UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                            FORM 10-Q

<TABLE>
<CAPTION>
<S>   <C>
[x]   Quarterly report pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934

      For the quarterly period ended September 30, 2002


                               or

[ ]  Transition report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

      For the transition period from            to

</TABLE>

                 Commission file number 1-14768
<TABLE>
<CAPTION>
<S>                                      <C>
                             NSTAR
     (Exact name of registrant as specified in its charter)


              Massachusetts                     04-3466300
     (State or other jurisdiction of         (I.R.S. Employer
      incorporation or organization)         Identification No.)


800 Boylston Street, Boston,Massachusetts         02199
 (Address of principal executive offices)       (Zip Code)

</TABLE>

Registrant's telephone number, including area code:(617)424-2000

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that theregistrant was required
to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes   x     No

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
<S>                            <C>

           Class                  Outstanding at November 5, 2002
Common Shares, $1 par value              53,032,546 shares
</TABLE>

                              NSTAR
<TABLE>
<CAPTION>
                              INDEX
<S><C>      <C>                                          <C>
Part I. Financial Information                            Page No.

   Item 1.  Financial Statements -

            Condensed Consolidated Statements of Income     3

            Condensed Consolidated Statements of
              Comprehensive Income (Loss)                   4

            Condensed Consolidated Statements of
              Retained Earnings                             4

            Condensed Consolidated Balance Sheets         5 - 6

            Condensed Consolidated Statements of Cash       7
              Flows

            Notes to Condensed Consolidated Financial
              Statements                                  8 - 23

   Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of
              Operations                                 23 - 56

   Item 3.  Quantitative and Qualitative Disclosure
              about Market Risk                             56

   Item 4.  Controls and Procedures                         56

Part II. Other Information

   Item 6   Exhibits and Reports on Form 8-K                57

   Signature                                                58

   Certification Statements                              59 - 62
</TABLE>


Part I - Financial Information
Item 1.  Financial Statements
<TABLE>
<CAPTION>
                              NSTAR
           Condensed Consolidated Statements of Income
                           (Unaudited)
        (in thousands, except earnings (loss) per share)
                                        Three Months Ended       Nine Months Ended
                                            September 30,            September 30,
<S>                                  <C>         <C>       <C>          <C>
                                           2002        2001        2002         2001
Operating revenues                     $701,001    $890,748  $2,024,312   $2,487,843
Operating expenses:
  Purchased power and cost of gas sold  333,370     524,460   1,053,841    1,489,595
  Operations and maintenance            108,086     102,694     322,975      306,020
  Depreciation and amortization          56,534      60,470     174,042      174,590
  Demand side management and
    renewable energy programs            17,910      19,824      49,782       58,156
  Property and other taxes               22,303      22,485      73,504       72,061
  Income taxes                           45,657      45,832      87,251      101,493
    Total operating expenses            583,860     775,765   1,761,395    2,201,915
Operating income                        117,141     114,983     262,917      285,928
Other income (deductions):
  Write-down of RCN                           -           -     (27,601)    (173,944)
investment, net
  Other income, net                       3,980          72      12,041        1,112
  Other deductions, net                    (719)     (3,243)     (1,358)      (3,404)
    Total other income (deductions)       3,261      (3,171)    (16,918)    (176,236)
Interest charges:
  Long term debt                         27,791      29,548      83,829       88,772
  Transition property
    securitization certificates           9,229      10,337      28,359       31,566
  Short-term and other                   10,155       5,707      20,540       21,694
  Allowance for borrowed funds used
    during construction                    (490)     (2,416)       (930)      (6,430)
      Total interest charges             46,685      43,176     131,798      135,602
Net income (loss)                        73,717      68,636     114,201      (25,910)
Preferred stock dividends of subsidiary     490       1,490       1,470        4,470
Earnings (loss) available for common
    shareholders                       $ 73,227    $ 67,146  $  112,731    $ (30,380)
                                       ========    ========  ==========    =========

Weighted average common shares
outstanding:
    Basic                                53,033      53,033      53,033       53,033
                                         ======      ======      ======       ======
    Diluted                              53,310      53,270      53,293       53,205
                                         ======      ======      ======       ======
Earnings (loss) per common share:
    Basic                                 $1.38       $1.27       $2.13       $(0.57)
                                          =====       =====       =====       ======
    Diluted                               $1.37       $1.26       $2.12       $(0.57)
                                          =====       =====       =====       ======
Dividends declared per common share       $0.53      $0.515       $1.59       $1.545
                                          =====      ======       =====       ======

The accompanying notes are an integral part of the condensed
consolidated financial statements.

</TABLE>

<TABLE>
<CAPTION>
                              NSTAR
Condensed Consolidated Statements of Comprehensive Income (Loss)
                           (Unaudited)
                         (in thousands)

<S>                              <C>       <C>        <C>        <C>
                                   Three Months Ended      Nine Months Ended
                                       September 30,          September 30,
                                     2002       2001        2002      2001

Net income (loss)                 $73,717    $68,636    $114,201  $(25,910)

Other comprehensive income, net:
  Unrealized gain (loss) on
    investments                   (11,308)    (9,610)   (12,682)    59,673
  Deferred income taxes               466      3,425        947    (24,365)
Comprehensive income              $62,875    $62,451   $102,466    $ 9,398
                                  =======    =======   ========    ========



The accompanying notes are an integral part of the condensed
consolidated financial statements.

</TABLE>
<TABLE>
<CAPTION>
                              NSTAR
     Condensed Consolidated Statements of Retained Earnings
                           (Unaudited)
                         (in thousands)
<S>                              <C>          <C>         <C>        <C>

                                     Three Months Ended      Nine Months Ended
                                         September 30,           September 30,
                                       2002         2001       2002        2001
Balance at the beginning of
    the period                     $317,426     $294,818   $334,138    $447,087
Add (Deduct):
  Net income (loss)                  73,717       68,636    114,201     (25,910)
    Subtotal                        391,143      363,454    448,339     421,177
Deduct:
Dividends declared:
  Common shares                      28,106       27,312     84,322      81,935
  Preferred stock                       490        1,490      1,470       4,470
    Subtotal                         28,596       28,802     85,792      86,405
Provision for preferred stock
  redemption and issuance costs           -           60          -         180

Balance at the end of the period   $362,547     $334,592   $362,547    $334,592
                                   ========     ========   ========    ========




The accompanying notes are an integral part of the condensed consolidated financial
statements.
</TABLE>

<TABLE>
<CAPTION>
                              NSTAR
              Condensed Consolidated Balance Sheets
                           (Unaudited)
                         (in thousands)

 <S>                                             <C>              <C>
                                                  September 30,    December 31,
                                                           2002            2001
Assets
Utility plant in service, at original cost          $ 3,979,526     $ 3,853,295
  Less: accumulated depreciation                      1,296,047       1,300,868
                                                      2,683,479       2,552,427
Construction work in progress                            91,291          72,957
  Net utility plant                                   2,774,770       2,625,384

Non-utility property, net                               116,874         106,007

Goodwill                                                454,437         463,626
Equity investments                                       22,314          22,560
Other investments                                        38,576          73,104

Current assets:
  Cash and cash equivalents                              37,327          11,655
  Restricted cash                                        23,116          22,966
  Accounts receivable, net                              296,015         485,687
  Accrued unbilled revenues                              54,066          51,061
  Fuel, materials and supplies, at average cost          60,427          53,276
  Other                                                  22,173          33,599
    Total current assets                                493,124         658,244

Deferred debits:
  Regulatory assets - other                             888,825       1,026,241
  Regulatory assets - power contracts                   631,914               -
  Prepaid pension cost                                  238,315         218,713
  Other                                                 129,513         134,312

  Total assets                                      $ 5,788,662     $ 5,328,191
                                                    ===========     ===========

The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>
                              NSTAR
              Condensed Consolidated Balance Sheets
                           (Unaudited)
                         (in thousands)

<S>                                              <C>              <C>
                                                 September 30,      December 31,
                                                          2002              2001
Capitalization and Liabilities
Common equity:
  Common shares, par value $1 per share
    (53,032,546 shares issued and outstanding)     $    53,033       $    53,033
  Premium on common shares                             870,622           873,664
  Retained earnings                                    362,547           334,138
  Accumulated other comprehensive income (loss)         (9,974)            1,761
    Total common equity                              1,276,228         1,262,596

Cumulative non-mandatory redeemable
  preferred stock of subsidiary                         43,000            43,000

Long-term debt                                       1,648,541         1,377,899
Transition property securitization certificates        445,890           513,904
    Total long-term debt                             2,094,431         1,891,803

    Total capitalization                             3,413,659         3,197,399

Current liabilities:
  Long-term debt                                       171,937            37,676
  Transition property securitization
    certificates                                        59,122            40,972
  Notes payable                                        121,297           624,847
  Accounts payable                                     207,019           209,821
  Deferred taxes                                        42,317            41,985
  Accrued interest                                      13,728            29,224
  Dividends payable                                     28,434            28,434
  Other                                                238,150           250,540
    Total current liabilities                          882,004         1,263,499

Deferred credits:
  Accumulated deferred income taxes                    624,492           616,743
  Accumulated deferred investment tax credits           36,394            37,877
  Power contracts                                      678,395            53,041
  Other                                                153,718           159,632
                                                     1,492,999           867,293
Commitments and contingencies

    Total capitalization and liabilities           $ 5,788,662       $ 5,328,191
                                                   ===========       ===========


The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>
                              NSTAR
         Condensed Consolidated Statements of Cash Flows
                           (Unaudited)
                         (in thousands)
<S>                                          <C>             <C>
                                                     Nine Months Ended
                                                        September 30,
                                                     2002           2001
Operating activities:
  Net income (loss)                            $  114,201     $  (25,910)
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation and amortization                 174,042        174,590
    Deferred income taxes and investment            5,263        (50,457)
      tax credits
    Loss on write-down of RCN investment           27,601        168,376
    Allowance for borrowed funds used
      during construction                            (930)        (6,430)
  Change in other current assets                  190,792        (19,599)
  Change in other current liabilities             (20,799)       (67,491)
  Prepaid pension                                 (19,602)       (29,867)
  Change in regulatory assets                      67,400        (15,962)
  Other miscellaneous operating changes           (24,316)         8,127
Net cash provided by operating activities         513,652        135,377

Investing activities:
  Plant expenditures (excluding AFUDC)           (254,160)      (149,506)
  Other investments                                   484          1,471
Net cash used in investing activities            (253,676)      (148,035)

Financing activities:
  Long-term debt redemptions                      (95,098)       (27,080)
  Transition property securitization
    certificates redemptions                      (49,864)       (47,628)
  Net change in notes payable                      (3,550)       175,800
  Dividends paid                                  (85,792)       (86,405)
Net cash (used in) provided by financing
  activities                                     (234,304)        14,687

Net increase in cash and cash equivalents          25,672          2,029
Cash and cash equivalents at beginning of year     11,655         21,873
Cash and cash equivalents at end of period     $   37,327      $  23,902
                                               ==========      =========
Supplemental disclosures of cash flow
  information:
Cash paid during the period for:
  Interest, net of amounts capitalized         $  133,459      $ 145,897
                                               ==========      =========
  Income taxes                                 $   54,487      $ 141,907
                                               ==========      =========
Supplemental disclosure of investing activity:
Investment in common shares                    $        -      $   4,537
                                               ==========      =========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>

      Notes to Condensed Consolidated Financial Statements
                           (Unaudited)

The accompanying Notes should be read in conjunction with Notes
to the Consolidated Financial Statements incorporated in NSTAR's
2001 Annual Report on Form 10-K.

