Jeffrey R. Kotkin - Executive Officer Thomas J. May - Chief Executive Officer, President, Trustee and Member of Executive Committee Leon J. Olivier - Chief Operating Officer and Executive Vice President James J. Judge - Chief Financial Officer and Executive Vice President Jay S. Buth - Chief Accounting Officer, Vice President and Controller

Travis Miller - Morningstar Inc., Research Division Kit Konolige - BGC Partners, Inc., Research Division Paul Patterson - Glenrock Associates LLC Ashar Khan Michael J. Lapides - Goldman Sachs Group Inc., Research Division Caroline Bone - Deutsche Bank AG, Research Division Andrew M. Weisel - Macquarie Research

Welcome to the Northeast Utilities Earnings Call. My name is Vanessa, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. And I will now turn the call over to Jeffrey Kotkin. Mr. Kotkin, you may begin. Jeffrey R. Kotkin: Thank you, Vanessa. Good morning, and thank you for joining us today. I'm Jeff Kotkin, NU's Vice President for Investor Relations. Speaking today will be Tom May, NU's President and Chief Executive Officer; Lee Olivier, NU Executive Vice President and Chief Operating Officer; and Jim Judge, NU Executive Vice President and Chief Financial Officer. Also joining us today are Jim Muntz, President of NU Transmission; Jay Buth, our Controller; Phil Lembo, our Treasurer; and John Moreira, Director of Corporate Financial Forecasting and Investor Relations. 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 risk and uncertainty, 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, and we also filed it as an 8-K. 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, 2011, and our 10-Q for the quarter ending September 30, 2012. 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 and 10-Q. Now I'll turn over the call to Tom. Thomas J. May: Thanks, Jeff, and thanks, everyone, for joining us this morning. I understand it's a busy morning with lots of other calls that you're trying to get to. Lee and Jim, as Jeff said, will take you through a more detailed discussion of 2012. Lee, the operations; Jim, the financial performance. We think we had a pretty good year, and I hope at the end of the call that you agree with us. As a prelude to their review, I'd like to give you an overview of the -- I guess, it's the first 10 months and 10 days of this combination that we've created, and like to give you -- share with you some of my thoughts and feelings about it. First of all, how things have gone and most importantly, why I'm so optimistic about our future. On April 10, we began a process of what I call creating a one-company model focused on great, consistent customer service across all of our 6 utility franchises. We organized around this model. We selected a management team into that organization. We pulled them together. I think I told some of you at our Analyst Day, that I took them to a beautiful retreat location, a Hilton hotel in Springfield, Mass, and focused them on the job ahead, which is to create a company that we're all going to be very proud of. I think the word "best practices" is a bit of cliché -- a bit of a cliché, but as you know, we all tend to use it. But what we're really trying to focus the team on and challenge the team is to be transformative. We do not need incremental change, we need transformation to reach the level of greatness, both financially and operationally, that we strive to. And first of all, we want to break the paradigm, and we have broken the paradigm and convinced our management team that you can improve your service goals. You can improve your service levels, while at the same time driving down costs, by working smarter, using technology. We've done it before and we will do it again. And my team is focused on that. We're really off to a great start working together. We have now been through a first budgeting and planning cycle, and we've implemented the management process that I have used successfully for the last 18 or 19 years. We've agreed on what we can spend. We've agreed on the service levels and goals that we will set. And most importantly, we have prioritized the initiatives that will transform us. Everybody knows what their job is. We've done the planning. Now it's all about execution. But I would remind everybody that it's not a 1-year process. And in fact, we have challenged our team and have established a glide path, if you will, 3 years' worth of goals, to bring our reliability and our customer service levels to top quartile across the entire business. The team is working terrifically together. I think a great example of how our team is responding and how they are enjoying being part of this new, bigger NU is the recent storms we have, our approach to Sandy. We received high marks in Connecticut from the governor on down. When the damage really crushed New Jersey, New York and the coast of Connecticut, which is where the huge damage was, we finished up our repairs everywhere else on our system and then rushed all of our resources from New Hampshire, Massachusetts, Western Mass, Cape Cod, everywhere, down to Connecticut where we had multi-colored trucks from all of our utilities working together, arm in arm and the camaraderie, esprit de corps and most importantly, the morale of our Connecticut troops was really, really high after they had been crushed in 2011 with complaints. This time, I was down there in Connecticut, and to see the people, the residents coming out and giving them coffee and stopping by with doughnuts and thanking them for the hard work, it really was quite a turnaround. And then last week, it seems like the weather will never stop, but we have another named storm called Nemo, and we reversed everything. In this case, the ice and damage was on Cape Cod and the south shore of Massachusetts. And so everything shifted, and we had CL&P crews in Marshfield. We had Western Mass crews in New Bedford. We had resources in New Hampshire and our friends at Hydro-Québec all over the Cape. And this time, again, the power of the larger NU crushed the storm in a few days once we could get there. The biggest problem, as you know, was getting access because they couldn't get the roads plowed, especially the secondary roads for a few days, but again, high marks and a tremendous esprit de corps and morale booster for all of our