Northeast Utilities Plans for Investment in Transmission Infrastructure

Leon J. Olivier – President Northeast Utilities Transmission Group

Harris Nesbitt Conference

Boston, Massachusetts

April 7, 2005

Page 2

Safe Harbor Provisions

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

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About Northeast Utilities Transmission…

Operating Company

Transmission Circuit Miles

Transmission Substations

12/31/04 Net Plant

($ Millions)

CL&P 1,671.5 38 293.1

WMECO

(including HWP & HPE)

470.5 18 58.6

PSNH 997.5 52 119.7

Total NU 3,139.5 108 471.4

Comparative Ranking of NU (Of the 20 largest transmission companies in the 11 Northeastern States)

• 4th Largest in terms of miles

• 10th largest in terms of Net Transmission Assets

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Agenda

The need for transmission investment

NU’s programs within ISO-NE’s Regional Transmission Expansion Plan (RTEP)

Major projects and status

Financial benefits to customers and shareholders

Looking beyond the current forecast

Page 5

The Nation’s Transmission System Is in Need of Significant Additions and Upgrades.

A 2001 Edison Electric Industry (EEI) study identified $56B in transmission infrastructure investment needs.

The Federal Energy Regulatory Commission (FERC) has identified $12B that is needed simply to relieve immediate congestion points.

The August 14, 2003 blackout report addresses the need for significant new transmission investments.

FERC’s Electric Transmission Constraint Study identified congestion points that need immediate relief.

MAPP

SPP

ECAR

SERC

FRCC

MAIN

NWPA

AZ/NM/SNV

RMPA

ISO-NE

NYISO

PJM

SW CT Interface

Southeast PA West VA/PJM Interface

Southeast West VACentral MO

East KS/MO Interface

Northeast AZ

Central IA

WY/ID InterfaceCA/OR Interface

Pacific DC Intertie

East NY

Central CA

Southern CA

CA/MX

Northeast of Boston

Southwest MI

: Constraint and constrained flow direction

Transmission Constraints in the Contiguous U.S.

55

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In New England, the Regional Transmission Expansion Plan (RTEP) Identifies Nearly $2.4 Billion in Projects

RTEP05 Transmission Projects

57%18%

10%

9%

5%

1%

NUNgrid NSTAR UI Bangor Hydro Energy East

And NU’s part of that transmission expansion program is nearly $1.4 billion.

NGrid

Page 7

NU’s RTEP Projects Include…

SWCT – 345 kV and 115 kV facilities

Replacement of the 138 kV Long Island Cable (with LIPA)

Distribution support through new substations

Additional autotransformers to strengthen certain areas by providing new connections to the 345 kV grid

Substation upgrades for enhanced reliability and to meet bulk power facility requirements

Circuit breaker replacements

Protection & controls modifications

Capacitor additions

Dynamic voltage control devices (Statcom completed in SWCT)

Line rebuilds and/or reconductoring for increased capability

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Transmission Group Asset Strategy for 2005

NU has committed to a $245 million capital program for 2005.

Five large projects in Connecticut comprise over two-thirds of the capital program:

Bethel-Norwalk $121.9M

Middletown-Norwalk $18.0M

Glenbrook Cables $3.9M

Long Island Replacement Cable $8.3M

Haddam Autotransformer $14.0M

The remaining one-third is comprised of nearly 200 projects in Transmission’s three-state region:

Connecticut $42.5M

Massachusetts $12.5M

New Hampshire $23.9M

$166.1M

$78.9M

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The Need: An Adequate Transmission System

Reliability Concerns An inadequate system serves 50% of Connecticut’s load New England’s 345kV system stops at SWCT’s border Does not meet national reliability standards SWCT noted as a major reliability concern at federal, regional and

local levels

Economic Impacts Rising potential for wide area blackouts Relies on old, costly and inefficient generation plants Threat to the area’s economy with increasing congestion costs and

potential for market power Limits the potential of New England’s competitive wholesale markets

345-kV115-kV

50%50%

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

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Proposed Upgrades to the SWCT Transmission System

345-kV115-kV

Existing

Bethel-Norwalk 345 kV Underground& Overhead$300-350 Million

21 miles 345kV (56% underground)

10 miles 115kV (100% underground)

Projected in-service date: Dec 2006 Middletown-Norwalk 345 kV

Underground & Overhead$670-794 Million (NU 80% Share) 69 miles 345kV (35% underground)

57 miles 115kV (1% underground)

Projected in-service date: 2009

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Financial Implications

For customers:

Improved reliability – creates secure supply, quality service and stable environment for production and growth

Lower levels of congestion and less LICAP exposure results in lower bills

Increased access by competitive generators should lower costs

For shareholders:

Increases in rate base from investments drive earnings growth

$500 million of current rate base

$1 billion - $1.5 billion of capital spending projected in 2005-2009

Siting for our large projects is progressing

Our cost recovery mechanisms are largely defined

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Transmission Capital Expenditures*

$55

$99

$171

$245

$285

$250

$375

$255

$20$0

$50

$100

$150

$200

$250

$300

$350

$400

2001 2002 2003 2004 2005 2006 2007 2008 2009

Actual Forecast

$ Millions NU’s Transmission growth has already begun.

* Spending levels depend on final level and timing of all projects.

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We Believe that a Significant, Continuing Stream of Investments in Transmission is Sustainable

Line rebuilds to replace aging, low capacity conductor

Voltage conversions from 69 kV to 115 kV

Additional 345 – 115 kV autotransformers

New 115 and 345 kV lines (overhead and underground) to meet load growth and to increase transfer capability across constrained interfaces

New substations to meet load growth

$55

$99

$171

$245

$285

$250

$375

$255

$20$0

$50

$100

$150

$200

$250

$300

$350

$400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Actual Forecast