Fitch Affirms NSTAR & Subsidiaries; Outlook Stable.

NEW YORK -- Fitch Ratings has affirmed the outstanding ratings of NSTAR and its subsidiaries as shown below. The Rating Outlook for NSTAR and each of its subsidiaries remains Stable.

NSTAR's ratings reflect the stable cash flows and relatively low business risk of its four regulated electric and gas distribution subsidiaries, the constructive regulatory environment in Massachusetts that largely insulates the utilities from commodity price risk, and an overall credit profile that is consistent with the current ratings. The ratings and Stable Outlook also consider the recent rate settlement agreement approved by the Massachusetts Department of Telecommunications and Energy (MDTE) in December 2005. The rate settlement agreement, covering each of the NSTAR electric utility subsidiaries, reduced delivery rates (defined as the distribution rate plus the standard cost access charge) by $20 million effective Jan. 1, 2006, and then freezes rates for seven years through 2012. The settlement agreement also provides for a $30 million increase in the distribution charge and a corresponding $30 million reduction and deferral in the access charge effective May 1, 2006. This reallocation of revenue has no impact on customer rates or NSTAR's cash flow, but will benefit earnings. The primary credit concern is the exposure to cost of service changes, other than fuel costs, during the rate freeze period.

Under the Massachusetts restructuring plan, NSTAR's electric utilities essentially have no commodity price exposure. Electric delivery customers that do not choose an alternative energy supplier receive basic service from NSTAR at market-based rates. NSTAR Gas is also largely protected from changes in commodity costs through the cost of gas adjustment clause (CGA). However, beginning Jan. 1, 2006, the CGA was modified to defer any supply costs that would increase CGA rates by more than 40% above those in effect Nov. 1, 2005. Each of the utilities also benefit from a regulatory mechanism that fully reconciles pension costs with pension revenue.

Boston Edison Company (BECO) is NSTAR's largest subsidiary and its primary source of credit strength. The distribution utility's solid credit metrics are consistent with its Fitch 'AA-' senior unsecured debt rating. BECO maintains a $350 million revolving credit facility that expires in November 2009 and serves as a back-up facility to its $350 million commercial paper (CP) program. The three smaller utility operating subsidiaries, Cambridge Electric, Commonwealth Electric, and NSTAR Gas generate solid regulated cash flows and have coverage and leverage measures that are supportive of the current ratings. Collectively these entities have $245 million available under several lines of credit.

The following ratings have been affirmed by Fitch:

NSTAR

-- Issuer Default Rating (IDR) 'A-';

-- CP 'F1';

-- Senior unsecured 'A'.

Boston Edison

-- IDR 'A+';

-- CP 'F1+';

-- Senior unsecured 'AA-';

-- Preferred Stock 'A+'.

Cambridge Electric Light Co.

-- IDR 'A-';

-- Senior unsecured 'A'.

Commonwealth Electric Co.

-- IDR 'A-';

-- Senior unsecured 'A'.

NSTAR Gas

-- IDR 'A-';

-- Senior secured 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.