A)  About NSTAR

NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts, including approximately 1.1
million electric customers in 81 communities and 246,000 gas
customers in 51 communities.  NSTAR is an exempt public utility
holding company.  NSTAR's retail utility subsidiaries are Boston
Edison Company (Boston Edison), Commonwealth Electric Company
(ComElectric), Cambridge Electric Light Company (Cambridge
Electric) and NSTAR Gas Company (NSTAR Gas).  Its wholesale
electric subsidiary is Canal Electric Company (Canal).  NSTAR's
three retail electric companies operate under the brand name
"NSTAR Electric."  Reference in this report to "NSTAR" shall mean
the registrant NSTAR or one or more of its subsidiaries as the
context requires.  Reference in this report to "NSTAR Electric"
shall mean each of Boston Edison, ComElectric and Cambridge
Electric.  NSTAR's non-utility operations include
telecommunications - NSTAR Communications, Inc. (NSTAR Com),
district heating and cooling operations (Advanced Energy Systems,
Inc. and NSTAR Steam Corporation) and a liquefied natural gas
service company (Hopkinton LNG Corp.).

B)  Basis of Presentation

The financial information presented as of September 30, 2002 and
for the periods ended September 30, 2002 and 2001 have been
prepared from NSTAR's books and records without audit by
independent accountants.  Financial information as of
December 31, 2001 was derived from the audited consolidated
financial statements of NSTAR, but does not include all
disclosures required by generally accepted accounting principles
(GAAP).  In the opinion of NSTAR's management, all adjustments
(which are of a normal recurring nature) necessary for a fair
presentation of the financial information for the periods
indicated have been included.  Certain reclassifications have
been made to the prior year data to conform with the current
presentation.

The results of operations for the three or nine months ended
September 30, 2002 and 2001 are not indicative of the results
that may be expected for an entire year.  Kilowatt-hour sales and
revenues are typically higher in the winter and summer than in
the spring and fall, as sales tend to vary with weather, economic
and other variable conditions.  Gas sales and revenues are
typically higher in the winter months than during other periods
of the year.

C)  Critical Accounting Policies

The results of operations, as presented on the accompanying
financial statements, are based on the application of accounting
principles generally accepted in the United States.  The
application of these principles often requires management to make
judgements, assumptions and estimates that may impact financial
presentations.  NSTAR believes that the accounting principles
presented herein are critical in terms of understanding its
financial statements.  These principles include the use of
estimates for long-lived assets, equity method investments and
long-term obligations.

1.  Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period.  Certain of these accounting
principles require subjective and complex judgements used in the
preparation of financial statements.  Accordingly, a different
financial presentation could result depending on the judgement,
estimates or assumptions that are used.  Such estimates and
assumptions, include, but are not specifically limited to:
depreciation rates set by regulator, amortization terms, future
interest rates, future discount rates, mark-to-market valuations,
investment returns, volatility in the price of NSTAR Common
Shares, impact of new accounting standards, future costs
associated with long-term contractual obligations, future
compliance costs associated with environmental regulations and
continuing creditworthiness of third parties.  Actual results
could materially differ from these estimates.

2.  Pension and Other Postretirement Benefits

NSTAR's pension and other postretirement costs are dependent upon
several factors and assumptions, such as the discount rate, the
long-term rate of return on plan assets and health care trends.
NSTAR's plan assets have been affected by significant declines in
the equity markets in the past three years.  These conditions are
expected to impact the funded status of the NSTAR Pension Plan
(the Plan) at year-end and pension and postretirement costs
for 2003.  Based on current estimates, NSTAR anticipates
recognizing pension and other postretirement costs for 2003
of $25 million to $55 million above the 2002 level of $37
million.  These costs would result in approximately $20
million to $40 million of incremental net pension and other
postretirement expenses charged to expense in 2003.

As a result of the negative investment performance, it is probable
that at December 31, 2002 the accumulated benefit obligation will
exceed Plan assets.  Therefore, it is also probable that NSTAR
will be required to recognize an additional minimum liability as
prescribed by the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 87,
"Employers' Accounting for Pensions" (SFAS 87) and SFAS
No. 132, "Employers' Disclosures about Pensions and
Postretirement Benefits."  The additional minimum liability
would result in the removal of Prepaid pension cost from
NSTAR's Consolidated Balance Sheet.

NSTAR's prepaid pension balance was $238 million as of
September 30, 2002.  The liability and Prepaid pension
adjustment would be recorded as a non-cash charge to Other
Comprehensive Income (OCI), and would not affect the results
of operations for 2002.  The charge to OCI would be reversed
in future peroids at the time that the fair value of the trust
assets exceeds the accumulated benefit obligation.  Assuming
there is no significant change in interest rates or equity
market performance for the remainder of the year, NSTAR
anticipates that the after-tax charge to OCI will be
approximately $200 million to $300 million.  The ultimate
impact of the Plan's investment performance on NSTAR's
financial position, results of operations and cash flows
will not be known until the Plan's assets and liabilities
are valued at December 31, 2002.

The Plan currently meets the minimum funding
requirements of the Employment Retirement Income Security
Act of 1974.  However, NSTAR is currently evaluating the
extent to which it may make additional optional cash
contributions to the Plan, the timing of each contribution
and the impact on the additional minimum liability.  Should
NSTAR elect to increase the level of its cash contributions
to the Plan, such cash requirements could be material to its
cash flows.  NSTAR believes it has adequate access to capital
resources to support these contributions. Pension and other
postretirement costs and cash contributions beyond
2003 are largely dependent on the financial markets.

In addition, NSTAR anticipates filing a request with the MDTE
seeking an order to mitigate the non-cash charge to OCI and the
increases in expected pension and other postretirement benefit
costs and cash contributions.  If approved, this request could
potentially allow NSTAR to record a regulatory asset in lieu of
a charge to OCI.  NSTAR cannot determine whether the request to
the MDTE will be approved or whether the approval would be
sufficient to record a regulatory asset under SFAS 71.

D)  New Accounting Standards

On July 5, 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations" (SFAS 143).  This Statement, which
is effective for NSTAR on January 1, 2003, establishes accounting
and reporting standards for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs.  It applies to legal obligations associated
with the retirement of long-lived assets that result from the
acquisition, construction, development and/or the normal
operation of a long-lived asset, except for certain obligations
of lessees.  SFAS 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period
in which it is incurred.  When the liability is initially
recorded, the entity capitalizes the cost by increasing the
carrying amount of the related long-lived asset.  Over time, the
liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the
related asset.  Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a
gain or loss upon settlement.  Management is currently assessing
the impact of SFAS 143 in light of its regulatory and accounting
requirements.  Management has identified several minor long-lived
assets, including lease arrangements, and has determined that it
is legally responsible to remove such property and comply with
the requirements of this standard.  However, based on NSTAR's
assessment of its potential liability and rate regulatory
treatment for certain identified assets, the adoption of SFAS 143
is not expected to have a material effect on its results of
operations, cash flows, or financial position.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" (SFAS 144), was effective January 1, 2002, and
addresses accounting and reporting for the impairment or disposal
of long-lived assets.  SFAS 144, among other things, expands the
reporting of discontinued operations to include all components of
an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction.  NSTAR has
reviewed and assessed for impairment certain of its non-utility
assets and based on its assessment, it has determined as of
September 30, 2002, that the implementation of SFAS 144 had no
effect on NSTAR's results of operations or financial position.

The FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" (SFAS 146) that requires
entities to record a liability for costs related to exit or
disposal activities when the costs are incurred.  Previous
accounting guidance required the liability to be recorded at the
date of commitment to an exit or disposal plan.  NSTAR is
required to comply with SFAS 146 beginning January 1, 2003.
NSTAR anticipates that the implementation of this standard will
not have an adverse impact on its financial position or results
of operations.

As of January 1, 2001, NSTAR adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended by
SFAS Nos. 137 and 138, (collectively, SFAS 133).  SFAS 133
established accounting and reporting standards requiring every
derivative instrument (including certain derivative instruments
embedded in such contracts as fixed-price fuel supply and power
contracts) be recorded on the Consolidated Balance Sheets as
either an asset or liability measured at its fair value.
Previously, all of NSTAR's commodity purchased power contracts
were exempt from this accounting treatment under the normal
purchase and sales exception of SFAS 133.  As a result, these
contracts were not marked to market and have not been reflected
on the accompanying Condensed Consolidated Balance Sheets.

Refer to Note G "Derivative Instruments" for further discussion.

