electric Company NSTAR Gas Company
/s/ Anna Blumkin	/s/ James J. Judge
By: Anna Blumkin Acting General Counsel Department of Energy Resources 100 Cambridge Street, Suite 900 Boston, MA 02114	By: James J. Judge Senior Vice President and Chief Financial Officer NSTAR 800 Boylston Street Boston, MA 02199

For:

Western Massachusetts Electric Company

/s/ David R. McHale

By: David R. McHale

Executive Vice President and

Chief Financial Officer

Northeast Utilities

56 Prospect Street

Hartford, CT 06103

Dated: February 15, 2012

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EX-99.1

Exhibit 99.1

News Release

MEDIA CONTACTS:

Caroline Allen, NSTAR	Al Lara, Northeast Utilities
617-424-2460	860-728-4616
caroline.allen@nstar.com	albert.lara@nu.com

NSTAR and Northeast Utilities Reach Comprehensive

Merger-Related Agreements with Massachusetts DOER and

Massachusetts Attorney General

Utilities agree to rate credit for customers, four-year rate freeze and enhanced environmental commitments

HARTFORD, CT, and BOSTON, MA, (February 15, 2012) – NSTAR (NYSE: NST) and Northeast Utilities (NYSE: NU) have reached separate, comprehensive merger-related agreements with both the Massachusetts Department of Energy Resources (DOER) and the Massachusetts Attorney General (AG) that will guarantee substantial customer and environmental benefits, while allowing the utilities’ merger to proceed. The settlement agreements both call for a one-time $21 million rate credit to be directed to customers of NSTAR Electric, NSTAR Gas and Western Massachusetts Electric Company (WMECo). Base distribution rates for the utilities would then be frozen until 2016. In addition, under the agreement with the DOER, the utilities pledge further environmental commitments to solar, wind, hydro, energy efficiency and electric vehicle development, including a memorandum of understanding to purchase clean power from Cape Wind, the nation’s first off-shore, large-scale wind farm.

“Today’s announcement is the result of a year-long effort by the state agencies and the companies to reach agreements that appropriately balance all of the interests affected by the merger,” said Tom May, NSTAR Chairman, President and CEO. “Benefits for Massachusetts customers are both immediate, in the form of a rate credit plus a four-year distribution rate freeze, and longer-term, with NSTAR’s purchase of clean power from Cape Wind, which together with our existing wind contracts will help meet the state’s clean energy targets. We recognize that the climate change goals set forth by Governor Patrick’s Green Communities Act will require aggressive action and we think the best way to meet those requirements is through a diversified portfolio of renewable resources.”

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“The merger will benefit all of our customers by creating a stronger company that stays headquartered in New England and is expected to provide higher service levels and lower costs over the long term,” noted Charles W. Shivery, NU Chairman, President and CEO. “This merger continues to be the right decision for customers, employees and shareholders now and into the future.”

Highlights of both the AG and DOER agreements include the following:

• The proposed merger between NSTAR and NU would be approved by the MDPU.

o Merger will create a stronger, more efficient company that will provide a number of benefits for customers that would not otherwise be possible.

o Merger would create a Fortune 300 company headquartered in New England, with close ties to local communities.

o All existing labor agreements will be honored, no broad-based employee layoffs.

• Massachusetts customers will benefit from an immediate $21 million rate credit and a base distribution rate freeze beginning when the merger closes and lasting until 2016.

o Customers of NSTAR Electric, NSTAR Gas and WMECo will receive an immediate, one-time rate credit.

o NSTAR Electric, NSTAR Gas and WMECo agree that they will freeze base distribution rates at current levels until 2016, thus guaranteeing that customers will see no base distribution rate increase during the term of the agreements.

In addition, the settlement agreement between the DOER and the utilities includes the following environmental provisions:

• Massachusetts’ climate goals will be substantially advanced.

o Wind: NSTAR will enter into a 15-year contract to buy 129 megawatts of offshore wind power from Cape Wind. This contract will complement NSTAR’s existing contracts for 109 megawatts of onshore wind and will help Massachusetts meet its clean energy goals.

o Solar: NSTAR will issue an RFP to enter into long-term contracts for 10 megawatts of solar power.

o Energy Efficiency: NSTAR and WMECo will commit to reducing electric use 2.5% annually beginning in 2013 through the remaining term of the agreement by increasing energy efficiency measures.

o Electric Vehicles: NSTAR will put in place an electric vehicle pilot program in Massachusetts, building on work already done by Northeast Utilities. The pilot will be designed to help NSTAR understand the infrastructure requirements needed for a substantial increase in the use of carbon-free electric vehicles.

The agreements must be approved by the MDPU. The parties have requested an approval date of April 4, 2012.

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About Northeast Utilities

NU, headquartered in Hartford, operates New England’s largest utility system with annual revenues of approximately $5.4 billion and assets of $14.2 billion. NU and its companies in Connecticut, Massachusetts and New Hampshire serve more than 2.1 million electric and natural gas customers in nearly 500 cities and towns. For more information, go to www.nu.com.

About NSTAR

NSTAR is the largest Massachusetts-based, investor-owned electric and gas utility. The company transmits and delivers electricity and natural gas to 1.4 million customers in Eastern and Central Massachusetts, including more than one million electric customers in 81 communities and 300,000 gas customers in 51 communities. For more information, visit www.nstar.com.

Information Concerning Forward-Looking Statements

In addition to historical information, this communication may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. Forward-looking statements relating to the proposed merger include, but are not limited to: statements about the benefits of the proposed merger involving NSTAR and Northeast Utilities, including future financial and operating results; NSTAR’s and Northeast Utilities’ plans, objectives, expectations and intentions; the expected timing of completion of the transaction; and other statements relating to the merger that are not historical facts. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements. With respect to the proposed merger, these factors include, but are not limited to: the risk that NSTAR or Northeast Utilities may be unable to obtain governmental and regulatory approvals required for the merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could reduce the anticipated benefits from the merger or cause the parties to abandon the merger; the risk that a condition to closing of the merger may not be satisfied; the length of time necessary to consummate the proposed merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on merger-related issues; the effect of future regulatory or legislative actions on the companies; and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect. These risks, as well as other risks associated with the merger, are more fully discussed in the joint proxy statement/prospectus that is included in the Registration Statement on Form S-4 (Registration No. 333-170754) that was filed by Northeast Utilities with the SEC in connection with the merger. Additional risks and uncertainties are identified and discussed in NSTAR’s and Northeast Utilities’ reports filed with the SEC and available at the SEC’s website at www.sec.gov. Forward-looking statements included in this document speak only as of the date of this document. Neither NSTAR nor Northeast Utilities undertakes any obligation to update its forward-looking statements to reflect events or circumstances after the date of this document.

Additional Information and Where To Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger between Northeast Utilities and NSTAR, Northeast Utilities filed with the SEC a Registration Statement on Form S-4 (Registration No. 333-170754) that includes a joint proxy statement of Northeast Utilities and NSTAR that also constitutes a prospectus of Northeast Utilities. Northeast Utilities and NSTAR mailed the definitive joint proxy statement/prospectus to their respective shareholders, on or about January 5, 2011. Northeast Utilities and NSTAR urge investors and shareholders to read the joint proxy statement/prospectus regarding the proposed merger, as well as other documents filed with the SEC, because they contain important information. You may obtain copies of all documents filed with the SEC regarding this proposed transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from Northeast Utilities’ website (www.nu.com) under the tab “Investors” and then under the heading “Financial/SEC Reports.” You may also obtain these documents, free of charge, from NSTAR’s website (www.nstar.com) under the tab “Investor Relations.”

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