troops. So we're on a -- we think we're well set to challenge people to take us to the next level. Of course, you know we have similar financial goals to provide our shareholders with top quartile results and returns, and we're not on any 3-year glide path. We've been there, and we're going to stay there. We are pleased with our 2012 results, 12.1% return for our shareholders. We were able to raise the dividends 7.1%, and most importantly to all of you, we have reaffirmed our guidance for the future. And Jim will talk a little bit more about that, I'm sure. As I mentioned earlier, I described at the -- our Analyst Day last October that the -- I look at this as having a 2-trick pony with transmission opportunities and an opportunity to take cost out of the business because of the rate settlement that we were able to achieve as part of the merger approval process. First, I mentioned that our -- I believe NU has the best transmission organization in the country. It's been delivering complex and critical projects to reinforce our energy highways. We're doing it on time, on budget. We've been doing this for a decade. And in fact, recently, I think some of you have probably read about the congestion that has crept back into NEMA. This congestion was predicted by our transmission organization, which shows you they know what they're doing. And they've been working with ISO New England to find solutions to these things before it even happened, and now here it is. It's in our marketplace, and we have the capabilities to, as the load shifts around, as generation shifts around, to build the electric superhighways to get the goods most efficiently and at the lowest cost to our consumers. And that's a role that our people are very proud of. Secondly, we talked about my other pony. The merger really has provided us an opportunity to be transformative. As you know, we've moved to a shared service model. We are looking at everything from facilities to our systems to the way we operate in each of our 4 electric utilities so that we have common platforms, common protocols and have the ability to shift resources or managers from one company to the other seamlessly, as we use our operating talent. And so we're very excited about what we have as an opportunity to both take costs out and as I said, improve service. And we've got everybody committed to that. The other thing I would mention and Lee will discuss this in more details is that as it relates to generation, we've seen some spikes in gas prices because they don't have transportation into the region. But for our gas customers, they haven't seen a blip. Low -- gas prices have remained low, tremendous savings against oil heating. As you know, Connecticut has a huge percentage of heating customers still on oil. And just yesterday, Connecticut set out their energy strategy in great detail, but a lot of it is dedicated to using that lower natural gas price to lower customers' bills, put dollars back into the economy. So it's a double play in terms of economic, helping the economy while reducing greenhouse gas emissions and helping our environment. So we're excited about that opportunity. It's not baked into our plans, but it is interesting to us. The governor's comprehensive energy strategy is focused on low cost, reliable and green. And so while natural gas, we think, is at the core of it, energy efficiency has gotten a lot of words in this document yesterday. We're very good at energy efficiency also. At NSTAR, Penni Conner has led, for the last decade, a huge ramping up of energy efficiency. We think it makes a lot of sense for our customers, that it is still a cheap form of energy. We're buying it back, if you will, the megawatts, at less than avoided cost. And we enjoy a regulatory framework that is supportive, and it -- therefore, it makes sense for us. In Western Mass, we're decoupled, as you know. NSTAR has a rate mechanism that allows us to recover lost base revenues. And we have been working with the state of Connecticut, and we're hopeful that CL&P will also have a program that has a similar rate recovery mechanism for energy efficiency that understands that the economic impacts on us need to be mitigated. And all of the people in Connecticut, including the document that came out yesterday, have positive words to that effect. Before turning the call over to Lee and getting you into some more of the details, I want to thank anybody who is a customer on this call, for their patience, as we've dealt with this horrendous weather the last of couple of years. We're getting better at it, and we will get even more focused as we go forward and we learn from these things. We understand that power outages are difficult, in particular, in cold weather, and we had a bit of that going on last week. So we are getting good at getting the power back on quickly, safely. And as I said, our employees have been just phenomenal, working very, very long days, but they feel appreciated this time, which helps us to get them focused on even greater levels of service. So with that, I will turn it over to Lee, and we'll all be here for comments or questions later on. Leon J. Olivier: Thank you, Tom. 2012 was a good year operationally for the new Northeast Utilities. Reliability and safety performance improved over 2011. We made significant progress in our major transmission projects, and we had a record number of customer conversions to natural gas. We were hit by the third devastating storm in 14 months when Hurricane Sandy bore down on us. And as Tom said, both our preparations and our performance were strong, showing that we continue to implement many of the emergency preparedness enhancements following the storms of 2011. We've also moved to continue to consolidate management around our major business lines: Electric distribution, electric transmission and our natural gas delivery business, so that we can better identify and implement the best practices across our 6 utilities. Just last month, Werner Schweiger, the President of NSTAR Electric, was promoted to the role of President of our electric distribution business. Werner's clear mandate is to move all of our NU Electric businesses to higher levels of performance and customer service. We're also consolidating NSTAR Transmission operations under Jim Muntz, President of