E)  Amortization of Merger Related Costs

The merger creating NSTAR was accounted for using the purchase
method of accounting.  In accordance with the MDTE's approval of
NSTAR's merger rate plan, the premium (Goodwill) associated with
this acquisition was approximately $490 million, while the
original estimate of transaction and integration costs to achieve
the merger was $111 million.  The merger premium is reflected on
the accompanying Condensed Consolidated Balance Sheets as
Goodwill.  This premium will continue to be amortized over 40
years and amounts to approximately $12.2 million annually, while
the costs to achieve (CTA) are being amortized over 10 years.
CTA are the costs incurred to execute the merger including the
employee costs for a voluntary severance program, costs of
financial advisers, legal costs, and other transaction and
systems integration costs.  CTA is being amortized at an annual
rate of $11.1 million based on the original rate plan.  NSTAR
expects to be required by the Massachusetts Department of
Telecommunications and Energy (MDTE) to reconcile the actual CTA
costs incurred with the original estimate.  This reconciliation
will include a final accounting of the deductibility for income
tax purposes of each component of CTA.  The total CTA is
approximately $143 million.  This increase from the original
estimate is partially mitigated by the fact that the portion of
CTA that is not deductible for income tax purposes is
approximately $20 million lower than the original estimate.  The
CTA and Goodwill amounts were filed and approved as part of the
rate plan.

In June 2001, FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets" (SFAS 142).  This Statement, which was
effective for NSTAR in the first quarter of 2002, establishes
accounting and reporting standards for acquired goodwill and
other indefinite lived intangible assets.  It prohibits entities
from continuing amortization of these assets.  Instead, goodwill
and other intangible assets are subject to review for impairment.
However, in accordance with the provisions of SFAS 142 and an
amendment to SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation," NSTAR will continue amortizing this asset
over its estimated regulatory recovery period.  NSTAR has
determined that its regulatory rate structure, resulting from the
merger and approved by the MDTE, supports the continued
amortization of goodwill over the period it is collected from its
customers.  A significant element of this rate plan includes
amortization of the acquisition premium over 40 years.

F)  Investments - Available for Sale Securities

NSTAR records its investments in marketable equity securities in
accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (SFAS 115).  Pursuant to this
standard, NSTAR continuously reviews the carrying value of its
investments in marketable equity securities to assess whether any
decline in the market value below its carrying value is deemed to
be other-than-temporary.  Unless there is evidence to the
contrary, NSTAR's policy is to record an impairment charge for
the decline in market value below its carrying value in
situations where the decline has continued for a period of six
months or more.  During the second quarter of 2002, NSTAR
determined that the decline in its investment in RCN Corporation
(RCN) was other than temporary.  As a result, NSTAR recognized a
$27.6 million impairment charge in the second quarter to adjust
its carrying value down to $1.37 per share.  As of September 30,
2002, the total carrying value of its 11.6 million common shares
of RCN is $5.9 million reflecting a market value per share of
$0.51.  These securities are currently available for sale and are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets.  Refer to Note H for further
discussion.  NSTAR no longer holds securities associated with the
demutualization of John Hancock Financial Services, Inc. and
MetLife, Inc. as the sale of these securities was completed
during the quarter ended September 30, 2002.  The sale of these
securities during 2002 resulted in the recognition of a gain of
approximately $4.8 million.

G)  Derivative Instruments

NSTAR adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), effective January
1, 2001.  The accounting for derivative financial instruments is
subject to change based on the guidance received from the
Derivative Implementation Group (DIG) of FASB.  The DIG issued
C15, on October 10, 2001, which specifically addressed the
interpretation of clearly and closely related contracts that
qualify for the normal purchase and sales exception under SFAS
133.  The conclusion reached by the DIG was that contracts with a
pricing mechanism that is subject to future adjustment based on a
generic index that is not specifically related to the contracted
service commodity generally would not qualify for the normal
purchase and sales exception.

On April 1, 2002, the effective date of DIG C15, NSTAR adopted
the interpretation of this guidance and began marking to market
certain of its long-term purchased power contracts that
previously qualified for the normal purchase and sales exception.
NSTAR has six purchased power contracts that contain components
with pricing mechanisms that are based on a generic index, such
as the GNP or CPI.  Although these factors are only applied to
certain ancillary pricing components of these agreements, as
required by the interpretation of C15, NSTAR began recording
these contracts at fair value on its Condensed Consolidated
Balance Sheets beginning in the second quarter of 2002.  This
action resulted in the recognition of a liability for the fair
value of the above-market portion of these contracts as of
September 30, 2002 of approximately $632 million and is a
component of Power contracts on the accompanying Condensed
Consolidated Balance Sheets.  NSTAR has recorded a corresponding
regulatory asset to reflect the future recovery of the above-
market component of these contracts through its transition
charge.  Therefore, as a result of this regulatory treatment, the
recording of these contracts on its accompanying Condensed
Consolidated Balance Sheets does not result in an earnings
impact.

NSTAR has other purchased power contracts in which the fair value
is significantly above-market.  However, these contracts have met
the criteria for the normal purchase and sales exception pursuant
to SFAS 133 and C15 and have not been recorded on the
accompanying Condensed Consolidated Balance Sheets.  The above-
market portion of these contracts is currently being recovered
through the transition charge.  Therefore, NSTAR does not account
for these types of capacity and energy contracts, gas supply
contracts, or purchase orders for numerous supply items as
derivatives.

NSTAR will continue to monitor any further guidance that may
result from FASB revisions and clarifications to SFAS 133.  Based
on NSTAR's assessment to date, the adoption of SFAS 133 has not
had a material effect on its results of operations, cash flows,
or net assets.

H)  RCN Joint Venture and Investment Conversion

NSTAR Com participated in a telecommunications venture with RCN
Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN).  NSTAR Com accounted for its equity investment
in the joint venture using the equity method of accounting.  As
part of the Joint Venture Agreement, NSTAR Com had the option to
exchange portions of its joint venture interest for common shares
of RCN at specified periods.

On April 6, 2000, NSTAR Com issued its third and final notice to
exchange substantially all of its remaining interest in the joint
venture into common shares of RCN.  Effective with the third
notice, NSTAR Com's profit and loss sharing ratio was reduced to
zero.

On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement.  Although the
agreement was subject to ongoing negotiations, this proposal
established, among other items, the number of shares to be
received upon finalization of the agreement for the third
conversion of NSTAR Com's remaining equity investment at 7.5
million shares.

On June 19, 2002, NSTAR Com and RCN finalized negotiations on an
Amended Joint Venture Agreement and NSTAR Com received the
anticipated 7.5 million shares resulting from its final exchange
of its investment in the RCN joint venture.  With the receipt of
these shares, NSTAR Com holds approximately 11.6 million RCN
common shares, or approximately 10.6% of RCN's outstanding common
shares.  Prior to this final exchange, NSTAR Com had received
approximately 4.1 million shares of RCN resulting from the two
previous exchanges.

In accordance with its accounting policies, NSTAR Com
continuously evaluates the carrying value of its investment in
RCN to assess whether any decline in the market value below its
carrying value is deemed to be other than temporary.  Consistent
with the performance of the telecommunications sector as a whole,
the market value of RCN's common shares decreased significantly
during the later part of 2000 and continued to decrease in 2001.
As a result, in the first quarter of 2001, management determined
that this decline in market value was "other-than-temporary" in
accordance with SFAS 115.

NSTAR Com recognized an impairment of its investment in RCN, in
the first quarter of 2001.  This write-down resulted in a non-
cash, after-tax charge of $173.9 million that is reported on the
accompanying Condensed Consolidated Statements of Income as
"Write-down of RCN investment, net."

During 2002, the market value of RCN common shares continued to
decline and had not closed above NSTAR's carrying value of $3.75
per share since November 27, 2001.  As a result, NSTAR Com
recognized a write-down of its 11.6 million RCN common shares to
a market value of $1.37 per share as of June 30, 2002.  This
write-down resulted in a non-cash, after-tax charge of $27.6
million that is reported on the accompanying Condensed
Consolidated Statements of Income as "Write-down of RCN
investment, net."

Since June 30, 2002, RCN's market value has continued to decline.
Should this trend continue for the remainder of 2002 and into
early 2003, it is reasonably possible that NSTAR may recognize a
further write-down of its carrying value or write off its entire
remaining investment in RCN as of December 31, 2002.

The total carrying value of the 11.6 million RCN common shares is
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $5.9 million at September 30, 2002.  The fair value
of the 11.6 million shares held may increase or decrease as a
result of changes in the market value of RCN common shares.  As
of September 30, 2002 and December 31, 2001, the market value per
share of RCN was $0.51 and $2.93, respectively.  The unrealized
gain or loss associated with these shares will fluctuate due to
the changes in fair value of these securities during each period
and is reflected, net of associated income taxes, as a component
of Other comprehensive income, net on the accompanying Condensed
Consolidated Statements of Comprehensive Income (Loss).  The
cumulative increase or decrease in fair value of these shares
including the impact of the write-down adjustments of these
shares are included in Accumulated other comprehensive income on
the accompanying Condensed Consolidated Balance Sheets.

I)  Service Quality Index

On October 29, 2001, and as subsequently updated, NSTAR Electric
and NSTAR Gas filed proposed service quality plans for each
company with the MDTE, which included guidelines that had been
established by the MDTE as a result of its generic investigation
of service quality issues.  The service quality plans established
performance benchmarks effective January 1, 2002 for certain
identified measures of service quality relating to customer
service and billing performance, customer satisfaction, and
reliability and safety performance.  The companies are required
to report annually concerning their performance as to each
measure and are subject to maximum penalties of up to two percent
of transmission and distribution revenues should performance fail
to meet the applicable benchmarks.  Concurrently, NSTAR Electric
and NSTAR Gas filed with the MDTE a report concerning their
performance on the identified service quality measures for the
two twelve-month periods ended August 31, 2000 and 2001.  This
report included a calculation of penalties in accordance with
MDTE guidelines as if such guidelines were in effect during this
period.  On March 22, 2002, following hearings on the matter, the
MDTE issued an order imposing a service quality penalty of
approximately $3.25 million on NSTAR Electric that was refunded
to customers as a credit to their bills during the month of May
2002.  As a result of the accrual for this estimated penalty
during 2001, this refund had no effect on NSTAR's consolidated
financial position or results of operations in 2002.

