CORRECTED-UPDATE 1-Massachusetts recommends approval of Northeast-NSTAR deal

Feb 15 (Reuters) - Northeast Utilities said regulators in Massachusetts have recommended the approval of its $4.17 billion takeover of NSTAR and the combined utility will freeze rates for four years and provide a rebate of $21 million to customers.

In October 2010, Northeast Utilities had said it will buy NSTAR in an all-stock deal to create a utility that will provide power and gas to more than half of the customers in New England.

NSTAR will buy 129 megawatts of offshore wind power from Cape Wind farm, developed by Massachusetts-based energy company EMI.

An independent report commissioned by Connecticut Governor Dannel Malloy had documented failings on the part of Northeast in preparing for Hurricane Irene.

Earlier last year, the Connecticut Public Utilities Regulatory Authority said it did not have jurisdiction over the deal, leaving final approval to regulators in Massachusetts.