the NU Transmission business. Finally, you may recall that the leadership of our natural gas distribution businesses was consolidated at the time of the merger under Rod Powell, who has been the Yankee Gas President for a number of years. Rod's organization has been structured to take advantage of this very unique opportunity. Continued low natural gas prices, driven in part by the rapid increase in the production of shale gas, are causing an unprecedented shift from heating oil to natural gas in New England. In 2012, NSTAR Gas and Yankee Gas together added nearly 8,900 new heating customers, compared with about 6,600 in 2011 and 5,600 in 2010. About 900 of those new customers were municipal, commercial or industrial, and 8,000 were residential. Approximately 3,000 of those new residential customers represented new construction. The other 5,000 involved the conversion of other space heating to natural gas. The 8,900 level compares favorably with the projection of 8,200 that we had given you just in October. We benefited by a large rush of new customers and activity before the coldest days of the winter. Yankee Gas accounted for more than 4,800 of those 8,900 new heating customers. And in Connecticut, the Malloy administration continues to move ahead with its comprehensive energy plan, a key element of which involves accelerating the conversion of the state's homes and businesses to natural gas heat as a way to cut customer bills in half, make the state more competitive and reduce our carbon footprint. We now have a combined total of approximately 490,000 customers. Approximately 40,000 customers are residential, customers who use natural gas for water heating or cooking, but not for space heating. Their economics of conversion can be very attractive. Additionally, our 2 gas utilities have another 82,000 potential residential customers and 22,000 potential commercial and industrial customers who are located within 150 feet of a gas main but are not yet connected to our system at any level of service. These 144,000 potential heating customers in total are a prime focus of our gas expansion plan. Most of those opportunities are at Yankee Gas system, which has a much lower penetration rate than the NSTAR Gas system. Today, only about 32% of Connecticut's dwellings heat with natural gas. Governor Malloy's draft comprehensive energy plan suggested moving toward 50% in 7 years. Only 35% of the commercial buildings and 54% of the state's industrial customers currently heat with natural gas. The draft plan discussed moving both of those figures to about 75%. The final plan was issued yesterday and we are now reviewing it. However, we believe the final version is very consistent with the final draft plan. We expect to approach our regulators and state energy officials with an expansion plan that will outline a number of initiatives to break down some of the barriers that are preventing a more rapid movement by the state to natural gas. We will keep you informed of our plans as we move forward. Our natural gas companies invested approximately $170 million in their systems last year, including NSTAR Gas expenditures prior to the merger. We expect our capital expenditures to remain at a similar level in 2013, but that figure could increase if significant additional initiatives are undertaken as part of Connecticut's comprehensive energy strategy. Turning from natural gas to electric transmission, we had a number of accomplishments in 2012. Transmission capital expenditures totaled approximately $680 million last year excluding -- including $192 million NSTAR Electric invested in its transmission system over the full year. That figure is comparable to what we had projected in October and is above our initial forecast for the year. The biggest piece of last year's spending was the Greater Springfield Reliability Project, which represents more than half of our expenditures on the NEEWS family of projects. GSRP was 93% complete at the end of 2012 and is currently 94% complete at this time. We had placed about $298 million of the project into service by the end of 2012, and we expect the entire project to be complete by the end of this year. The last of the major line work will be done by the end of March. Final substation work, which must be closely coordinated with ISO New England, will continue throughout the remainder of this year. The second large piece of the NEEWS project is the 3-state Interstate Reliability segment or IRP. The Connecticut Siting Council approved the Connecticut section of the IRP in January and reviews our continuing in Rhode Island and Massachusetts, where National Grid is the project proponent. We expect the project approval in those 2 states either late this year or early 2014. We expect to commence substation work in Connecticut in the first quarter of 2014 and line work in the spring of 2014 after receiving the project's Army Corps of Engineers permit. We continue to expect the project will be complete by the end of 2015. ISO New England continues to review CL&P's Greater Hartford, Central Connecticut project. As you probably recall, we had initially expected to spend about $300 million on a new 345kV line from Bloomfield, Connecticut to the southern terminus of the GSRP project to a substation in Watertown, Connecticut. ISO New England planners have continued to review the project in the context of a comprehensive of review of transmission constraints in Central Connecticut and the Greater Hartford area. This review continued earlier this year during a meeting of the ISO Planning Advisory Committee. A large number of potential overload and low-voltage situations are being reviewed currently, and they are in the process. During the second half of this year, ISO expects to make recommendations on what the solutions are for those constraints. At this time, we expect the original single, large 345kV line project to evolve into a series of smaller projects. For now, we are projecting a cost of about $300 million to address those constraints. We will provide a further update to you in the second half of this year after ISO identifies its proposed solutions. The other major project now underway on our system is NSTAR Electric's $106 million project to add a 345kV transmission link to Cape Cod. Work on that project commenced in