Through September 30, 2002, NSTAR Electric's performance has
resulted in a minimal penalty situation based on both actual
results through September 2002 and forecasted results for the
remaining three-month period.  However, these results may not be
indicative of the results for the remainder of the year.  NSTAR
accounts for its service quality penalties pursuant to SFAS No.
5, "Accounting for Contingencies."  Accordingly, these penalties
are monitored on a monthly basis to determine NSTAR's contingent
liability, and if NSTAR determines it is probable that a
liability has been incurred and is estimable, NSTAR would then
accrue an appropriate liability.  Annually, each NSTAR utility
subsidiary makes a service quality performance filing with the
MDTE.  Any settlement or rate order that would result in a
different liability (or credit) level from what has been accrued
would be adjusted in the period an agreement is received from the
MDTE.

J)  Contingencies

1.  Merger Rate Appeal

The 1999 MDTE order, which approved the rate plan associated with
the merger of BEC and COM/Energy, was appealed by certain parties
to the Massachusetts Supreme Judicial Court (SJC).  In October
2001, the MDTE certified the record of the case to the SJC.  The
appeals of the Massachusetts Attorney General (AG) and a separate
group that consists of The Energy Consortium (TEC) and Harvard
University (Harvard) are pending.  On June 21, 2002, TEC and
Harvard filed their joint initial brief with the SJC and on June
24, 2002, the AG filed a brief in the consolidated proceeding.
TEC and Harvard allege that, in approving the rate plan and
merger proposal, the MDTE committed errors of law in the
following areas: (1) in adopting a public interest standard, the
MDTE applied the wrong standard of review, and failed to
investigate the propriety of rates and to determine that the
resulting rates of Boston Edison, Cambridge Electric, ComElectric
and NSTAR Gas were just and reasonable; (2) that in permitting
Cambridge Electric and ComElectric to adjust their rates by $49.8
million to reflect demand-side management costs, the MDTE failed
to determine whether such an adjustment was warranted in light of
other cost decreases; (3) that the MDTE's approval results in an
arbitrary and unjustified sharing of benefits and costs between
ratepayers and shareholders; and (4) that the MDTE's approval of
the rate plan guarantees shareholders recovery of future costs
without any future demonstration of customer savings.  The AG's
brief includes similar arguments in each of these areas and adds
that, in allowing recovery of the acquisition premium, the MDTE
has improperly deviated from a cost basis in setting approved
rates and the ratemaking policies in other jurisdictions.
Responsive briefs from NSTAR and the MDTE were filed on August
30, 2002 and September 9, 2002, respectively.  Reply briefs were
filed by TEC/Harvard and the AG on September 27, 2002 and October
3, 2002, respectively.  On November 4, 2002, oral arguments
occurred before the SJC. Management is currently unable to
determine the outcome of this proceeding.  NSTAR intends to
vigorously defend its position relative to this appeal.  However,
in the unlikely event, an unfavorable outcome were to occur,
there could be a material adverse impact on the consolidated
financial position, cash flows and the results of operations for
a reporting period.

2.  Environmental Matters

NSTAR's subsidiaries are involved in 18 state-regulated
properties ("Massachusetts Contingency Plan, or "MCP" sites")
where oil or other hazardous materials were previously spilled or
released.  The NSTAR subsidiaries are required to clean up or
otherwise remediate these properties in accordance with specific
state regulations.  There are uncertainties associated with the
remediation costs due to the final selection of the specific
cleanup technology and the particular characteristics of the
different sites.  In addition to the MCP sites, NSTAR
subsidiaries also face possible liability as a potentially
responsible party (PRP) in the cleanup of eight multi-party
hazardous waste sites in Massachusetts and other states where one
or more NSTAR subsidiaries are alleged to have generated,
transported or disposed of hazardous waste at the sites.  NSTAR
generally expects to have only a small percentage of the total
potential liability for these sites.  Estimates of approximately
$5.6 million and $5.8 million are included as liabilities in the
accompanying Condensed Consolidated Balance Sheets at September
30, 2002 and December 31, 2001, respectively, related to the non-
recoverable portion of these cleanup liabilities and is the gross
amount of NSTAR's estimated environmental clean-up obligations
that is not certain to be recoverable in NSTAR's rates.
Accordingly, this amount has not been reduced by any potential
rate recovery treatment of these costs or any potential recovery
from NSTAR's insurance carriers.  Prospectively, should NSTAR be
allowed regulatory rate recovery of these specific costs, it
would record an offsetting regulatory asset and record a credit
to operating expenses equal to previously expensed costs.  Based
on its assessments of the specific site circumstances, management
does not believe that it is probable that any such additional
costs will have a material impact on NSTAR's consolidated
financial position.

NSTAR Gas is participating in the assessment of six former
manufactured gas plant (MGP) sites and alleged MGP waste disposal
locations to determine if and to what extent such sites have been
contaminated and whether NSTAR Gas may be responsible for
remedial action.  The MDTE has approved recovery of costs
associated with MGP sites over a 7-year period, without carrying
costs.  As of September 30, 2002 and December 31, 2001, NSTAR Gas
has recorded a liability of $6.7 million as an estimate for site
cleanup costs for several MGP sites for which NSTAR Gas was
previously cited as a PRP.  A corresponding regulatory asset has
been recorded that reflects the future rate recovery for these
costs.

Estimates related to environmental remediation costs are reviewed
and adjusted periodically as further investigation and assignment
of responsibility occurs and as either additional sites are
identified or NSTAR's responsibilities for such sites evolve or
are resolved.  NSTAR's ultimate liability for future
environmental remediation costs may vary from these estimates.
Although, in view of NSTAR's current assessment of its
environmental responsibilities, existing legal requirements and
regulatory policies, management does not believe that these
matters will have a material adverse effect on NSTAR's
consolidated financial position or results of operations for a
reporting period.

3.  Legal Proceedings

In the normal course of its business, NSTAR and its subsidiaries
are involved in certain legal matters, including civil lawsuits.
Management is unable to fully determine a range of reasonably
possible court-ordered damages, settlement amounts, and related
litigation costs ("legal liabilities") that would be in excess of
amounts accrued.  Based on the information currently available,
NSTAR does not believe that it is probable that any such
additional legal liability will have a material impact on its
consolidated financial position.  However, it is reasonably
possible that additional legal liabilities that may result from
changes in estimates could have a material impact on its results
of operations for a reporting period.

K)  Income Taxes

Income taxes are accounted for in accordance with SFAS No. 109,
"Accounting for Income Taxes" (SFAS 109).  SFAS 109 requires the
recognition of deferred tax assets and liabilities for the future
tax effects of temporary differences between the carrying amounts
and the tax basis of assets and liabilities.  In accordance with
SFAS 109, net regulatory assets include $53.1 million and $53.4
million of deferred tax assets and corresponding amounts in
accumulated deferred income taxes as of September 30, 2002 and
December 31, 2001, respectively.  The regulatory assets represent
the additional future revenues to be collected from customers for
deferred income taxes.

1.  Effective Tax Rate
<TABLE>
<CAPTION>
The following table illustrates the reconciliation of the
statutory federal income tax rate to the annual estimated
effective income tax rate for 2002 and the actual effective
income tax rate for the year ended December 31, 2001:
<S>                                                    <C>          <C>
                                                          2002          2001
Statutory tax rate                                        35.0%         35.0%
State income tax, net of federal income tax benefit        5.0           5.3
Investment tax credits                                    (0.7)         (0.7)
Other                                                      1.0           0.6
  Effective tax rate before write-down and tax
     valuation allowance adjustment                       40.3          40.2
Adjustment to tax valuation allowance and write-
 down of RCN investment (Federal and State)                3.0          57.3
  Effective tax rate                                      43.3%         97.5%
                                                          ====          ====
</TABLE>

2.  Tax Valuation Allowance

SFAS 109 prohibits the recognition of deferred income tax
benefits unless the utilization of future income tax benefits is
more likely than not.  NSTAR has determined that it was not
likely that a current or future income tax benefit would be
realized relating to the write-downs of its RCN investment that
was recorded in the second quarter of 2002 and previously in the
first quarter of 2001.  These write-downs resulted from the
significant declines in the market value of the
telecommunications sector, including RCN.  As a result, NSTAR
recorded a $74.2 million tax valuation allowance on the entire
tax benefit associated with these write-downs. During the nine
months ended September 30, 2002, as a result of certain
unanticipated capital gain transactions, NSTAR recognized $3.2
million of this tax benefit.  Therefore, the tax valuation
allowance balance as of September 30, 2002 was reduced to $71
million.

A portion of the $71 million tax valuation allowance relates to
NSTAR's previous equity investment in the Joint Venture (JV) with
RCN Telecom Services, Inc. of Massachusetts wherein NSTAR had
claimed operating losses generated from its JV interest through
June 19, 2002 for federal income tax purposes.  Although the
initial review of the operating loss deductions have produced no
adjustment by the IRS, NSTAR is continuing to reserve the $20
million in its valuation allowance pending either further review
by taxing authorities or an analysis by NSTAR's tax advisor.  The
tax years in question are 1999 through 2002, and currently years
1999 and 2000 are under review by the IRS as part of their normal
review of NSTAR's consolidated federal income tax returns.  A
determination is anticipated by the end of 2002 or early 2003.
Should NSTAR prevail in its treatment of these losses as
operating losses, it would allow for the reduction of the
valuation allowance and an immediate recognition of approximately
$20 million as a credit to income tax expense.

NSTAR has and will continue to research potential transactions
that improve the operational efficiencies of NSTAR while
maximizing the utilization of these potential tax benefits.
Should NSTAR be successful in its tax and operational planning to
allow for all or a portion of this tax benefit to be ultimately
realized, NSTAR will reflect a credit to its income tax expense.
Future earnings could be positively impacted by the outcome of
this strategy.  The maximum potential positive future earnings
impact is currently estimated at $71 million, including the $20
million discussed above.  Management is currently unable to
determine when, whether, or the extent to which NSTAR will be
able to recognize this potential benefit.

