Nstar Electric Co. · OTC:NSARO
Nstar Electric — EEI Financial Conference 2012
45 slides from Nstar Electric's conference presentation, Nov 9, 2012
Slide 1: EEI Financial Conference
EEI Financial Conference November 11-14, 2012 ine mage ny uM Wi
Slide 2: NU Safe Harbor Provisions
NU Safe Harbor Provisions This presentation includes statements concerning NU’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth arid other statements that are not historical facts. These statements are “forward-looking
Slide 3: Agenda
Agenda * Hurricane Sandy * New NU * Energy Policy/Gas Expansion * Transmission Update * Merger Integration * Financial Review and Outlook 3
Slide 4: Hurricane Sandy Update
Northeast Utilities Hurricane Sandy Update About half — 1.5M of NU’s electric customers were impacted Over 10,000 FTEs
Slide 5: New NU Has Extensive Scale and Scope
Northeast ZI Viilities New NU Has Extensive Scale and Scope Combined, the new NU is now: Providing reliable electric & gas service to: * 3.5 million electric and gas customers +Leveraging investments for our customers & shareholders: + $12.4 billion combined rate base (2011) “Serving 525 cities & to
Slide 6: Crown Jewel of a Service Territory
Northeast Utilities “Crown Jewel’ of a Service Territory Herald Seaport District Boston, MA Business The Summer House Stamford, CT _) Under Construction SAFRAN, Production Facility chester, NH
Slide 7: Creating Superior Value: Growing the Transmission and Gas Businesses
Northeast Y Utilities <% 2 Creating Superior Value Growing the Transmission and Gas Businesses
Slide 8: Connecticut Draft Energy Policy
Connecticut Draft Energy Policy Hartford Courant ‘A Push For Cheaper, Cleaner Power “Malloy’s plan to expand natural gas “Converting up to 300,000 was proposed Oct. 5 as part of households to natural gas the state Department of Energy & by 2020 Environmental Protection & comprehensive energy strateg
Slide 9: NU's Gas Business Could Be Significantly Expanded
Annual customer additions NU’s Gas Business Could Be Significantly Expanded NU Gas Business — NSTAR Gas, Yankee Gas 2013-2022 Projected Annual Customer Additions 20,000 5,000 Potential High Growth Projection 89,000 incremental new customers 33% total customer base growth 2012 to 2022 Base Growth Pro
Slide 10: Transmission Update
Northeast ZX Utilities Transmission Update * $700M of additional transmission projects * About $2B of equity invested in transmission business expected to grow to $3.5B by 2017 * FERC committed to incentives for needed infrastructure investments
Slide 11: NEEWS Transmission Update
Northeast Utilities NEEWS Transmission Update Projected in-service: late 2013 + Joint project with National Grid (NU in CT; +Project 85% complete as of 9/30/12 NGrid in MA & Ril) ‘Total projected NU cost: $718 milion * All major permitapplications filed * CT siting hearings are complete with decisio
Slide 12: Northern Pass Transmission Project Overview
Northeast ZX Viilities Northern Pass Transmission Project Overview 1,200 MW clean energy * $1.1 billion HVDC line, terminaland AC facilities + Participant-funded structure; no impacton the Regional Transmission Rate + Uses HVDC technology at +/- 300-kV with AC/DC converters in Quebecand NH + AC radi
Slide 13: Financial Review
Northeast * Utilities 1 Al Financial Review Jim Judge Executive Vice President & Chief Financial Officer
Slide 14: Outline
Northeast | , TR Outline « A Great Platform for Future Success + Regulatory and business diversity * Strong financial condition + Merger integration * Financial Results and Expectations « Key assumptions * Interest savings . Full year 2012 and 2013 projections and third quarter 2012 results * Divide
Slide 15: Regulatory and Business Segment Diversity
Northeast Utilities Regulatory and Business Segment D Rate Base By State / Federal Rate Base By Business MA pute’ Y istribution 31% 52% NH 12% Electric Generation 6% Electric Gas Transmission Distribution 32% 25% 10% Combined 2011 Rate Base: $12.4 billion
Slide 16: Very Strong Ratings Rank Highly in the Industry
Northeast Utilities Very Strong Ratings Rank Highly in the Industry . Wisconsin Energy . Northeast Utilities Con Edison . National Grid Holdings . Xcel Energy . Integrys . Dominion . NextEra : | - E i ° Ld BBB+ Below Investment, Grade ee try Report Card: U.S. Regulated Ele ned Regulated Electric Uti
Slide 17: Merger Integration Priorities