September 2012 and will be completed in the middle of 2013. The project is on schedule, budget and approximately 35% complete. Turning to our Northern Pass project. I will remind you the project will cover about 180 miles. More than 140 miles will be along existing rights of way where we have maintained transmission lines for many decades. The other 40 miles will be along a new right of way in Northern New Hampshire. We expect to announce the new route in Northern New Hampshire in the next several weeks. We look forward to sharing the details of the route with you once it's announced. The new northern route has been developed in response to potential visual impacts and private property rights issues. I want to reiterate the substantial clean energy and economic benefits that the project's 1,200 megawatts of hydroelectric power from Hydro-Québec will provide to New Hampshire and the region. They include: Helping to address New England's acute need to diversify its electric energy supply, which is currently over 50% dependent on natural gas; freeing up significant natural gas supplies now used for generation that instead can be used by the region to continue to reduce its dependence on imported oil and conversion of space heating to natural gas; reducing carbon dioxide emissions by approximately 5 million tons annually, a decrease equivalent to taking 1 million cars off the road each year; lowering electric energy costs for New England consumers by an estimated $200 million to $300 million annually by displacing more costly fossil fuel generation; providing unique and significant economic benefits to New Hampshire, including the creation of 1,200 jobs during construction and approximately $26 million in new property taxes and fees annually for local communities. We currently estimate that the project will cost approximately $1.2 billion, up from the previous estimate of $1.1 billion. We believe it will be completed between the end of 2016 and mid-2017. The revised cost estimate is the result of having a more defined design, have more certainty on the AC system upgrades required for this project to be connected to the ISO New England grid. This estimate will of course be continually refined as we move through the siting process. In addition to these large projects, our transmission group continues to identify and complete scores of smaller projects each year that are needed to adjust reliability and aging infrastructure issues in our service territories. I am pleased to report that the transmission reliability of the NU system was excellent last year and exceeded our internal goals. We placed more than $630 million of transmission facilities in service in 2012, well beyond our initial projection. During our Analyst Day in October, we unveiled a $3.7 billion transmission investment program from 2013 through 2017. With the additional spending on Northern Pass, we now project a transmission capital budget of approximately $3.9 billion over the next 5-year period, including $636 million we expect to invest in 2013. Moving to our electric distribution business. All of our electric metrics improved in 2012. As Tom mentioned, we also believe we provided customers with very strong response to Hurricane Sandy, with restoration times that compared very well to other utilities that were in or near Sandy's direct path. State regulators have begun the review of the performance during Hurricane Sandy, and we expect to receive good marks, though we recognize that there is always areas in which we can further improve upon. We're also pleased with our restoration work following this month's blizzard, during which the worst damage was concentrated in Southeastern Massachusetts and Cape Cod. Crews from PSNH and Western Mass Electric were -- which experienced relatively minor damage, moved quickly to help the NSTAR Electric system customers. CL&P crews joined after 2 full days of restoration in Southeastern Connecticut, during which we reconnected nearly 75,000 customers. Damage during that storm caused by high winds and heavy, wet snow knocking down whole trees and large limbs, it was not caused by the prodigious snow depths. Southeastern New England experienced by far the highest wind speeds, up to 80 miles per hour and more than 300,000 NSTAR Electric customers lost power at one time or another. By Wednesday midnight, February 13, nearly all of the NSTAR Electric customers were restored. We continue to invest heavily in our electric distribution business, though we expect capital synergies as Werner's team adopts best practices across 4 electric utilities. Our electric distribution capital program totaled $677 million in 2012, including the full year of NSTAR Electric. Last month, Connecticut regulators approved a resiliency program that will allow us to invest $300 million from 2013 through 2017 in CL&P's system. In 2013, that spending will be focused on enhanced tree trimming along CL&P's overhead lines. As we move into the later years of the plan, we will also be installing stronger poles and more tree-resistant overhead wire. We are grateful that the Public Utilities Regulatory Authority is allowing us to make these additional investments on behalf of our customers. Also, I want to quickly update you on the Massachusetts solar program. Western Mass Electric's 40 megawatts of solar generation also operated well in 2012. The solar program is currently authorized for 6 megawatts, and the regulatory construct allows for a fully tracking cost recovery. We hope to expand the size of this program to a total of 8 megawatts. Such an expansion is consistent with a commitment made as part of our merger settlement and can be accomplished within the $41 million of originally-authorized funds by the Department of Public Utilities for these initiatives. Now I'd like to turn the call over to Jim. James J. Judge: Thank you, Lee, and thank you all for joining us this morning. We were pleased with our financial performance for the fourth quarter and for the entire year. The $2.28 per share we earned in 2012, exclusive of merger charges, was well within the $2.25 to $2.30 range that we provided during our Analyst Day in early October. Consistent with our prior guidance, $2.28 will serve as the base for our long-term annual EPS growth target of 6% to 9%. This morning, I'd