3.  Tax Gain on Generating Assets

The cost of transitioning to competition was mitigated, in part,
by the sale of Commonwealth Energy System's (COM/Energy) (now a
wholly owned subsidiary of NSTAR) non-nuclear generating assets.
COM/Energy completed the sale of substantially all of its non-
nuclear generating assets on December 30, 1998.  Proceeds from
the sale of these assets amounted to approximately $453.9
million, or 6.1 times their book value of approximately $74.2
million.  The proceeds from the sale, net of book value,
transaction costs and certain other adjustments amounted to
$358.6 million and were used to reduce transition costs of
Cambridge Electric and ComElectric related to electric industry
restructuring that otherwise would have been collected through a
non-bypassable transition charge.  COM/Energy determined that
this transaction was not a taxable event because it did not
provide an economic benefit to COM/Energy.  The amount, if not
for this treatment, that would otherwise have been paid in taxes
is approximately $136 million.  Should COM/Energy ultimately lose
this issue, tax deductions resulting in tax savings of
approximately $136 million would ultimately be realized by
COM/Energy over a period of years.  During the second quarter of
2002, NSTAR was notified that the IRS intended to file a Request
for Technical Advice with the IRS National Office with regard to
COM/Energy's tax treatment of this item.

The IRS is in the process of auditing the COM/Energy tax returns
for the years 1997, 1998 and 1999.  Before completion of the
audit, which may be at the end of the first quarter of 2003, it
is expected that the IRS National Office will provide a response
to the request.  Should NSTAR's position be challenged as a
result of the IRS decision, it is probable that NSTAR will make a
tax payment of approximately $61 million in order to stop the
accrual of interest on the potential remaining tax deficiency for
all years involved through 2002.  NSTAR intends to vigorously
defend its position, which is supported by an opinion from an
independent tax advisor, relative to this transaction and
anticipates pursuing a refund of any amounts paid plus interest.
In addition, NSTAR would pursue regulatory rate recovery for the
interest on tax deficiencies should any amounts ultimately be
incurred as a result of this transaction.  The MDTE has provided
written acknowledgements to NSTAR, COM/Energy and the IRS
indicating: (1) its understanding of the issue; and (2)
COM/Energy's ability to seek recovery of costs relating to the
tax deficiency that may be incurred.  NSTAR believes that the
expectation of recovery from customers is probable in view of the
MDTE's and COM/Energy's position and the monetary benefits to be
realized by COM/Energy's customers should it be successful in
defending its position.  However, if NSTAR is unsuccessful with
the IRS and its regulatory treatment, it is possible that it
could have an adverse impact on NSTAR's results of operations,
cash flows and financial position.

L)  Subsequent Events

1.  Generating Asset Divestiture

On November 1, 2002, FPL Group, Inc. closed on its purchase of an
88% majority ownership interest in the Seabrook Nuclear Power
Station, including Canal Electric's 3.52% ownership interest, for
$836.6 million.  The purchase agreement was reached through an
auction process launched in late 2001.  FPL Group assumed
responsibility for the ultimate decommissioning of the facility
and received the Seabrook decommissioning funds of approximately
$233 million at the closing.  Canal Electric's portion of the
sale proceeds amounted to $31.6 million, less $4.7 million paid
into the decommissioning trust and for other transaction costs.
The net proceeds of $26.9 million were less than Canal Electric's
remaining investment in Seabrook.  The net result of this
transaction will be included as a component of Cambridge
Electric's and ComElectric's transition cost recovery of
approximately $15 million and is expected to be collected from
ComElectric's and Cambridge Electric's customers in 2003 through
the transition charge.  As part of this sale, all purchased power
agreements were terminated.  This sale completes the final
divestiture of NSTAR's remaining regulated generating assets with
the exception of Blackstone Street Station, which is under
agreement to be sold.  This transaction did not have an impact on
NSTAR's current results of operations.  The future impact of this
transaction will not have a material effect on operations.

2.  Long-Term Debt Issuance

On October 15, 2002, Boston Edison sold $400 million of 4.875% 10-
year debentures and $100 million of 3-year floating rate
debentures priced at LIBOR plus 50 basis points.  The net
proceeds were used to repay consolidated outstanding short-term
debt balances.  For financial reporting purposes, $500 million of
short-term debt has been reclassified on the accompanying
Condensed Consolidated Balance Sheets as Long-term debt.

M)  Earnings Per Common Share

Basic earnings per common share (EPS) is calculated by dividing
net income, after deductions for preferred dividends, by the
weighted average common shares outstanding during the year.  SFAS
No. 128, "Earnings per Share," requires the disclosure of diluted
EPS.  Diluted EPS is similar to the computation of basic EPS
except that the weighted average common shares is increased to
include the number of dilutive potential common shares.  Diluted
EPS reflects the impact on shares outstanding of the deferred
(nonvested) shares and stock options granted under the NSTAR 1997
Share Incentive Plan.
<TABLE>
<CAPTION>
The following table summarizes the reconciling amounts between
basic and diluted EPS:

(in thousands, except per share amounts)
<S>                              <C>       <C>         <C>         <C>
                                    Three Months Ended     Nine Months Ended
                                        September 30,         September 30,
                                       2002        2001      2002        2001
After non-cash RCN charge:
  Earnings (loss) available for   $  73,227   $  67,146 $ 112,731    $(30,380)
    common shareholders
  Basic EPS                           $1.38       $1.27     $2.13      $(0.57)
  Diluted EPS                         $1.37       $1.26     $2.12      $(0.57)
Before non-cash RCN charge:
  Earnings available for common
    shareholders                  $  73,227   $  67,146 $ 140,332    $143,564
  Basic EPS                           $1.38       $1.27     $2.65       $2.71
  Diluted EPS                         $1.37       $1.26     $2.64       $2.70

Weighted average common shares
  outstanding for basic EPS          53,033      53,033    53,033      53,033
Effect of diluted shares:
Weighted average dilutive
  potential common shares               277         237       260         172
Weighted average common shares
  outstanding for diluted EPS        53,310      53,270    53,293      53,205
                                  =========   ========= =========   =========
</TABLE>

N)  Segment and Related Information

For the purpose of providing segment information, NSTAR's
principal operating segments, or its traditional core businesses,
are the electric and natural gas utilities that provide energy
delivery services in over 100 cities and towns in Massachusetts.
NSTAR subsidiaries also supply electricity at wholesale to
municipalities.

The non-utility operations operating segment engages in business
activities that include telecommunications, district heating and
cooling operations and a liquefied natural gas service.  Amounts
shown on the following table for the three and nine month periods
ended September 30, 2002 and 2001 include the allocation of
NSTAR's (parent company) results of operations and assets, net of
inter-company transactions, and primarily consist of interest
charges and investment assets, respectively, to these business
segments.  The allocation of parent company charges is based on
an indirect allocation of the parent company's debt financing
used to fund these various businesses.

In addition, the non-utility operations operating segment for
three and nine month periods ended September 30, 2002 and 2001,
reflect reductions in the carrying value of NSTAR's investment
and its ultimate discontinuance of a chilled water operation.
During 2000, NSTAR notified certain chilled water customers of
its decision to exit that business and that service would cease
effective September 30, 2002, in accordance with its contractual
obligations.  As part of the 2001 impairment charge, NSTAR's
carrying value of this investment has been written-off entirely.
In addition, during the three months ended September 30, 2002 and
2001, NSTAR has provided $1.5 million and $3.8 million,
respectively, for potential removal costs and settlement of a
certain district cooling facility.

Excluding the impact of transactions related to NSTAR's
investment in RCN, a portion of its chilled water operations and
the negative effect of the allocation of parent company losses,
non-utility operations would otherwise reflect a minimal level of
net income for the period shown.

Management anticipates that the remaining operations of this
segment will stabilize and generate positive results of
operations in the near future.  However, management cannot
predict if or when assets within this segment will be fully
realized.  Reference is made to Note D, "New Accounting
Standards" and to Note H, "RCN Joint Venture and Investment
Conversion" for further discussions.

<TABLE>
<CAPTION>
Financial data for the operating segments were as follows:
<S>                            <C>          <C>        <C>         <C>
(in thousands)                     Utility Operations    Non-utility Consolidated
                                   Electric       Gas    Operations         Total

Three months ended September 30,
2002
Operating revenues              $  631,458    $  36,972  $  32,571     $  701,001
Segment net income (loss)(a)    $   81,223    $  (8,318) $     812     $   73,717
2001
Operating revenues              $  822,475    $  41,014  $  27,259     $  890,748
Segment net income (loss)(b)    $   81,122    $  (4,908) $  (7,578)    $   68,636

Nine months ended September 30,
2002
Operating revenues              $1,707,190    $ 214,660  $ 102,462     $2,024,312
Segment net income (loss)(a)    $  129,392    $   5,184  $ (20,375)    $  114,201
2001
Operating revenues              $2,099,292    $ 303,822  $  84,729     $2,487,843
Segment net income (loss)(b)    $  151,113    $  10,505  $(187,528)    $  (25,910)

Total assets
September 30, 2002              $5,094,091    $ 483,039  $ 211,532     $5,788,662
December 31, 2001               $4,509,982    $ 517,659  $ 300,550     $5,328,191

</TABLE>

(a) Non-utility operations in 2002 include an impairment charge
of $27.6 million for the nine-month period ended September 30,
2002.  In addition, in 2002, non-utility operations include the
benefit of a deferred tax valuation allowance adjustment of $3.2
million for the nine months ended September 30, 2002, and for the
three and nine-month periods, an additional $1.5 million reserve
for estimated removal costs associated with a district cooling
facility upon cessation of those operations on September 30,
2002.

(b) A $173.9 million impairment charge related to the RCN
investment was recognized in the nine-month period ended
September 30, 2001.  In the three and nine-months ended September
30, 2001, non-utility operations includes $7.5 million charged
for the write-down of NSTAR's ultimate discontinuance of certain
chilled water operations.

O)  Electric Equity Investment

Cambridge Electric had a 2.65% equity investment in the 540 MW
Vermont Yankee nuclear power plant.  Cambridge Electric was
entitled to electricity produced from the facility based on its
ownership interest, and was billed for its entitlement pursuant
to a contractual agreement that was approved by the Federal
Energy Regulatory Commission.

