Profile: NStar (NST.N)

NSTAR is a holding company engaged in the energy delivery business. The Company, through its subsidiaries, is involved in serving approximately 1.4 million customers in Massachusetts, including approximately 1.1 million electric distribution customers in 81 communities and approximately 300,000 natural gas distribution customers in 51 communities. NSTAR derives its revenues from the sale of energy, distribution and transmission services to customers. NSTAR’s operating segments are the electric and natural gas utility operations that provide energy delivery services in 107 cities and towns in Massachusetts.

NSTAR’s retail electric transmission and distribution utility subsidiaries are NSTAR Electric Company (NSTAR Electric) and NSTAR Gas Company (NSTAR Gas), respectively. Its nonutility, unregulated operations include district energy operations primarily through its Advanced Energy Systems, Inc. (AES) subsidiary, telecommunications operations (NSTAR Communications, Inc.) and a liquefied natural gas service company (Hopkinton LNG Corp). Harbor Electric Energy Company (HEEC), a wholly owned subsidiary of NSTAR Electric, provides distribution service and ongoing support to its only customer, the Massachusetts Water Resources Authority.

NSTAR Electric Company

NSTAR Electric supplies electricity at retail to an area of 1,702 square miles. The territory served is located in Massachusetts and includes the City of Boston and 80 surrounding cities and towns, including Cambridge, New Bedford, and Plymouth and the geographic area comprising Cape Cod and Martha’s Vineyard. Retail electric delivery rates are established by the Department of Public Utilities (DPU) and comprises distribution charges, basic service charge, transition charges, transmission charges, energy conservation charges and renewable energy charges. NSTAR Electric fully recovers its energy costs, through DPU approved rate mechanisms. As of December 31, 2008, NSTAR Electric’s primary and secondary transmission and distribution system consisted of approximately 21,950 circuit miles of overhead lines, 12,980 circuit miles of underground lines, 255 substation facilities and 1,169,300 active customer meters.

NSTAR Gas Company

NSTAR Gas distributes natural gas to approximately 300,000 customers in 51 communities in central and eastern Massachusetts covering 1,067 square miles and having a population of 1.2 million. Twenty five of these communities are served with electricity by NSTAR Electric. Some of the communities served by NSTAR Gas include the Hyde Park area of Boston, Cambridge, Dedham, Framingham, New Bedford, Plymouth, Somerville and Worcester. NSTAR Gas generates revenues through the sale and/or transportation of natural gas. Gas sales and transportation services are divided into two categories: firm, whereby NSTAR Gas supplies gas and/or transportation services to customers on demand; and interruptible, whereby NSTAR Gas temporarily discontinues service to high volume commercial and industrial customers. Retail gas delivery and supply rates are established by the DPU and comprises distribution charges, seasonal cost of gas adjustment clause (CGAC) and a local distribution adjustment clause (LDAC). The CGAC provides for the recovery of all gas supply costs from firm sales customers. The LDAC provides for the recovery of costs applicable to both sales and transportation customers.

NSTAR Gas maintains a resource portfolio consisting of gas supply contracts, transportation contracts on interstate pipelines, market area storage and peaking services. It purchases transportation, storage and balancing services from Tennessee Gas Pipeline Company and Algonquin Gas Transmission Company, as well as other upstream pipelines that bring gas from major producing regions in the United States, Gulf of Mexico and Canada to the final delivery points in the NSTAR Gas service area. NSTAR Gas purchases its gas supply from third-party vendors. The supplies are purchased under a firm portfolio management contract with a term of one year. The Company has one multiple year contract, which is used for the purchase of its Canadian supplies. Based on its firm pipeline transportation capacity entitlements, NSTAR Gas contracts for up to 139,214 millions of British thermal units (MMbtu) per day of domestic production. As of December 31, 2008, the gas system included approximately 3,086 miles of gas distribution lines, approximately 188,000 services and approximately 299,500 customer meters.

Unregulated Operations

NSTAR’s unregulated operations include district energy operations, telecommunications and liquefied natural gas service. District energy operations are provided through its AES subsidiary that sells chilled water, steam and electricity to hospitals, teaching and research facilities located in Boston’s Longwood Medical Area. Telecommunications services are provided through NSTAR Com, which installs, owns, operates and maintains a wholesale transport network for other telecommunications service providers in the metropolitan Boston area to deliver voice, video, data and Internet services to customers. NSTAR Com’s telecommunications service owns approximately 200 miles of fiber optic network, which represents approximately 79,000 fiber miles of network.