like to cover 4 primary areas. First, our earnings performance for the fourth quarter and full year 2012. EPS comparisons here are a challenge because of the stub year. Legacy NU results are reflected for the full year, but NSTAR's results are only for 9 months. Additionally, we had the exchange of NSTAR shares for 136 million additional NU shares. Second, I'll cover our expectations for 2013 and the primary drivers for the year, as well as some discussion of economic conditions in our region. Third, an update on some current regulatory issues, and finally, a summary of system-wide financing activity, as we continue to take advantage of the current low interest rate environment. Let me start with the discussion of our fourth quarter results. Yesterday, we reported recurring earnings of $0.56 per share, which was just about what we had projected given the quarterly profile of NSTAR's earnings. Aside from the merger impact, there were a number of drivers in the quarter. First, the negative ones. Earnings per share related to our legacy NU Transmission operations declined $0.10 in the fourth quarter of 2012 compared to the same period in 2011, primarily as a result of a higher effective tax rate on our transmission earnings in 2012. Again, this higher tax rate was anticipated because 2011's rate was lower than in most years. We reflected the higher rate in our guidance. Higher legacy NU O&M costs, primarily driven by higher pension and health care costs, negatively impacted year-over-year fourth quarter results by $0.03 per share. Higher legacy NU depreciation and property taxes cost us another $0.03 per share. Factors that had a positive impact on earnings for the quarter included an 11% increase in heating degree days in Connecticut in 2012 compared with 2011, plus the customer growth that Lee mentioned earlier, helped to drive an 8% increase in Yankee Gas sales, which added $0.02 to our results compared with the fourth quarter of last year. A number of factors in NU parent and other, including lower interest cost due to some refinancing activity and lower income tax expense, added $0.05 to EPS. Earnings from our generation operations increased $0.03 compared to last year, due to a higher return on rate base, resulting primarily from the fact that we are now reflecting 2/3 of our Merrimack Scrubber project end results compared with last year, when we booked no return on the project. Lastly, we had an increase in revenues related to new distribution rates that became effective for both public service of New Hampshire and Yankee Gas on July 1, 2012. Those new rates added about $0.01 to the quarter's results. The new rates provide about $7 million in additional revenue to each company on an annual basis. Now let me cover the full year results. As I mentioned previously, we reported recurring earnings of $2.28 per share for 2012 compared with $2.38 per share last year. There are a number of factors, including declines in NU legacy electric and gas sales of 0.6% and 4.3%, respectively, mostly reflecting mild first quarter weather in 2012. That cost us $0.04 per share compared with 2011. About $0.03 of it was on the electric side and $0.01 for Yankee Gas. Higher legacy NU O&M costs reduced the year's results by $0.08 and primarily reflect increases in pension and health care expenses, as well as higher tree trimming costs. This was not a surprise, as both David McHale and I discussed many of these drivers with you in the first half of 2012. Higher legacy NU depreciation and property tax expense reduced earnings by another $0.07 per share. Factors that had a positive impact for the year included higher transmission earnings, which added $0.03 for the year, net of the higher tax rate, reflecting the continued investment in transmission projects, primarily the NEEWS project that Lee covered earlier. NU parent and other companies earnings contributed about $0.12, primarily reflecting lower interest expense and lower tax expense. Now I'd like to discuss the major drivers for 2013 that support the earnings guidance of $2.40 to $2.60 per share that we provided at our Analyst Day in October and we reaffirmed in the news release last evening. First, as Lee pointed out, the commitment to our transmission infrastructure is a significant component of our future growth. The $680 million we invested in 2012 brought our transmission rate base to approximately $4.2 billion at year end. Second, as we have previously indicated, we expect that the level of total O&M costs will decline going forward by about 3% annually off of the $1.6 billion we have projected for year-end 2012. Third, we'll also -- we will also benefit from lower interest costs on both the short- and long-term basis as a result of our actions to expand our commercial paper program in 2012 across the family of NU companies. Also, the successful financing activity completed in 2012 will have a positive impact in 2013 and beyond. Fourth, gas expansion initiatives and conversions, which hit a record level in 2012, will have a positive impact on our results going forward, and this doesn't include the potential gas expansion proposed by the Governor of Connecticut in his 2012 energy strategy. And fifth, the new distribution rates that became effective in mid-2012 for PSNH and Yankee Gas will enhance 2013's distribution revenues. One more item that we expect to benefit from, particularly for our gas business, is a return to normal weather in 2013 compared to 2012. You may recall that we lost about $20 million of pretax gas margin in Q1 2012 due to the extremely mild weather. Last February, we had thought that we would also benefit from lower untracked pension expense at some of the legacy NU companies. However, the benefits from the strong performance of the plan's assets in 2012 and from the cash contributions we made into it, were essentially fully offset by a decline in the discount rate from 5.03% at the end of 2011 to 4.24% at the end of 2012. As a result, we now expect untracked pension expense in 2013 to be comparable to 2012's expense. Generally, the only major factors we expect to weigh on earnings growth will be higher depreciation and property taxes that are a function of our continuing significant investment in our infrastructure. Worth noting is that the new tax legislation, the American