On July 31, 2002, Vermont Yankee was sold for approximately $180
million to Entergy Nuclear Vermont Yankee, LLC (Entergy).  The
sale agreement stipulates, among other items, that Entergy will
assume responsibility for the ultimate decommissioning of the
facility and will receive the Vermont Yankee decommissioning
funds.  Pursuant to the terms of an Additional Power Contract,
Cambridge Electric is obligated to purchase its entitlement
percentage of the net capacity and output of the plant through
the current license term ending in March 2012.  The plant's
owners before the sale were a consortium of New England
utilities, including Cambridge Electric.  This transaction will
not have an impact on NSTAR's results of operations.  The net
result of this transaction will be included as a component of
Cambridge Electric's transition cost recovery and is reflected on
the accompanying Condensed Consolidated Balance Sheets as a
Regulatory asset.

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

The accompanying Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) should be
read in conjunction with the MD&A in NSTAR's 2001 Annual Report
on Form 10-K and its March 31, 2002 and June 30, 2002 Quarterly
Reports on Form 10-Q.

Overview

NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts, including approximately 1.1
million electric customers in 81 communities and 246,000 gas
customers in 51 communities.  NSTAR is an exempt public utility
holding company.  NSTAR's retail utility subsidiaries are Boston
Edison Company (Boston Edison), Commonwealth Electric Company
(ComElectric), Cambridge Electric Light Company (Cambridge
Electric) and NSTAR Gas Company (NSTAR Gas).  Its wholesale
electric subsidiary is Canal Electric Company (Canal).  NSTAR's
three retail electric companies operate under the brand name
"NSTAR Electric."  Reference in this report to "NSTAR" shall mean
the registrant NSTAR or one or more of its subsidiaries as the
context requires.  Reference in this report to "NSTAR Electric"
shall mean each of Boston Edison, ComElectric and Cambridge
Electric.  NSTAR's non-utility operations include
telecommunications - NSTAR Communications, Inc. (NSTAR Com),
district heating and cooling operations (Advanced Energy Systems,
Inc. and NSTAR Steam Corporation) and a liquefied natural gas
service company (Hopkinton LNG Corp.).

Cautionary Statement

This MD&A contains certain forward-looking statements such as
forecasts and projections of expected future performance or
statements of management's plans and objectives.  These forward-
looking statements may also be contained in filings with the
Securities and Exchange Commission (SEC) and in press releases
and oral statements.  You can identify these statements by the
fact that they do not relate strictly to historical or current
facts.  They use words such as "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe" and other words
and terms of similar meaning in connection with any discussion of
future operating or financial performance.  These statements are
based on the current expectations, estimates or projections of
management and are not guarantees of future performance.  Some or
all of these forward-looking statements may not turn out to be
what the Company expected.  Actual results could potentially
differ materially from these statements.  Therefore, no assurance
can be given that the outcomes stated in such forward-looking
statements and estimates will be achieved.

The impact of continued cost control procedures on operating
results could differ from current expectations.  NSTAR's revenues
from its electric and gas sales are sensitive to weather, the
economy and other variable conditions, particularly sales to
residential, commercial and industrial customers.  Accordingly,
NSTAR's sales in any given period reflect, in addition to other
factors, the impact of weather, with colder temperatures
generally resulting in increased gas sales and warmer
temperatures generally resulting in increased electric sales.
NSTAR anticipates that these sensitivities to seasonal and other
weather conditions will continue to impact its sales forecasts in
future periods.  The effects of changes in weather, economic
conditions, tax rates, interest rates, technology, prices and
availability of operating supplies could materially affect the
projected operating results.

NSTAR's forward-looking information depends in large measure on
prevailing governmental policies and regulatory actions,
including those of the Massachusetts Department of
Telecommunications and Energy (MDTE) and the Federal Energy
Regulatory Commission (FERC), with respect to allowed rates of
return, rate structure, financings, purchased power and cost of
gas recovery, acquisition and disposition of assets, operation
and construction of facilities, changes in tax laws and policies
and changes in and compliance with environmental and safety laws
and policies.

The impacts of various environmental, legal issues, and
regulatory matters could differ from current expectations.  New
regulations or changes to existing regulations could impose
additional operating requirements or liabilities other than
expected.  The effects of changes in specific hazardous waste
site conditions and the specific cleanup technology could affect
the estimated cleanup liabilities.  The impacts of changes in
available information and circumstances regarding legal issues
could affect any estimated litigation costs.

NSTAR undertakes no obligation to publicly update forward-looking
statements, whether as a result of new information, future
events, or otherwise.  You are advised, however, to consult any
further disclosures NSTAR makes in its filings to the SEC.  Also
note that NSTAR provided in the above paragraphs a cautionary
discussion of risks and other uncertainties relative to its
business.  These are factors that could cause its actual results
to differ materially from expected and historical performance.
Other factors in addition to those listed here could also
adversely affect NSTAR.  This report also describes material
contingencies and critical accounting policies in NSTAR's Notes
to Condensed Consolidated Financial Statements, and NSTAR
encourages a review of these Notes.

Critical Accounting Policies

The accompanying consolidated financial statements for each
period presented include the activities of NSTAR's wholly owned
subsidiaries.  All significant intercompany transactions have
been eliminated.  Certain reclassifications have been made to the
prior year data to conform to the current presentation.

a.  Regulatory Accounting

NSTAR follows accounting policies prescribed by the FERC and the
MDTE.  In addition, NSTAR is subject to the accounting and
reporting requirements of the SEC.  The accompanying condensed
consolidated financial statements conform to generally accepted
accounting principles (GAAP).  As a rate-regulated company, NSTAR
is subject to the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS
71).  The application of SFAS 71 results in differences in the
timing of recognition of certain expenses from that of other
businesses and industries.  The energy delivery business remains
subject to rate-regulation and continues to meet the criteria for
application of SFAS 71.  This ratemaking process results in the
recording of regulatory assets based on current and future cash
inflows.  As of September 30, 2002 and December 31, 2001, NSTAR
has recorded regulatory assets of $1,521 million and $1,026
million, respectively.  NSTAR continuously reviews these assets
to assess their ultimate recoverability within the approved
regulatory guidelines.  NSTAR anticipates to fully recover in its
rates these regulatory assets.  However, impairment risk
associated with these assets relates to potentially adverse
legislative, judicial or regulatory actions in the future.  Plant
and other regulatory assets related to the generation business
are recovered through the transition charge.

NSTAR Electric has long-term purchased power agreements that are
used primarily to meet its standard offer obligation.  The
majority of these agreements are above-market and are not
reflected on the accompanying Condensed Consolidated Balance
Sheets.  However, effective April 1, 2002, NSTAR has marked to
market six purchased power contracts that are reflective of above-
market costs.  The above-market value of these contracts is
reflected as a component of Power contracts on the accompanying
Condensed Consolidated Balance Sheets.  Refer to "Critical
Accounting Policies," Item d. "Derivative Instruments" below for
further discussion.  The above-market costs of all of these
contracts are currently being recovered through the transition
charge as of these costs are incurred.  This recovery occurs
through 2016 for Boston Edison, through 2023 for ComElectric and
through 2011 for Cambridge Electric.  These recovery periods
coincide with the contractual terms of these purchased power
agreements.  Furthermore, standard offer and default service
revenues are adjusted periodically to recover actual costs
provided.  Standard offer and default service revenues are
recognized based on these approved rates for energy delivery.
Refer to "Retail Electric Rates" in this MD&A for further
discussion.

b.  Pension and Other Postretirement Benefits

NSTAR's pension and other postretirement costs are dependent upon
several factors and assumptions, such as the discount rate, the
long-term rate of return on plan assets and health care trends.
NSTAR's plan assets have been affected by significant declines in
the equity markets in the past three years.  These conditions are
expected to impact the funded status of the NSTAR Pension Plan
(the Plan) at year-end and pension and postretirement costs
for 2003.  Based on current estimates, NSTAR anticipates
recognizing pension and other postretirement costs for 2003
of $25 million to $55 million above the 2002 level of $37
million.  These costs would result in approximately $20
million to $40 million of incremental net pension and other
postretirement expenses charged to expense in 2003.

As a result of the negative investment performance, it is probable
that at December 31, 2002 the accumulated benefit obligation will
exceed Plan assets.  Therefore, it is also probable that NSTAR
will be required to recognize an additional minimum liability as
prescribed by the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 87,
"Employers' Accounting for Pensions" (SFAS No. 87) and SFAS
No. 132, "Employers' Disclosures about Pensions and
Postretirement Benefits."  The additional minimum liability
would result in the removal of Prepaid pension cost from
NSTAR's Consolidated Balance Sheet.

NSTAR's prepaid pension balance was $238 million as of
September 30, 2002.  The liability and Prepaid pension
adjustment would be recorded as a non-cash charge to Other
Comprehensive Income (OCI), and would not affect the results
of operations for 2002.  The charge to OCI would be reversed
in future peroids at the time that the fair value of the trust
assets exceeds the accumulated benefit obligation.  Assuming
there is no significant change in interest rates or equity
market performance for the remainder of the year, NSTAR
anticipates that the after-tax charge to OCI will be
approximately $200 million to $300 million.  The ultimate
impact of the Plan's investment performance on NSTAR's
financial position, results of operations and cash flows
will not be known until the Plan's assets and liabilities
are valued at December 31, 2002.

The Plan currently meets the minimum funding
requirements of the Employment Retirement Income Security
Act of 1974.  However, NSTAR is currently evaluating the
extent to which it may make additional optional cash
contributions to the Plan, the timing of each contribution
and the impact on the additional minimum liability.  Should
NSTAR elect to increase the level of its cash contributions
to the Plan, such cash requirements could be material to its
cash flows.  NSTAR believes it has adequate access to capital
resources to support these contributions. Pension and other
postretirement costs and cash contributions beyond
2003 are largely dependent on the financial markets.

In addition, NSTAR anticipates filing a request with the MDTE
seeking an order to mitigate the non-cash charge to OCI and the
increases in expected pension and other postretirement benefit
costs and cash contributions.  If approved, this request could
potentially allow NSTAR to record a regulatory asset in lieu of
a charge to OCI.  NSTAR cannot determine whether the request to
the MDTE will be approved or whether the approval would be
sufficient to record a regulatory asset under SFAS 71.

c.  New Accounting Standards

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142).  This Statement, which was
effective for NSTAR in the first quarter of 2002, establishes
accounting and reporting standards for acquired goodwill and
other indefinite lived intangible assets.  It prohibits entities
from continuing amortization of these assets.  Instead, goodwill
and other intangible assets are subject to review for impairment.
However, in accordance with provisions of SFAS 142 and a revised
amendment to SFAS 71, NSTAR will continue amortizing this asset
over its estimated regulatory recovery period and is subject to
impairment in accordance with provisions under SFAS 71.  NSTAR
has determined that its regulatory rate structure, resulting from
the merger and approved by the MDTE, supports the continued
amortization of goodwill over the period it is collected from its
customers.  A significant element of this rate plan includes
amortization of the acquisition premium over 40 years.

