ELECTRIC

1
ELECTRIC GAS COMPANYBoston,
Massachusetts

• September 21, 2005
• Vivian Castro
• Amy Schoeman
• Laura Shifley

2
Introduction

• March 1998 the restructuring of the electric
  utility industry began in Massachusetts
• Resulted in the unbundling of generation (energy
  supply) from energy delivery.
• Energy supply was provided by competitive
  suppliers (Select Energy supplies energy to
  NSTAR)

3
Background

• Electricity Natural Gas Utility
• Headquarters in Boston
• Serves nearly 1.4 million residential business
  customers in over 100 Eastern Massachusetts
  communities
• Competitors include New England Gas Company
  (Blackstone Electric) UNITIL (Fitchburg Gas
  Electric) Massachusetts Electric and Western
  Massachusetts Electric

4
Organizational Structure

• NSTAR is a publicly traded company. It is MA's
  largest investor owned gas and electric utility.

• Managed by a team of 10 trustees and 11 managers
  - NSTAR is comprised of three retail electric
  companies, Boston Edison, ComElectric, and
  Cambridge Electric.

• Financed by its shareholders and customers
  through the distribution, transmission, and sale
  of services.

Regulatory Structure Massachusetts Department of
Telecommunications and Energy (MDTE) Federal
Energy Regulatory Commission (FERC) regulate
rates of return, rate structure, continued
recovery of regulatory assets, financings,
purchased power, acquisition and disposition of
assets, operation and construction of facilities,
and changes in tax laws and policies
5
2004 Financial Overview

• Financing Activities
• long-term debt redemptions (138.3 m)
• sinking funds payments (258.4 m)
• dividends paid of 119.8 million
• a reduction in short-term borrowings since
  December 2003 of 77.7 million as a result of the
  300 million financing by Boston Edison in April
  2004
• issued approximately 156,000 common shares and
  has received approximately 7.6 m as a result of
  the plan
• Major Issues for the Company
• -NSTAR has sold ALL of their power plants out
  of financial necessity
• -Environmental Remediation Costs

6
NSTAR 2004 Financials
Assets Liabilities ( 7,117,229) Utility
plant in service, construction work in progress,
non-utility property, equity investments,
accounts receivable, accrued unbilled revenues,
inventory, deferred debits, prepaid pension For
2004, utility operations accounted for 96 of
consolidated operating revenues Net income
188,481,000 Comprehensive income 185,078,000

7
NSTAR Operations

• Customer Base (covers 81 counties)
• Residential Customers 967,000 (86)
• Business Customers 156,000 (14)
• TOTAL 1.123 Million customers
• Employee Base
• NSTARs regulated subsidiaries (including NSTAR
  Gas) have more than 3,200 employees
• Physical Asset Base
• owns and maintains hundreds of properties
  throughout its service territory for the
  distribution and transmission of electricity
  (substations, service/operating centers,
  right-of-ways, warehouses, and related corporate
  facilities and offices)
• NSTAR has hundreds of miles of electric rights of
  way, some of which are owned by NSTAR and others
  which are held in easement and owned by others.

8
NSTAR Operations

• Output Variables (MWH)
• Retail Electric Sales (2004)
• Residential 6,564,494 MWH
• Commercial 12,693,217 MWH
• Industrial 1,651,389 MWH
• Other 168,733 MWH
• Total retail sales 21,077,833 MWH

9
NSTAR Tariffs
Sample of ConEd Bill (NYC)

• Locational Marginal Pricing (LMP)
• Mechanism based on wholesale clearing prices by
  load zones

Estimated September 2005 Electricity Costs
NSTAR Residential Pricing