Welcome to the Northeast Utilities Q1 2011 Earnings Call. My name is Sandra, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mr. Jeffrey Kotkin. Mr. Kotkin, you may begin.

Thank you, Sandra. Good afternoon, and thank you for joining us. I'm Jeff Kotkin, NU's Vice President for Investor Relations. Speaking today will be Chuck Shivery, NU's Chairman, President and Chief Executive Officer; Leon Olivier, NU's Executive Vice President and Chief Operating Officer; and David McHale, NU Executive Vice President and Chief Financial Officer. Also joining us today are Jim Muntz, President of our Transmission Group; and Jay Buth, our Controller. Before we begin, I'd like to remind you that some of the statements made during this investor call may be forward-looking as defined within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, which may cause the actual results to differ materially from forecasts and projections. Some of these factors are set forth in the news release issued yesterday. If you have not yet seen that news release, it is posted on our website at www.nu.com. Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31, 2010. Additionally, our explanation of how and why we use certain non-GAAP measures is contained within our news release and in our most recent 10-K. Now I will turn over the call to Chuck.

Thank you, Jeff. And I'd like to thank everyone for joining us on this Friday afternoon. We've had a very strong start to the year, both financially and operationally. Lee and David will provide you with more details. But as you saw in our earnings news release, first quarter financial results were well above 2010 results, and consistent with our guidance for 2011. We have also made good progress on our major projects that are supportive of the energy policies of the states in which we serve. They include the news projects, public-service New Hampshire's Clean Air Project and Yankee Gas' Waterbury-to-Wallingford line. We will update you on each of these projects shortly. Economic recovery across our service territory continues to vary. In New Hampshire, which, along with the Boston area, appears to have the strongest economic growth in New England, manufacturing employment is up by nearly 2% over last year while nonmanufacturing employment is up about 1%. New Hampshire's unemployment rate in March fell to 5.2%, one of the lowest in New England. While not as robust as New Hampshire, we've seen growth in Connecticut as well. Employment is up more than 1% and personal income up 3.4%. While hiring has yet to pick up in Western Massachusetts, personal income is up 4.2% from last year. Cost control and a continued reduction in uncollectible expense have helped us improve results as our regional economy has begun to turn upward. On of our major initiatives, we cleared another milestone in February with our Northern Pass transmission project when FERC [Federal Energy Regulatory Commission] accepted without change the transmission services agreement, which spells out the terms and conditions of the arrangement between Northern Pass LLC, our project subsidiary and Hydro-Québec. As you know, the Northern Pass transmission project will bring 1,200…

Thank you. As Chuck said, we are very pleased with our operating performance during the first three months of the year. Despite a difficult winter with record January snowfall, overall, reliability was far better in the first quarter of 2011 than it was in the first quarter 2010 when we had very significant windstorms and damage in both Southwest Connecticut and New Hampshire. Our customer service metrics have improved significantly over the course of the last 12 months, particularly in our call centers. Yankee Gas has the highest J.D. Power customer service ranking of any East Coast mid-size natural gas utility this year. Credit and collections performance has also been very strong, with non-hardship uncollectible expense down by more than 50% in the first quarter of this year as compared to the first three months of 2010. Our PSNH [Public Service of New Hampshire] generating stations operated well during a very cold winter and our 6 largest fossil fuel units had an average availability factor of 95% in the quarter. Our wood-burning plant, at Shiloh, operated at a strong 89% capacity factor and produced nearly 83,000 renewable energy certificates in the quarter. Our $430 million Clean Air Project, which involves installing a wet scrubber on our two unit Merrimack coal-fired station is ahead of schedule and currently 82% complete. Some of the new equipment is now being tested, system tie-ins, start up and conditioning activities are expected to begin in the fourth quarter of this year, and the scrubber itself could be operational by the end of the year. The entire project should be fully complete by mid-2012. You may recall that the scrubbers are required under New Hampshire's mercury reduction law, which was enacted about 5 years ago. We believe that this technology will provide us with some of…