On July 5, 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations" (SFAS 143).  This Statement, which
is effective for NSTAR on January 1, 2003, establishes accounting
and reporting standards for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs.  It applies to legal obligations associated
with the retirement of long-lived assets that result from the
acquisition, construction, development and/or the normal
operation of a long-lived asset, except for certain obligations
of lessees.  SFAS 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period
in which it is incurred.  When the liability is initially
recorded, the entity capitalizes the cost by increasing the
carrying amount of the related long-lived asset.  Over time, the
liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the
related asset.  Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a
gain or loss upon settlement.  Management is currently assessing
the impact of SFAS 143 in light of its regulatory and accounting
requirements.  Management has identified several minor long-lived
assets, including lease arrangements, and has determined that it
is legally responsible to remove such property and comply with
the requirements of this standard.  However, based on NSTAR's
assessment of its potential liability and rate regulatory
treatment for certain identified assets, the adoption of SFAS 143
is not expected to have a material effect on its results of
operations, cash flows, or financial position.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" (SFAS 144), was effective January 1, 2002, and
addresses accounting and reporting for the impairment or disposal
of long-lived assets.  SFAS 144, among other things, expands the
reporting of discontinued operations to include all components of
an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction.  NSTAR has
reviewed and assessed for impairment certain of its non-utility
assets and based on its assessment, it has determined as of
September 30, 2002, that the implementation of SFAS 144 had no
effect on NSTAR's results of operations or financial position.

The FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" (SFAS 146) that requires
entities to record a liability for costs related to exit or
disposal activities when the costs are incurred.  Previous
accounting guidance required the liability to be recorded at the
date of commitment to an exit or disposal plan.  NSTAR is
required to comply with SFAS 146 beginning January 1, 2003.
NSTAR anticipates that the implementation of this standard will
not have an adverse impact on its financial position or results
of operations.

As of January 1, 2001, NSTAR adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended by
SFAS Nos. 137 and 138, (collectively, SFAS 133).  SFAS 133
established accounting and reporting standards requiring every
derivative instrument (including certain derivative instruments
embedded in such contracts as fixed-price fuel supply and power
contracts) be recorded on the Consolidated Balance Sheets as
either an asset or liability measured at its fair value.
Previously, all of NSTAR's commodity purchased power contracts
were exempt from this accounting treatment under the normal
purchase and sales exception of SFAS 133.  As a result, these
contracts were not marked to market and have not been reflected
on the accompanying Condensed Consolidated Balance Sheets.

The impact of SFAS 133 is discussed in the following paragraph.

d.  Derivative Instruments

The accounting for derivative financial instruments is subject to
change based on the guidance received from the Derivative
Implementation Group (DIG) of FASB.  The DIG issued C15, on
October 10, 2001, which specifically addressed the interpretation
of clearly and closely related contracts that qualify for the
normal purchase and sales exception under SFAS 133.  The
conclusion reached by the DIG was that contracts with a pricing
mechanism that is subject to future adjustment based on a generic
index that is not specifically related to the contracted service
commodity generally would not qualify for the normal purchase and
sales exception.

On April 1, 2002, the effective date of DIG C15, NSTAR adopted
the interpretation of this guidance and began marking to market
certain of its long-term purchased power contracts that
previously qualified for the normal purchase and sales exception.
NSTAR has six purchased power contracts that contain components
with pricing mechanisms that are based on a generic index, such
as the GNP or CPI.  Although these factors are only applied to
certain ancillary pricing components of these agreements, as
required by the interpretation of C15, NSTAR began recording
these contracts at fair value on its Condensed Consolidated
Balance Sheets beginning in the second quarter of 2002.  This
action resulted in the recognition of a liability for the fair
value of the above-market portion of these contracts as of
September 30, 2002 of approximately $632 million and is a
component of Power contracts on the accompanying Condensed
Consolidated Balance Sheets.  NSTAR has recorded a corresponding
regulatory asset to reflect the future recovery of the above-
market component of these contracts through its transition
charge.  Therefore, as a result of this regulatory treatment, the
recording of these contracts on its accompanying Condensed
Consolidated Balance Sheets does not result in an earnings
impact.

NSTAR has other purchased power contracts in which the fair value
is significantly above-market.  However, these contracts have met
the criteria for the normal purchase and sales exception pursuant
to SFAS 133 and C15 and have not been recorded on the
accompanying Condensed Consolidated Balance Sheets.  The above-
market portion of these contracts is currently being recovered
through the transition charge.  Therefore, NSTAR does not account
for these types of capacity and energy contracts, gas supply
contracts, or purchase orders for numerous supply items as
derivatives.

NSTAR will continue to monitor any further guidance that may
result from FASB revisions and clarifications to SFAS 133.  Based
on NSTAR's assessment to date, the adoption of SFAS 133 has not
had a material effect on its results of operations, cash flows,
or net assets.

e.  Revenue Recognition

Utility revenues are based on authorized rates approved by the
FERC and the MDTE.  Estimates of transmission, distribution and
transition revenues for electricity and natural gas delivered to
customers but not yet billed are accrued at the end of each
accounting period.  Included as a component of transition
revenues is the recovery of all above-market purchased power
costs.  The determination of unbilled revenues requires
management to estimate the volume and pricing of gas and
electricity delivered to customers prior to actual meter
readings.

In determining its unbilled electric base revenues, NSTAR
compares the actual delivery of megawatthours (mWh) demanded (its
territory load) to its actual monthly billed mWh sales.  The
difference in volume represents the level of unbilled mWhs.
Dollars associated with the unbilled mWhs are calculated by
multiplying these units by NSTAR's approved distribution revenue
rates.  There is no inherent volatility in the rate used to
determine unbilled revenue.  Using this estimation methodology,
there is minimal volatility in estimating this component of
operating revenues.

In determining its unbilled gas base revenues, NSTAR compares the
gas supply input as metered at various city gates, to its actual
monthly billed MMBTUs (millions of British thermal units).  This
difference in volume represents the level of unbilled MMBTUs.
Dollars associated with the unbilled MMBTUs are calculated by
multiplying these units and multiplied by NSTAR's approved base
revenue rates.  There is no inherent volatility in the rate used
to determine unbilled revenue.  Using this estimation
methodology, there is minimal volatility in estimating this
component of operating revenues.

Revenues for NSTAR's non-utility subsidiaries are recognized when
services are rendered or when the energy is delivered.  Revenues
are based, for the most part, on long-term contractual rates.

f.  Available for Sale Equity Securities

NSTAR records its investments in marketable equity securities in
accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."  Pursuant to this standard, NSTAR
continuously reviews the carrying value of its investments in
marketable equity securities to assess whether any decline in the
market value below its carrying value is deemed to be other-than-
temporary.  Unless there is evidence to the contrary, NSTAR's
policy is to record an impairment charge for the decline in
market value below its carrying value in situations where the
decline has continued for a period of six months or more.  During
the second quarter of 2002, NSTAR determined that the decline in
its investment in RCN Corporation (RCN) was other than temporary.
As a result, NSTAR recognized a $27.6 million impairment charge
in the second quarter to adjust its carrying value down to $1.37
per share.  As of September 30, 2002, the total carrying value of
its 11.6 million common shares of RCN as of September 30, 2002,
is $5.9 million reflecting a market value per share of $0.51.
Refer to Note H of Notes to Condensed Consolidated Financial
Statements for a further discussion.  These securities are
currently available for sale and are included in Other
investments on the accompanying Condensed Consolidated Balance
Sheets.  NSTAR no longer holds securities associated with the
demutualization of John Hancock Financial Services, Inc. and
MetLife, Inc. as the sale of these securities was completed
during the quarter ended September 30, 2002.  The sale of these
securities during 2002 resulted in the recognition of a gain of
approximately $4.8 million.

g.  Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period.  Certain of these accounting
principles require subjective and complex judgements used in the
preparation of financial statements.  Accordingly, a different
financial presentation could result depending on the judgement,
estimates or assumptions that are used.  Such estimates and
assumptions, include, but are not specifically limited to:
depreciation rates set by regulator, amortization terms, future
interest rates, future discount rates, mark-to-market valuations,
investment returns, volatility in the price of NSTAR Common
Shares, impact of new accounting standards, future costs
associated with long-term contractual obligations, future
compliance costs associated with environmental regulations and
continuing creditworthiness of third parties.  Actual results
could materially differ from these estimates.

h.  Asset Impairment Assessment

Based on the current market performance of the telecommunications
sector, NSTAR has reviewed and assessed for impairment, in
accordance with SFAS 144, its unregulated telecommunications
assets.  NSTAR's judgements used in its assessment include, but
are not limited to, future anticipated revenue streams and future
operating costs.  NSTAR has determined, based on its probability
assessment, that the carrying value of approximately $31 million
of its unregulated telecommunications assets are not impaired as
of September 30, 2002.  Management cannot assure the precision of
its estimates of future revenues or expenses.  Should a further
and continued deterioration of this business sector occur, NSTAR
may be required to write down its carrying value of these assets.

i.  Accounting for Stock Options

The NSTAR 1997 Share Incentive Plan (the Plan) permits a variety
of stock and stock-based awards, including the granting to key
employees of stock options and deferred (non-vested) stock.  The
Plan limits the terms of option awards to ten years.  Currently,
NSTAR continues to account for stock options pursuant to APB
Opinion No. 25, "Accounting for Stock Issued to Employees" and
does not recognize an expense currently.  Based on a provision of
the Plan that establishes the exercise price equal to the market
price at the grant date, no current expense recognition is
necessary.  However, if NSTAR had expensed these options since
the Plan's inception under the provision of SFAS No. 123,
"Accounting for Stock-Based Compensation," the additional expense
to earnings for the first nine months of 2002 would be
approximately $550,000, net of tax, or $0.01 per share.

j.  Income Taxes

Income taxes are accounted for in accordance with SFAS No. 109,
"Accounting for Income Taxes" (SFAS 109).  SFAS 109 requires the
recognition of deferred tax assets and liabilities for the future
tax effects of temporary differences between the carrying amounts
and the tax basis of assets and liabilities.  In accordance with
SFAS 109, NSTAR has established policies and has made
determinations on significant tax matters in arriving at certain
estimations of future tax benefits or liabilities.  Reference is
made to the "Income Tax Issues" section of this MD&A for a
discussion of NSTAR's significant tax matters, including
accounting for its tax valuation allowance and its position on
the tax treatment taken for the sale of generating facilities in
1998.

