Fitch Rates Connecticut Light & Power Co.'s FMBs 'A-'

Business Wire, June 1, 2006

NEW YORK -- Fitch Ratings has assigned an 'A-' rating to Connecticut Light & Power Co.'s (CL&P) $250 million issuance of 6.35% first and refunding mortgage bonds, 2006 series A, due 2036. The Rating Outlook is Stable. Proceeds from the issuance will be used primarily to reduce outstanding short-term debt and finance capital expenditures.

CL&P's ratings reflect the stable cash flows of its regulated electric transmission and distribution business and hedged commodity price risk. Under existing Connecticut law, CL&P procures power supply through a competitive wholesale bidding process and is allowed to pass through costs to end-users while earning a small profit margin.

Primary credit concerns include CL&P's substantial capital spending plan, the moderate lag in regulatory recovery of these transmission expenditures before the facilities enter service, and the resulting weakening of credit measures. CL&P's leverage (in terms of debt to cash flow from operations) is expected to remain high over the next several years, until the company completes its major capital projects in southwest Connecticut and begins recovering a return on more of its investment 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.

Importantly, there are mechanisms in place that mitigate the risk of delayed recovery and provide for the timely recovery of CL&P's FERC regulated transmission investments. For instance, in July 2005, Connecticut enacted legislation requiring the Connecticut Department of Public Utility Control to adjust electric retail rates regularly to reflect all prudently incurred transmission costs. CL&P 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 positively affected further by additional incentives for transmission investment being considered by FERC.

CL&P's parent company, Northeast Utilities, altered its business strategy during 2005, deciding to exit its underperforming competitive operations. The exit from all nonregulated operations is expected to continue through 2006 and will reduce future consolidated cash flow volatility.

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