Plan Approach and Underlying Principles

1. Northeast Utilities(NSTAR Electric and Western Mass Electric)Planning and Decision Making on Grid Facing InvestmentsJanuary 14, 2013

2. Plan Approach and Underlying Principles • Results of planning process must meet obligation to provide safe and reliable service to our customers • To achieve this objective, both companies adhere to established engineering optimum design guidelines

3. Optimum Engineering Design Framework • Developed based on a comprehensive engineering assessment and review of infrastructure and assets • Established criteria for system design and operation • Formal guidelines and framework followed by Engineering in the identification and recommendation of projects and solutions

4. Project Selection Methodology Objectives • Probabilistic Assessment focused on Expected Energy at Risk and Customer Reliability Improvements (MBI / CAIDI) • Defines the magnitude and duration of customer interruptions • Reliability Projects – Measures the degree which the project will reduce the frequency or duration of an outage based on the historical performance of the system • Capacity Projects – Evaluates the extent of overloads and amount of load at risk • Highest value (impact and probability) for the lowest unit cost • Minimize Frequency and Duration of Outages • Improve Customer Service & Satisfaction • Adhere to Safety & Environmental Standards • Maximize Cost-Effectiveness of Investment Capital Project Assessment Process

5. Project Selection Methodology • The process evaluates the customer service impact and considers expenditure to create a cost benefit analysis • Other Considerations used in the Project Selection Process: • Municipal or DPU Commitments • Communities with historically lower reliability performance (low months between outage) • Effect of outages on customers (Significant hardship versus minimal impact) • Environmental and safety concerns • Asset age and performance • Service quality metrics

6. Project Selection Methodology • Selection and prioritization process does not accommodate all types of projects • Examples of such projects include: • OHSA Mandated Modifications • Acts of Public Authority • Distribution Generation Interconnections • Purchase of Spare Equipment • New Customer Connections and Equipment Failures • CPSL (NSTAR) • Urban Grid Monitoring (NSTAR) • Massachusetts Broadband Initiative (WMECO)

7. Overview of the Distribution, Substation & Transmission Planning Projects • Based on the Distribution Planning Criteria, NSTAR Electric and Western Mass Electric develop a program-based plan that addresses reliability, capacity, and new customer development • Reliability Enhancements • SQI Programs • Major Outage Drivers • Vegetation • Direct buried cable in older Underground Residential Areas (URDs) • Areas of Concern • Customers Experiencing Multiple Interruptions (CEMI) • Network feeders impact due to steam leaks • Transformer and Breaker Replacements • Acts of Public Authority • Distributed Generation Interconnections • New Customer Connect

8. Overview of the Distribution, Substation & Transmission Planning Projects • Meet NERC/NPCC Transmission Standards • Program Initiatives • Distribution Automation • Auto Restoration • New Technologies: Triple Single Reclosers, Trip Savers, Automatic Customer Outage Reporting Initiative • Vegetation Management • URD System • Split Fiber Main System • DSS Line System • Network System • Urban Grid Monitoring • 4kV Underground System • CPSL

9. Introduction of New Technologies Process Overview for Due Diligence Identify Need Evaluate Technology Solutions Field Testing Proof of Concept Develop Standard/Training 4 5 1 2 3 • Reliability Enhancements • Maintain System Integrity • Risk assessment, worker safety, cyber-security go-no-go evaluation • Trade shows • Membership in leading research organizations (i.e., EPRI, IEEE, AEIC, etc.) and application center (i.e., NEETRAC) • Approved vendor list • Integration evaluation, testing, work practices • Feedback from work force • Meetings with vendors to discuss pro and con decision to move forward • Controlled installation (quantity & duration) for field testing and education • Create construction and work method standards • Prepare training material and train all stakeholders • Submit for Work Plan submittal

10. NSTAR Electric Example: Implementation of New Technology • Leverage use of Automated Reclosers in the interconnection of Distributed Generation facilities to reduce cost & complexity associated with transfer trip schemes • Remote monitoring of the amount of generation interconnected to the utility • Automatic disconnect after 90sec loss of voltage due to feeder loss • Supervisory control to re-establish interconnection by remotely closing the Recloser upon return of the Normal Supply

11. In Summary • Comprehensive planning process focused on improving reliability and customer service • Cost / Benefit analysis is an input to the process • Focus is on the lowest cost for the right solution • New market technologies are considered and implemented based on impact to system reliability, customer service and safety