Thank you, Lee. Following our release of mid-year results last year, Chuck noted that we had reached an inflection point where we were now positioned to improve our distribution results and expected to begin earning much closer to our allowed returns. This view is primarily due to the conclusion of the CL&P [Connecticut Light and Power Company] and PSNH distribution rate case decisions. Results from the past 3 quarters show that we indeed reached that inflection point in mid-2010, and our first quarter results for 2011 demonstrate that continuing trend. Excluding the impact of merger-related expenses of $0.05 per share, we earned $122.5 million or $0.69 per share in the first quarter compared with $86.2 million or $0.49 per share in the same quarter of 2010. Including merger expenses, we earned $0.64 per share. As is true in the third and fourth quarter of 2010, the primary area of year-over-year earnings growth was in the distribution segment, where we earned $78.2 million in the first quarter of 2011 compared with $47.9 million in the first quarter of 2010. That improvement was driven by a number of factors, including the distribution rate decision. We also benefited from the impact of much colder quarter 2011 than in 2010 and from our continued focus on managing our costs. Largely because of the impact of weather, electric sales were up 3% in the first quarter 2011 versus 2010. Heating degree days were up 18.6% in the Hartford, Connecticut area and 17.7% in the Concord, New Hampshire area. Translating that to earnings, relative to the first quarter of 2010, the weather effect accounted for $0.05 per share of the quarter's $0.20 per share increase. On a weather-adjusted basis, retail electric sales were down 0.2%, which is pretty consistent with our expectations of flat weather-adjusted sales…

Thank you, David. And I'm going to turn the call back to Sandra. Just to remind you how to enter questions. Sandra?

[Operator Instructions]

Our first question today is from Jack D’Angelo from Catapult. Jack D’Angelo : Chuck, you noted earlier that you guys still see Northern Pass coming online in 15 and also touched briefly on this legislation that's come out of New Hampshire. So should I infer that since you still see the line coming online in 15, you guys are pretty confident you'll be able to kill this bill?

I'm not sure I would infer that, Jack, from our comments, but I think we are comfortable that we're still going to be able to do what is necessary to get this line sited and eventually built. Jack D’Angelo : Okay, so is PSNH, are they actively fighting or opposing the bill or is the strategy more just to go ahead and try to build the line without being able to use in the domain?

Well, there's a lot of different things going on in PSNH right now. As we said we really don't believe this is a good bill. And so obviously, we are in the process of arguing that point. But we are also looking at a variety of other options to allow us to move forward with the line.

Thank you, Jack. Our next question is from David Paz from Bank of America. David? David Paz - BofA/Merrill Lynch: I just had a question, Chuck, I believe you were talking about the reduction in the Interstate Reliability Project in terms of the overall investment there. I think I heard you say $50 million reduction and then 1/2 of that will be made up with other projects. I guess if I look at the 2011 to 2015 project costs for all the NEEWS projects, collectively, I believe that's 11.75%, what is the new number that we should be looking at?

Yes, that was actually Lee that made that comment. So let me turn that over to him.

David, in regards to Interstate, if you remember the interstate project was previously $301 million and as a result of some other projects that we will undertake as required by ISO, this will cost about $25 million and about $50 million of interstate will be deferred, which is not to say that it won't be done, it's not just going to get done on the existing schedule. From the standpoint of the overall project cost, we had always had the overall project cost of NEEWS at about $1.5 billion. We have recently done a filing that David will talk more about in terms of collection of construction work in progress from the regional network system from LNS customers, which is essentially CL&P, Western Mass Electric and New Hampshire that will lower the overall cost because we won't have to collect that from -- won't have to refund that back to the local network service customers. But you're looking at it a total project cost for NEEWS about $1.35 billion now that we're not refunding the credits to local network service customers. So essentially, again, GSRP at $795 million the interstate at $251 million and the Central Connecticut at $338 million. David Paz - BofA/Merrill Lynch: Okay. Those other projects that you're referring, I guess, the $25 million or 1/2 of that amount, the $50 million, will that still be allowed the NEEWS ROE?