Taxpayer Relief Act of 2012, includes a provision related to bonus depreciation that is expected to have a minimal impact for 2013 because of our net operating loss carryforward position. We expect 2013 to be supportive of the 6% to 9% annual earnings per share growth guidance, which we discussed during our Analyst Day and reaffirmed with our earnings release yesterday. Now turning the discussion to the local economy. We see different trends in different states. Unemployment rates in Massachusetts and New Hampshire for the fourth quarter were 6.7% and 5.7%, respectively, a bit higher compared to the third quarter of this year, but well below the national average of 7.8%. The Connecticut rate was unchanged at 8.8%. But more positively, initial unemployment claims for Connecticut and New Hampshire for the fourth quarter declined at a higher rate than the national rate. Also, the housing market in our region continues to show signs of strength compared to the national market, which is showing improvement. Housing permits have increased in our region, particularly in Connecticut and Massachusetts. A key question is what does that mean for sales. As you may recall, we forecast normalized sales growth of between 0.5% and 1% for our regulated electric utilities and between 1% and 2% for our regulated gas companies. In 2012, our weather-normalized electric sales were down 0.2%, while our weather-normalized firm natural gas sales rose 2.7%. We will be tracking these sales figures closely to see if we can detect any churn in the regional economy, positively or negatively. On the regulatory front, there are several items pending. I know one that is at the top of everyone's list is the complaint filed by a number of parties in September 2011 with FERC concerning the current base ROEs earned by New England transmission owners. In November 2012, the transmission owners, including NU, filed testimony showing that the current base ROE of 11.14% is reasonable. On January 18, FERC trial staff issued an ROE recommendation of 9.66%. While we do not consider a 9.66% ROE to be just and reasonable, and we believe there were a number of flaws in that testimony, we strongly agree that their use of a midpoint, rather than a median, is a more appropriate methodology in determining the return for the New England transmission owners. We filed our second round of testimony last week and it is posted on our website. The next steps in this proceeding include the filing of updated ROE analysis, due in mid-April, with hearings scheduled to begin in May. An initial decision would be made by an administrative law judge in September, and a final decision from FERC is not expected until next year. On August 1, the Connecticut Public Utility Regulatory Authority issued a final decision on the investigation of CL&P's performance related to Tropical Storm Irene and the October 2011 snowstorm. The decision identified certain penalties that could be imposed, including a reduction in CL&P's allowed ROE, to be determined in our late 2014 rate case, and disallowance of certain deferred storm restoration costs. However, the PURA will consider and weigh the extent to which we have implemented improvements in storm management and the establishment of new practices for future storm response. As Lee discussed and Tom discussed, we continue to make good progress in improving our emergency preparedness and response efforts and believe that customers, communities and regulators are recognizing that improvement. As of year end, CL&P's deferred storm costs were approximately $280 million from the 2011 storms and another $160 million from Sandy. We will file for recovery of these costs and expect to do so concurrently in the first half of this year. Under the merger settlement agreement, we cannot begin cost recovery of the 2011 costs until December 1, 2014. Additionally, as reported in the second quarter, we agreed, as part of our merger agreement, not to recover $40 million of those costs. And this $40 million was among the charges recorded in the second quarter. In Massachusetts, deferred storm restoration costs were approximately $64 million at NSTAR Electric and $31 million at Western Mass as of year end. We expect to file for recovery shortly on Tropical Storm Irene in the October 11 -- the October 2011 snowstorm, for recovery to begin January 1, 2014, per our merger settlement. This will be followed by filing for Sandy and the blizzard of 2013 later this year. We're currently assessing the cost of this month's blizzard. However, based on very preliminary assessments, we believe it could be in the $100 million to $120 million range, with about 90% of those costs at NSTAR Electric. Finally, the Massachusetts Department of Public Utilities, in separate orders issued on December 11, assessed penalties of $4.1 million and $2 million for NSTAR Electric and Western Mass, related to the 2011 storms. On December 28, we filed appeals with the Mass Supreme Judicial Court arguing that the DPU penalty should be vacated because they are arbitrary and not supported by substantial evidence. We await the court's decision on that matter. Now I'd like to discuss some very positive developments around financing activity. I'll start by recapping some of the highlights from 2012 and early 2013. In July, we initiated a new $1.15 billion commercial paper program for NU. A recent rate on that commercial paper was 36 basis points. NU was previously paying more than 2% on its bank borrowings. In October, $170 million of CL&P and Western Mass tax-exempt bonds, with rates between 5.85% and 5.95%, were called. Also in October, NSTAR Electric issued $400 million of unsecured debt at a rate of 2.375% to repay a like amount of maturing 4.875% debentures. Just last month, Connecticut Light and Power issued $400 million of 10-year first mortgage bonds at a rate of 2.5% to reduce short-term debt. This financing activity has resulted in over $30 million of annualized interest savings. $20 million of that savings will be incremental in 2013. Also in 2013, we have approximately $600 million of debt maturing that we will refinance. Now I'll turn the call back over to Jeff for any questions that you may have. Jeffrey R. Kotkin: And I'm going to turn back the call to Vanessa just to remind you how to enter questions. Vanessa?

