Fitch Revises Outlooks of NU and CL&P to Stable.

NEW YORK -- Fitch Ratings has affirmed the issuer default and senior unsecured ratings of Northeast Utilities (NU) at 'BBB' and the ratings of its regulated distribution utilities Connecticut Light and Power Co. (CL&P), Public Service Co. of New Hampshire (PSNH) and Western Massachusetts Electric Co. (WMECO) as outlined below. Fitch has also revised the Rating Outlooks of NU and CL&P to Stable from Negative. Approximately $2.4 billion of debt is affected.

The Stable Rating Outlook reflects NU's relatively predictable utility cash flows, the expectation of reduced business risk with the exit from its nonregulated businesses, and adequate liquidity. During 2005, NU altered its business strategy, deciding to exit its underperforming competitive operations. The exit from all nonregulated operations, which is expected to continue through 2006, will reduce future cash flow volatility. However, NU will not have the cash flow and dividends that these businesses had been projected to generate to support its capital spending needs, which are forecast at $4.3 billion over the next five years.

NU's Stable Outlook also assumes that the further exit costs from exiting below-market energy contracts will be manageable. Fitch considered estimated costs for exiting NU's marketing operations as well as alternative stress scenarios. Positively, NU should benefit from net cash proceeds from the sale of subsidiary Northeast Generation Co.'s generating assets, which could be utilized to reduce debt and/or finance the company's substantial capital build-out. Fitch anticipates that NU will continue to fund its capital spending program with adequate levels of equity. In the event the costs associated with serving and/or exiting NU's marketing contracts are higher than anticipated or cash proceeds from asset sales fall short of expectations, Fitch believes NU will adjust the timing and size of future equity issuances to maintain credit metrics in line with the rating category. Fitch notes that in December 2005, NU completed an upsized $425 million equity offering, with proceeds primarily used to reduce outstanding debt that had been incurred to finance wholesale contract buyouts and capital expenditures.

NU's credit metrics have weakened over the past year due to customer refunds, lackluster returns from the wholesale business, and the additional debt incurred to fund capital expenditures and power contract buyouts. Debt leverage (as measured by debt to cash flow) in particular is expected to remain weak for the rating category over the next several years as incremental capital expenditures are financed with debt before equity is issued and tariffs are adjusted. Adjusted debt to FFO is expected to exceed 7.0 times (x) over the next several years, while adjusted FFO to interest should be in the 3.0x range. Importantly, there are mechanisms in place that provide for the timely recovery of the company's Federal Energy Regulatory Commission (FERC) regulated transmission investments. For instance, in July 2005, Connecticut enacted legislation requiring the Connecticut Department of Utility Control to adjust electric retail rates regularly to reflect all prudently incurred transmission costs. This mechanism is particularly beneficial to CL&P's cash flow stability, given the high transmission costs that continue in Connecticut. NU also recently received FERC approval to add 50% of construction work in progress into rate base for its four southwestern Connecticut projects, which will moderately reduce financing needs over the next five years. Cash flow could be further positively affected by additional incentives for transmission investment being considered by FERC.

CL&P's Stable Rating Outlook reflects Fitch's view that adequate and explicit mechanisms exist for the recovery of the company's substantial transmission investments and the expectation that these will be funded with a balanced mix of debt and equity. While CL&P's allowed return on equity remains relatively low at 9.85%, Connecticut legislation has allowed for the full recovery of energy, congestion and transmission costs. CL&P's debt leverage is expected to remain high over the next several years until the company completes its major capital projects and begins recovering its investments from customers. Inadequate equity funding of its capital build-out or significant delays in the regulatory recovery of these costs could lead to a negative rating action.

The ratings of PSNH and WMECO reflect their predictable cash flows and relatively low commodity price risk. WMECO has divested all of its generation and procures power for default customers through competitive bids and fully passes on its market-based costs to customers. PSNH still owns 1,150 megawatts of fossil and hydroelectric assets, which are used to supply energy for approximately 70% of its transition service load. PSNH's fuel and purchased power costs in excess of those reflected in the transition and default service charges are addressed through an annual stranded-cost recovery charge reconciliation filing, and recovery is subject to a regulatory prudence review.

Through its regulated subsidiaries, CL&P., PSNH, WMECO and Yankee Gas Services, NU provides power and gas to a total of 2.1 million residential, commercial and industrial customers in New England. NU also operates several unregulated businesses, including energy marketing, merchant generation and energy services, which it is in the process of divesting.

Fitch affirms the NU subsidiaries as follows:

Connecticut Light & Power Company

--Issuer Default Rating (IDR) at 'BBB';

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

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

--Preferred stock at 'BBB'.

Public Service Co. of New Hampshire

--IDR at 'BBB';

--Senior secured debt at 'BBB+';

--Senior unsecured debt at 'BBB'(indicative).

Western Massachusetts Electric Company

--IDR at 'BBB';

--Senior unsecured bonds at 'BBB+'.

The Outlook for all ratings is Stable.

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.