No, that would be at an ROE of 11.64%, which is the regional rate. David Paz - BofA/Merrill Lynch: Okay, all right. Separate question, just one follow-up, what are the -- I guess there was some talk out of Governor Malloy's office about the legislature about possibly removing the surcharge on CL&P rates that took effect this January. Is there any update on that?

David, I think you're referring to the, I guess, the successor to the rate reduction bonds, the economic recovery bonds, correct? David Paz - BofA/Merrill Lynch: Right, correct.

David, this is Chuck. There's still a lot of discussion going on in that within the legislature. Right now, our revenues, the state's revenues are coming in a little higher than they anticipated. So there is continuing discussion on that issue.

Our next question is from Jay Dobson from Wunderlich. Jay?

Lee, I was wondering if you could chat a little bit about the Central Connecticut segment of NEEWS and just if there's any read through from the interstate piece of sort of declining costs. And I know that sort of a specific of the Interstate segment but is there any read through there that we ought to be thinking that $338 million is going to be lower or any insight you can offer on that?

I think that, Jay, it's a good price at this point in time. There's a lot of kind of moving parts to the energy environment here in New England. What I sort of said is a result of earlier studies, they need to broaden the review they do around Central Connecticut to a larger geographical area, including the Hartford area. So there could, indeed, that number could be larger. And if you look at the other issues that ISO is evaluating, what happens to plants like Vermont Yankee, what happens to a lot of these old plants in the state, that essentially don't generate; they have about a 1% capacity factor and the fact that forward capacity markets are on the decline going forward, they have to evaluate all of those variables before they make a final determination on the Central Connecticut project. So I don't think it's a signaling that the project is going to be less. There's a possibility that the project could even be larger.

Okay, great. That's helpful. And again on Central Connecticut, you indicated that their analysis would be done in late 2011 but did I understand you to suggest that the specific plans and sort of timeline on Central Connecticut would be disclosed sometime late '12?

Yes, once they complete their analysis then they will make, they'll go through this interim process to determine what projects they need to satisfy the analysis. And that will take place in 2012, I would estimate somewhere between mid to late 2012.

Perfect. And then Chuck, I'm not sure, I'll throw it you and you can throw it around the room there, just usage trends that you're seeing on the electric side, particularly away from industrial and more to sort of the residential and commercial. I ask the question in the context of both the economy but to the residential side, maybe just usage trends and austerity, and customers using less in light of what we're seeing around the country?

Well, Jay, I think as we said, on a weather-adjusted basis, we've seen a flattening of the year-over-year. That's actually consistent with what we anticipated happening. I think David may have some specific numbers on the different classes.

Jay, I think you’ll remember that when we were positioning guidance for the year, we had talked about flat sales, which is a departure from the demand disruption that we had seen for maybe the last 4 or 5 years. Within that flat, it will vary by class, of course. What we've seen so far in the first 3 months of the year is a little bit, and this is all weather adjusted, strip away all of the heating differential that we've seen. But we've seen some strength and I use that term loosely in the industrial area, up 1.5% on average across all of our classes. We see a little bit of growth in the residential area, and still some weakness – of course, commercial across all of our businesses, commercial is still down about 1%. And as I suggested, on our prepared remarks, it does vary by state where you're seeing a little bit more strength in our New Hampshire area and that's historically what we had recognized. So I think particularly in Southern New Hampshire, they experienced the strength that we see coming out of the Boston market. A little bit weaker in Massachusetts and a little bit more balanced in Connecticut. But when you kind of look at the trends, I’d say commercial still struggling to make a lot of progress as consumer spending isn't quite where it was, industrial progressing and keep in mind, particularly in Connecticut, this is a big market for exporting, exporting to France, to Canada, to Germany, to China. So those companies are actually doing well, particularly given where the dollar is these days. And the residential consumer I'm not sure sort of sprung back to life but they're right at about flat for now. We'll continue to watch that, Jay. I think we still look for sales across the entire platform of our companies and our customers, still to kind of balance out to about flat. And as you heard in our comments, too, we try to weather that with a revenue decoupling cost in Massachusetts. So that's not a big earnings issue there. We'll report back as these trends continue.