[Operator Instructions] Jeffrey R. Kotkin: Thank you very much. First question this morning is from Travis Miller from Morningstar. Travis Miller - Morningstar Inc., Research Division: I wonder if you could update us on the merger cost savings and how much you did achieve in 2012 and maybe apart from that O&M decrease that you guys have projected, anything you see coming in 2013 that might contribute or even add to those cost savings, that $140 million number? James J. Judge: Well, the merger savings that we experienced in 2012 were around staff reductions in non-operational areas. In benefits, we changed our medical plan for a number of employees. We reduced contractors, insurance, advertising, basically the items that we identified in our net benefit analysis. And we will get the benefit in 2013 of the annualized impact of those savings from last year. Plus, we're focused on additional cost cutting. And in terms of overall magnitude, I think that in the original net benefit analysis, we were targeting staff savings associated with the merger of about 350 people. We did exit about 170 million in 2012, so there's more integration that can happen, more savings that can occur going forward. I think the best guidance I can give you is that we've given the direction that we expect to lower our O&M costs by 3% a year over each of the next 3 years, including 2013. Leon J. Olivier: 170 million. James J. Judge: Okay. I think I said 170 million. I think I meant 170 people, individuals. Jeffrey R. Kotkin: All right. Our next question is from Kit Konolige of BGC. Kit Konolige - BGC Partners, Inc., Research Division: I know it's obviously very early still with the Governor's energy plan, but in thinking about what you might file, can you give us some idea if you're thinking in terms of some kind of proposals for innovative or formula rate plans for new rate base and if you can have any sense of what the rate base opportunity might be for expanding gas mains that you might see out there? James J. Judge: Certainly, Kit. This is Jim. The energy plan is consistent with sort of earlier versions in that regard, and what we would expect to file for would be a capital tracker. We've identified the potential in Connecticut, given the low gas penetration that exists there, and it's not unreasonable to expect that it couldn't translate to an additional $100 million a year for gas conversions to try to achieve the goals that the governor's laid out. Jeffrey R. Kotkin: All right. The next question is from Paul Patterson from Glenrock. Paul Patterson - Glenrock Associates LLC: Just on a couple of things. On Northern Pass, you guys mentioned that, I think, in the next several weeks, we're going to get a route. You guys are going to be filing a route. Should we interpret that to mean that you guys have the -- all the required rights of way to have that route effectuated? Leon J. Olivier: Paul, this is Lee Olivier. Yes. We are very confident that we have a route that is -- we can get sited. As you know, we have spent really the last 2 years acquiring rights of way from private property landowners. We have a number of options around intersections, over public right of ways, so we are very confident we have a route. And again, we'll be looking to announcing that over the next couple of weeks. We'll share that with you. Paul Patterson - Glenrock Associates LLC: Okay. And I guess, as you guys are very aware of, there's this group up there that's sort of suggesting that they're getting this land to block you guys and stuff. How should we think about these sort of continual reports that they or claims that they make about that? Leon J. Olivier: We read all of the press as well, and the land in which they have for the most part acquired, is land in which we never have sought to purchase to begin with. So we -- we're not at all concerned with what their claims are. Paul Patterson - Glenrock Associates LLC: Okay, great. And then on energy efficiency, you guys mentioned the state policies that are being involved and encouraging and what have you. Obviously, we've seen some negative sales growth for some time, weather adjusted. When we think about your long-term sales growth and we think about what you guys are doing in terms of the regulatory initiatives and just what you already have in place, how should we think about your sales growth, your earnings guidance, long-term earnings guidance, and its dependency or lack thereof on electric sales growth? Do you follow what -- does that -- do you follow me? James J. Judge: Yes, I do, Paul. We've given guidance that we expect sales growth over the next 3 years on the electric side to be between 0.5% and 1%. That's electric sales growth. That's after energy efficiency investments. As you know, in Massachusetts, to the extent the energy efficiency spending ramps up and has an impact, we get recovery of those lost base revenues. We're hopeful that the same model or a similar model could evolve in Connecticut. So again, the 0.5% to 1% is the guidance that we've given for sales growth. But even if energy efficiency ramps up more significantly than we've modeled it, we expect to get recovery through that vehicle of lost base revenues. Paul Patterson - Glenrock Associates LLC: Okay. So if there's less sales growth, like we've been witnessing for whatever reason in the last few years, last several years, do you guys still think you guys should be able to achieve within that range of long-term growth that you guys gave us? James J. Judge: We do. Jeffrey R. Kotkin: Our next question is from Ashar Khan from Visium.

Lee, can I just -- from your comments that you mentioned that the Northern Pass line ending could be between end of 2016 or the middle of 2017. So should we be -- I was going back to the numbers you gave us at the Analyst Day that showed no Northern Pass CapEx in 2017. Should we be pushing some of the CapEx from '16 to '17 as we stand over here right now based on your comments this morning? Leon J. Olivier: This is Lee Olivier, Ashar. Yes, that is true. In the -- when we publish the 10-K, we'll -- you'll see the cash flows that will move into 2017. And I would have you -- I would just remind you that on these kinds of transmission lines, where you have these large converter stations, the way the payment process works on the converter station is that there is kind of a down payment, some minor payments, and then out at the other end, there's a big payment. So 2000 -- late 2016, early 2017, when we put the converter in, it goes through its acceptance process and operational testing. We make a big lump-sum payment to whoever will be the equipment, the OEM in that particularly case. So yes, you will see that in the 10-K.