Merger Integration Priorities Merger integration initiatives Category Staffing Levels v Information 7 Technology Supply Chain v Customer Care v Operations A Activity Achieving reductions in staff, vendors and contractors Consolidating IT infrastructure, data storage, data centers, security Implement
Slide 18: Key Assumptions Through 2015
Northeast | Z Utilities Key Assumptions Through 2015 Electric sales: Annual growth of approximately 0.5% - 1.0% Natural gas sales: \Weather-normalized annual growth of 1%-2% = Impact of a return to normal weather for 2013 adds approximately 7% to sales O&M: Annual decreases of approximately 3% = Cos
Slide 19: Interest Savings: Short-Term and Long-Term
Northeast SHORT-TERM NSTAR commercial paper program expanded to NU in July Effectively lowered short-term borrowing costs on $700M by 150 basis points Renegotiation of $1.6B of bank lines also lowered revolverfees Annualized Interest/Fee Savings of Approximately LONG-TERM NSTAR Electric is refinanci
Slide 20: Projected 2012 Recurring EPS
Northeast Utilities Projected 2012 Recu Major Drivers vs. 2011 NSTAR earnings Higher transmission rate base Lower interest costs Initial cost savings PSNH, Yankee Gas distribution rate increases $2.25 - $2.30 20
Slide 21: Strong Third Quarter Results Support 2012 Guidance
Northeast Utilities Strong Third Quarter Results Support 2012 Guidance (Recurring EPS) $0.04 $0.03 $0.33 EARNINGS $0.70 $0.51 03-2011 NSTAR Earnings Transmission Electric and gas Other, primarily Highershares Higher O&M 03-2012 sales growth lower tax outstanding expense 24
Slide 22: Projected EPS Range for 2013
Northeast Utilities Projected EPS Range for 2013 Major Drivers vs. 2012 Normal weather Lower interest costs Additional transmission rate base PSNH, Yankee Gas distribution rate increases Cost savings Additional PSNH $2.40 = $2.60 generation return 22
Slide 23: EPS Growth Beyond 2013
Northeast |, Z Utilities hig EPS Growth Beyond 2013 | Major Drivers Continued investment in transmission reliability projects, including NEEWS Northern Pass Transmission Long-te rm Increase in gas 6% - 9% neat savings CAGR off of 2012 23
Slide 24: Dividend Growth In-Line with Earnings Growth
Northeast Utilities Dividend Growth In-Line with Earnings Growth $0.95 Annualized Dividend 2009 2010 2011 Q1 2012 Q2-04 2012 24
Slide 25: Additional Upside Opportunities Not Reflected in Projections
Northeast |, Utilities Additional Upside Opportunities Not Reflected in Projections * Additional natural gas expansion investments * Additional transmission investments * Favorable CT energy efficiency/ energy policy outcomes + Accelerated economic recovery
Slide 26: Today's Key Takeaways
Northeast | ZI Viilities Today’s Key Takeaways.... * 6% - 9% projected long-term growth rate exceeds peers * Transmission capital spending increases $700 million from previous forecast * Significant interest savings * Top tier financial condition * Strong management team that delivers
Slide 27: Appendix
Northeast |, Y Utilities ©
Slide 28: Slide 28
Slide 29: The Regulatory Environment: NU Business Segments
Northeast Utilities The Regulatory Environment: NU Business Segments Have a High Level of Rate Certainty NSTAR Electric Rates frozen through 12/31/15; NSTAR Gas reconciling adjustments continue to WMECO operate Rates frozen through 11/30/14; ee CL&P. reconciling adjustments continue to Distribution
Slide 30: Review of FERC-Approved Transmission ROEs
Northeast Utilities Review of FERC-Approved Transmission ROEs 13.50% 13.00% 12.50% 12.00% 11.50% 11.00% 10.50% 10.00% 12.80% 13.10% 12.56% 12.64% 11.64% 11.14% g LocalNetwork Regional Norther Pass 2005-2008 NEEWS Service Network Service Regional Unde ground Base Projects I NU's Local Network Service
Slide 31: Transmission ROE Proceeding Timeline
Northeast Utilities 10/1 11/20 Transmission Owners Case Filed Complainants’ Case Filed rf 4it7 516 gto Updated ROE Initial Decision ee Analyses Due > esis From Judge 2014 FERC Decision Expected Possible Requests for Rehearing
Slide 32: CT Governor's Energy Policy Addresses State's Dependence on Fuel Oil
CT Governor's Energy Policy Addresses State’s Dependence on Higher-Cost, Higher-Emission Fuel Oil CT & MA Residential Gas Heating CT Residential Market Penetration by Penetration vs. Nearby States Heating Source 80% 72% 60% 6 50% 60% 53% 48% 47% 40% 40% 31% 31% 20% 20% 15% i = 0% o% 4 Ee NJ NY RI MA
Slide 33: Customer Growth Has Picked Up for NU's Gas Business
