Fitch Affirms Rating of NU & Subsidiaries; NU Outlook Remains Negative.

NEW YORK -- Fitch Ratings has affirmed the senior unsecured rating of Northeast Utilities (NU) at 'BBB' and the ratings of its utility subsidiaries as outlined below. NU's Rating Outlook remains Negative. Also, Fitch affirmed the ratings of Northeast Generation Co. (NGC).

The rating affirmation follows NU's announcement on March 9, 2005 that it intends to exit the wholesale marketing and energy services businesses. NU believes the wholesale power markets in the Northeast region have become increasingly competitive and that it is not able to earn acceptable profit margins. NU will explore a number of options for exiting the wholesale business in the coming months. The company announced that it expects to take a charge during the first quarter of 2005. It is possible that more significant impairment charges will be required as NU completes its exit from these businesses. However, the company will retain its competitive generation and retail energy marketing operations.

In November 2004, NU announced that it was reviewing strategic alternatives for its competitive businesses following unsuccessful bidding in the Connecticut and other New England competitive power auctions. The financial performance of its competitive operations, particularly the wholesale segment, has been below expectations for the past several years. Additionally, the energy services segment has not been able to produce meaningful earnings for NU.

NU's Negative Rating Outlook reflects the expectation of reduced earnings and cash flow from NU's competitive businesses, the unclear cash flow and balance sheet impact of NU's business disposals, and the significant utility capital spending plan. NU had previously anticipated considerable dividends from its competitive businesses over the next several years to help fund its substantial utility capital buildout, especially network-related investments at Connecticut Light & Power Co. The material reduction in anticipated dividends from the competitive businesses has increased the company's need for external funding to finance these projected capital expenditures. Insufficient equity financing, particularly in light of reduced internal cash flow expectations, would have negative credit implications.

A negative rating action could result for NU and its utility subsidiaries if NU funds the expansion of its utility system without sufficient new equity, NU's business disposals result in more significant impairment charges or require substantial cash payments or if it is unable to manage the risks of its retained retail energy marketing and competitive generation businesses. A positive rating action could result if the proceeds of business disposals permit a significant reduction in parent level debt or if the utility capital investment is funded with sufficient parent level equity.

NGC's long-term credit quality is driven by its underlying value as a merchant portfolio. Although Fitch expects that NGC's output will continue to be sold to affiliates for the foreseeable future, the rating does not rely on the financial performance resulting from the current contractual arrangements. (See the press release 'Fitch Comments on Northeast Generation Company,' dated Nov. 19, 2004, available on the Fitch Ratings web site at www.fitchratings.com for additional details.

Fitch affirms the NU subsidiaries as follows:

Connecticut Light & Power Company

-- First and refunding mortgage bonds at 'A-';

-- Unsecured and second-mortgage pollution control bonds at 'BBB+';

-- Preferred stock at 'BBB';

-- Rating Outlook Negative.

Public Service Co. of New Hampshire 

-- Senior secured debt at 'BBB+';

-- Sr. Unsecured debt (indicative) at 'BBB';

-- Rating Outlook Stable.

Western Massachusetts Electric Company

-- Senior unsecured bonds at 'BBB+';

-- Rating Outlook Stable.

Northeast Generation Co.

-- Senior secured bonds (series A) at 'BBB';

-- Senior secured bonds (series B) at 'BBB-'.