No, that's great. And then David just last question on the guidance, you had a fantastic first quarter and congratulations on that, but the comps get tougher, with just the more normal summer weather in the third quarter. How would you have us positioned within that guidance range? I mean, it sort of feels as if we ought to be towards the top end of that, but certainly we've got a lot of roadway between now and year end.

Oh I’m careful never suggest to you how you should feel and where you should be in the range. I think, we've had a good start; we didn't try to characterize out of the block where we would be in that range. We have had a good start. As I said some of it is because of the weather. But as we sort of position ourselves through the year, I think we probably feel better about the state of the economy. We feel better about where sales are and uncollectible expenses and some of those items that trend-wise, have been effective in the last couple of years. We still have kind of risks in front of us, including the summer, including storm, the basic business. We have yet to receive a decision on the Yankee case. I think overall, core O&M’s in good shape; the economy is in decent shape but there are risks that remain in the business, but we feel pretty good about where we are for this.

Our next question is from Paul Patterson from Glenrock. Paul?

Just wanted to ask you about the core capacity market for cooling. There were several items that came up in terms of zonal pricing and the floor for the capacity market. And I was just wondering what -- how, if in any way -- what you see coming out of that I guess as it pertains to you guys in terms of transmission needs or what have you?

This is Lee Olivier. Paul, when we look at the fluid capacity markets and the fact out and around 2015 timeframe, they potentially could go to zero, then you will, in all likelihood, be looking at more retirements. There's about 9,000 -- 8,000 to 9,000 megawatts of generation that's inside of New England that is essentially the old, either oil steam, gas steam, coal steam plants they have very, very low capacity factors. As I mentioned before, you've got the issue around Vermont Yankee, what will happen there. If the floor stays very low or goes to zero, then the likelihood is that some of those plants will shut down, or they’ll be shutdown as a result of the environmental emissions issues coming either from the states or the EPA. That's good for a transmission obviously. There are better solutions we think than building new capacity in terms of transmission solutions, including bringing in renewable energy from a renewable energy construction project in New Hampshire and Maine, as well, of course, as the Northern Pass or HVDC line coming down from Quebec. So from the standpoint that some of these units retire, we think that is very supportive of transmission. And ISO is studying transmission in lower New Hampshire and lower Vermont, including transmission now that runs down from New Hampshire down into the Northern Massachusetts, this is the Scobie Tukes [ph] transmission line. Those projects are starting to mature, and we would place a higher probability those projects could get built in the future.

Okay, great. FD1, any update on the outlook regarding that bill and how it's proceeding and how it might impact you?

No, no really update. It's just kind of up there's been a lot of discussion about it, but no real movement one way or the other.

Okay, and then smart meters, I apologize, I've sort of lost track of that, has they made a decision on that?

They have not yet made one. We expect one probably in the next few months.

Okay. And then just finally customers shopping, I think at the end of December it was around 63% of load and about 38% of customers. Has there been an update since December on that?

This is Lee Olivier. No, that's pretty much the same. It stayed pretty solid, clearly, as the price of natural gas drops and there's not nearly as much margin in that for retailers. So you don't see as much migration as we saw last year. So the migration is actually slowing down.

Thank you, Paul. That's the last question we have for today. So we want to thank you all for joining us. And if you have any further questions, just give us a call this afternoon or next week. Thank you very much.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.