Okay. So what you're saying is it's like when you -- the line comes onto line, a huge payment goes out at that time, so that hence, CapEx would move from '16 to '17, some of that? Leon J. Olivier: Yes, exactly. There'll be -- that as well, obviously, depending on the siting process, the length of the siting process, no matter how you look at it now, there would be a payment in '17, even if we finished at the end of 2016. To the extent that we finish further into '17, that payment would just be larger. Jeffrey R. Kotkin: Next question is from Michael Lapides from Goldman Sachs. Michael J. Lapides - Goldman Sachs Group Inc., Research Division: Just, Lee, real quick question. You rattled through some of the transmission CapEx in 2012 and expectations for 2013. Can you just refresh us on the end of 2012 transmission rate base? And at transmission, but really across all of your businesses, how does 2013 CapEx look relative to what you talked about at the October Analyst Day? Leon J. Olivier: Well, in terms of 2012 in transmission, we essentially had approximately $700 million of transmission CapEx. $192 million of that was from NSTAR. We put in service, in 2012, $636 million, and that includes about almost $300 million of GSRP. So that's what '12 looks like. And if you look at '13 for CapEx, '13, we've got about $636 million, so it's going to be the work on the NEEWS, Northern Pass, about $52 million for Lower Seymour, nearly $20 million for our Boston Network project, our Greater Boston project, that's another set of projects will be $6 million to $10 million. And then there's about 257 of -- excuse me, $369 million on other transmission projects that get you up to that $636 million for next year. In terms of -- as I've said, for Yankee Gas, it's about $170 million for 2013. And in terms of the distribution business, Jimmy, I think it's $660 million? James J. Judge: Yes, roughly, we in total, we spent $1.6 billion of CapEx in '12, and the number in '13 is similar, slightly lower because the transmission is going down by about $50 million or $60 million. But to your question about rate base, we finished 2012 with a transmission rate base of $4.2 billion. Michael J. Lapides - Goldman Sachs Group Inc., Research Division: Got it. And I'm just trying to bridge the comments or the analytics from the October Analyst Day to what you're saying now on this call. Just trying to think about CapEx going forward, differences from the Analyst Day versus today, outside of Northern Pass. James J. Judge: I think, essentially, the slight increase in transmission that Lee talked about going from $3.7 billion to $3.9 billion is the only noticeable change from what we reviewed at the Analyst Day. Leon J. Olivier: Yes, if you take $100 million for Northern Pass and then there is kind of a whole array of smaller projects that have better definition around the scope and so forth, so that adds in another $100 million. Jeffrey R. Kotkin: Thank you, Michael. Next question is from Caroline Bone of Deutsche Bank. Caroline Bone - Deutsche Bank AG, Research Division: Sorry, Jim, I missed this on the call. Can you repeat what sort of cash flow benefits and rate base impacts we should expect from bonus depreciation this year? James J. Judge: Yes, the issue is that we have net operating loss carryforwards as a result of the, primarily, the storm expenses that we've incurred, so you wouldn't expect the full benefit of the bonus depreciation to impact us in '13. It may be pushed out into '14 or '15. Caroline Bone - Deutsche Bank AG, Research Division: Okay, got it. And then also, at the time of issuing guidance in October for 2013, had you accounted for a lower discount rate in the resulting impacts on pension expense? James J. Judge: Yes, we did. Jeffrey R. Kotkin: All right. Thank you, Caroline. Next question is from Andrew Weisel from Macquarie. Andrew M. Weisel - Macquarie Research: Just following on Caroline's question about bonus depreciation. I didn't hear -- Can you quantify the amount that you expect over the next several years of cash and the rate base impact relative to what you had given us at EEI? James J. Judge: Yes, the cash flow impact is north of $200 million... Leon J. Olivier: Minimum impact. James J. Judge: And the -- again, the -- because of the net operating loss carryforward, our rate base would not be significantly impacted in '13, but '14 and beyond. Andrew M. Weisel - Macquarie Research: But the $200 million was the cash number not the rate base impact number, right? James J. Judge: That's correct. Andrew M. Weisel - Macquarie Research: Okay. And then I assume still no change to the comment of no equity needs through the forecast period. Any thoughts on longer term? James J. Judge: No, that's still the guidance that we've given, and we've -- we're staying with the 3-year guidance at this point. Andrew M. Weisel - Macquarie Research: Okay, great. And then just lastly, one more on Northern Pass. The transmission services agreement you have with Hydro-Québec, I believe, expires on February 14 of next year. My understanding is that kind of assumes that you'll have all the necessary approvals by the time -- before that deadline. In the event that you don't get all of the approvals by then, can you walk us through the process in terms of would you have to renegotiate with HQ, would this potentially be impacted by the FERC ROE review, and how should we think about the potential for small or not small changes to that, to the economics of the project? Thomas J. May: In terms of the TSA issue and expiration on February 14, we've discussed that with HQ. We both agree that we would go forward and do a letter extension around that, and then later on, at some point once we get farther down the road, there's a number of kind of admin kind of issues and so forth we would clean up with -- inside of the TSA, and we would just file a petition at FERC to do that at some point in time, but that's not on the immediate horizon. Andrew M. Weisel - Macquarie Research: Okay. So in other words, even if the approvals do linger on beyond that TSA expiration, your assumption is that it would be just extended and/or amended such that the long-term economics are the same in terms of like ROE agreement off of the slightly higher CapEx base? Thomas J. May: Well, we would not change any of the basic kind of aspects of the TSA. It would really be the issue of extending it beyond February of 2014. In other words, we would not propose to change anything around the ROE or any of the other covenants of the TSA. Jeffrey R. Kotkin: We have one more question from Michael Lapides. Michael? Michael J. Lapides - Goldman Sachs Group Inc., Research Division: Just want to make sure I understand what's happening on GAAP versus cash taxes. Are you expecting to be much of a federal cash tax payer in 2013 or beyond? And if so, kind of how significant of an impact is it from a cash flow statement item? James J. Judge: Yes, we don't expect to be a cash payer in '13. Michael J. Lapides - Goldman Sachs Group Inc., Research Division: And longer term, meaning in the 3-year horizon of your EPS guidance? Jay S. Buth: Michael, this is Jay Buth. We're not going to be a taxpayer in '13. Because of this, we probably will not be a taxpayer in '14 as well. Jeffrey R. Kotkin: Thank you, Michael. No more questions, so we just want to thank you all for joining us today. If you have anything -- any follow-ups, just give John or me a call later today. Take care. Thanks a lot.

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