Northeast Z Utilities Customer Growth Has Picked Up for NU’s Gas Business egy NU Gas Business — NSTAR, Yankee Gas 2007-2012 Annual Customer Additions (Conversions and new construction) 10,000 Natural gas prices decreasing 8,000 Economic downturn = 6,000 E = 4000 8,200 3 6,802 cos - 5,162 5,572 = 2,0
Slide 34: Natural Gas Prices Have Reduced New England's Wholesale Electricity Costs
Northeast Utilities Natural Gas Prices Have Reduced New England’s Wholesale Electricity Costs By More Than 50% ISO-NE Wholesale Market Costs, Energy Component $12 $12 ~ = Electricity Value $9 —Natural Gas (Henry Hub) é o s 2 2 $6 $6 5 6 @ 8 $3 $0 $0 2006 2007 2008 2009 2010 2011 2012 Average Cost(ce
Slide 35: Lower Wholesale Prices Have Reduced Retail Electric Bills Since 2008
Northeast Utilities Lower Wholesale Prices and Lower Congestion Costs Have Significantly Reduced Our Retail Electric Bills Since 2008 Cents/KWH Cents/KWH NSTAR CL&P oe Electric oe 2008 Bill Today's Bill 2008 Bill Today's Bill @i Generation/Supply Mi Distribution ™ Transmission ™ > Other 35
Slide 36: Near Term Upside: Record Mild Weather in 2011
Near Term Upside: Record Mild Weather in 2011 Reduced Our Gas Delivery Margins by $30 Million 2000— Present Winter Heating Degree Days Heating Degree Days 6,500 6,000 5,500 3331 5,000 4,500 4,000 3,800 3,000 2zoon- -2001- = 2002- »-2003- = nns- —2008- ©2n08- © 2007- ©2008-2009 2001 2002 2003 ns. 200
Slide 37: NEEWS: Greater Springfield Reliability Project
Y Utilities NEEWS: mm Northeast The Greater Springfield Reliability Project A Case Study In NU’s Transmission Development Expertise Southampton «Holyoke Greater Springfield Reliability Project (GSRP) Shawinigan ‘sutching Saco Westie’ ott dl Ga 3 ae +Projected in-service: late 2013 ingte springfield
Slide 38: NEEWS: Interstate Reliability Project
NEEWS: Interstate Reliability Project Northeast ZX Viilities Interstate Reliability Project Willington Ashford | Eastford Killingly yhongeuuoo Brooklyn, Windham Card Street] scotiang Canterbury Plainfield” Sterling ENE Proposed Route A Switching Station A. Substation 38 | + Joint project with Nation
Slide 39: NEEWS: Greater Hartford Central Connecticut Project
Northeast ’ Utilities NEEWS: Greater Hartford CentralConnecticut Project (GHCC) Pn, Blomnta Wong Roa SUrCtOH aden cha Famiogton Pymouth Bristol Pivilo fron ge bern woot Sottnington MR sed 54 tte Asian — @ det tena caso EXISTING CONNECTICUT = TRANSMISSION SYSTEM The 345-kV Central Connecticut Reliabi
Slide 40: Transmission's Projected Capital Investment Has Grown by $700M
Northeast Utilities ‘Transmission’s Projected Capital Investment Has Grown by $700M to $3.7B from Last Year's Forecast Historic Budget Forecast $3.5 Billion $718M $3.7 Billion $1,000 _ y $900 $800 ef $700 |- SWCT mae total $1.6 billion ~ il 0 =a Northern Pass HVDC Line to Canada US portion estimated
Slide 41: 2013-2017 NU Transmission Capital Program
Northeast Utilities 2013-2017 NU Transmission Capital Program Other Projects — In Millions CL&P NSTAR PSNH WMECO Total $1.47 Billion High confidence level in “Other Projects,” 78% in RSP as required. Breakdown of Other Projects: + 78% ($1.14B) -in RSP + 22% ($328M) - not yet in RSP a
Slide 42: Transmission Rate Base Growth Projections
Northeast Utilities Transmission Rate Base Growth Projections 10% CAGR $8,000 $7,000 $6,811 $6,000 $4,991 $5,000 $4,613 5 3.873 $4,214 = $4,000 ° $3,000 $1,232 $1,480 $1,648 BS , $866 $975 $1,130 4 $2,000 $1,000 $2,100 $2,191 $2,248 $2,392 $2,421 $2,403 $2,439 $0 2011A 2012 2013 2014 2015 2016 2017
Slide 43: Projected Distribution/Generation Capital Expenditures
Northeast Utilities Projected Distribution/Generation Capital Expenditures $1,000 $889 $886 $858 $840 $800 — 952 g $600 $665 2 $637 = $603 $583 *® $400 $200 $0 T T 1 7 2013 2014 2015 @ Natural Gas Distribution m Generation Electric Distribution mCL&P Resiliency 43
Slide 44: Total Projected Capital Expenditures
Northeast Utilities Total Projected Capital Expenditures $2,000 $1,600 $1,200 $800 $400 $0 2012 2013 2014 2015 i Transmission Electric & Gas Distribution and Generation (including CL&P resiliency) Other, Primarily IT
Slide 45: Projected Rate Base Growth
Northeast Z Utilities Projected Rate Base Growth - 2 Rate Base By Business* Electric Distribution, AT% Electric Electric Generation Transmission B% 39% Gas Distribution 9% Projected Combined 2015 Rate Base: $15.6 billion ectrie Transmission includes projected Northern Pass AFUDC 2s of 12/3 45