Generating Assets Divestiture

a.  Seabrook Nuclear Power Station

On November 1, 2002, FPL Group, Inc. closed on its purchase of an
88% majority ownership interest in the Seabrook Nuclear Power
Station, including Canal Electric's 3.52% ownership interest, for
$836.6 million.  The purchase agreement was reached through an
auction process launched in late 2001.  FPL Group assumed
responsibility for the ultimate decommissioning of the facility
and received the Seabrook decommissioning funds of approximately
$233 million at the closing.  Canal Electric's portion of the
sale proceeds amounted to $31.6 million, less $4.7 million paid
into the decommissioning trust and for other transaction costs.
The net proceeds of $26.9 million were less than Canal Electric's
remaining investment in Seabrook.  The net result of this
transaction will be included as a component of Cambridge
Electric's and ComElectric's transition cost recovery of
approximately $15 million and is expected to be collected from
ComElectric's and Cambridge Electric's customers in 2003 through
the transition charge.  As part of this sale, all purchased power
agreements were terminated.  This sale completes the final
divestiture of NSTAR's remaining regulated generating assets with
the exception of Blackstone Street Station, which is under
agreement to be sold.  This transaction did not have an impact on
NSTAR's current results of operations.  The future impact of this
transaction will not have a material effect on operations.
However, NSTAR's future annual earnings will be adversely
impacted by approximately $2.6 million as a result of the
absence of the return on its Seabrook investment.  The net
result of this transaction will be included as a component
of Cambridge Electric's and ComElectric's transition
cost recovery.

b.  Blackstone Station

On August 1, 2002, Cambridge Electric reached a tentative
agreement to sell Blackstone Station to President and Fellows of
Harvard College ("Harvard") for $17.6 million.  On November 4,
2002, Harvard notified Cambridge Electric that its Board approved
the purchase.  A filing with the MDTE for regulatory approval for
this transaction will be made prior to December 31, 2002.  Under
terms of this agreement, NSTAR Steam will continue to manage the
day-to-day operations of the steam plant on this site for one
year after the sale.

Cambridge Electric is divesting its electric generating assets
consistent with the provisions of the Massachusetts Electric
Restructuring Act of 1997 (Restructuring Act).  Cambridge
Electric divested the majority of its non-nuclear generating
facilities in 1998.  The sale is subject to approval by the MDTE
and $14.6 million of the proceeds from the sale will be used to
reduce Cambridge Electric's transition charge.  In addition,
NSTAR Steam has agreed to sell its steam operations at this site
for $3 million to Harvard.

Rate and Regulatory Proceedings

a.  Merger Rate Plan

An integral part of the merger creating NSTAR is the rate plan of
the retail utility subsidiaries that was approved by the MDTE on
July 27, 1999.  Significant elements of the rate plan include a
four-year distribution rate freeze, recovery of the acquisition
premium (goodwill) over 40 years and recovery of transaction and
integration costs (costs to achieve) over 10 years.  Refer to the
"Retail Electric Rates" section of this MD&A for more
information.

The 1999 MDTE order, which approved the rate plan associated with
the merger of BEC and COM/Energy, was appealed by certain parties
to the Massachusetts Supreme Judicial Court (SJC).  In October
2001, the MDTE certified the record of the case to the SJC.  The
appeals of the Massachusetts Attorney General (AG) and a separate
group that consists of The Energy Consortium (TEC) and Harvard
University (Harvard) are pending.  On June 21, 2002, TEC and
Harvard filed their joint initial brief with the SJC and on June
24, 2002, the AG filed a brief in the consolidated proceeding.
TEC and Harvard allege that, in approving the rate plan and
merger proposal, the MDTE committed errors of law in the
following areas: (1) in adopting a public interest standard, the
MDTE applied the wrong standard of review, and failed to
investigate the propriety of rates and to determine that the
resulting rates of Boston Edison, Cambridge Electric, ComElectric
and NSTAR Gas were just and reasonable; (2) that in permitting
Cambridge Electric and ComElectric to adjust their rates by $49.8
million to reflect demand-side management costs, the MDTE failed
to determine whether such an adjustment was warranted in light of
other cost decreases; (3) that the MDTE's approval results in an
arbitrary and unjustified sharing of benefits and costs between
ratepayers and shareholders; and (4) that the MDTE's approval of
the rate plan guarantees shareholders recovery of future costs
without any future demonstration of customer savings.  The AG's
brief includes similar arguments in each of these areas and adds
that, in allowing recovery of the acquisition premium, the MDTE
has improperly deviated from a cost basis in setting approved
rates and the ratemaking policies in other jurisdictions.
Responsive briefs from NSTAR and the MDTE were filed on August
30, 2002 and September 9, 2002, respectively.  Reply briefs were
filed by TEC/Harvard and the AG on September 27, 2002 and October
3, 2002, respectively.  On November 4, 2002, oral arguments
occurred before the SJC.  Management is currently unable to
determine the outcome of this proceeding.  NSTAR intends to
vigorously defend its position relative to this appeal.  However,
in the unlikely event, an unfavorable outcome were to occur,
there could be a material adverse impact on the consolidated
financial position, cash flows and the results of operations for
a reporting period.

b.  Goodwill and Costs to Achieve

The merger creating NSTAR was accounted for using the purchase
method of accounting.  In accordance with the MDTE's approval of
NSTAR's merger rate plan, the premium (Goodwill) associated with
this acquisition was approximately $490 million, while the
original estimate of transaction and integration costs to achieve
the merger was $111 million.  The merger premium is reflected on
the accompanying Condensed Consolidated Balance Sheets as
Goodwill.  This premium will continue to be amortized over 40
years and amounts to approximately $12.2 million annually, while
the costs to achieve (CTA) are being amortized over 10 years.
CTA are the costs incurred to execute the merger including the
employee costs for a voluntary severance program, costs of
financial advisers, legal costs, and other transaction and
systems integration costs.  CTA is being amortized at an annual
rate of $11.1 million based on the original rate plan.  NSTAR
expects to be required by the MDTE to reconcile the actual CTA
costs incurred with the original estimate.  This reconciliation
will include a final accounting of the deductibility for income
tax purposes of each component of CTA.  The total CTA is
approximately $143 million.  This increase from the original
estimate is partially mitigated by the fact that the portion of
CTA that is not deductible for income tax purposes is
approximately $20 million lower than the original estimate.  The
CTA and Goodwill amounts were filed and approved as part of the
rate plan.

c.  Service Quality Index

On October 29, 2001, and as subsequently updated, NSTAR Electric
and NSTAR Gas filed proposed service quality plans for each
company with the MDTE, which included guidelines that had been
established by the MDTE as a result of its generic investigation
of service quality issues.  The service quality plans established
performance benchmarks effective January 1, 2002 for certain
identified measures of service quality relating to customer
service and billing performance, customer satisfaction, and
reliability and safety performance.  The companies are required
to report annually concerning their performance as to each
measure and are subject to maximum penalties of up to two percent
of transmission and distribution revenues should performance fail
to meet the applicable benchmarks.  Concurrently, NSTAR Electric
and NSTAR Gas filed with the MDTE a report concerning their
performance on the identified service quality measures for the
two twelve-month periods ended August 31, 2000 and 2001.  This
report included a calculation of penalties in accordance with
MDTE guidelines.  On March 22, 2002, following hearings on the
matter, the MDTE issued an order imposing a service quality
penalty of approximately $3.25 million on NSTAR Electric that was
refunded to customers as a credit to their bills during the month
of May 2002.  This refund had no material effect on NSTAR's
consolidated financial position, cash flows or results of
operations in 2002.

Through September 30, 2002, NSTAR Electric's performance has
resulted in a minimal penalty situation based on both actual
results through September 2002 and forecasted results for the
remaining three-month period.  However, these results may not be
indicative of the results for the remainder of the year.  NSTAR
accounts for its service quality penalties pursuant to SFAS No.
5, "Accounting for Contingencies."  Accordingly, these penalties
are monitored on a monthly basis to determine NSTAR's contingent
liability, and if NSTAR determines it is probable that a
liability has been incurred and is estimable, NSTAR would then
accrue an appropriate liability.  Annually, each NSTAR utility
subsidiary makes a service quality performance filing with the
MDTE.  Any settlement or rate order that would result in a
different liability (or credit) level from what has been accrued
would be adjusted in the period an agreement is received from the
MDTE.

d.  Retail Electric Rates

The Restructuring Act requires electric distribution companies to
obtain and resell power to retail customers who choose not to buy
energy from a competitive energy supplier through either standard
offer service or default service.  Standard offer service will be
available to eligible customers through February 2005 at prices
approved by the MDTE, set at levels so as to guarantee mandatory
overall rate reductions provided by the Restructuring Act.  New
retail customers in the NSTAR Electric service territories and
other customers who are no longer eligible for standard offer
service and have not chosen to receive service from a competitive
supplier are provided default service.  The price of default
service is intended to reflect the average competitive market
price for power.  As of September 30, 2002 and December 31, 2001,
customers of NSTAR Electric had approximately 25% and 16%,
respectively, of its load requirements provided by competitive
suppliers.

During 2000, NSTAR Electric's accumulated cost to provide default
and standard offer service was in excess of the revenues it was
allowed to bill by approximately $242.7 million.  On January 1
and July 1, 2001, NSTAR Electric was permitted by the MDTE to
increase its rates to customers for standard offer and default
service to collect this shortfall.  Furthermore, when combined
with the reduction in energy supply costs experienced in 2001 and
through the first half of 2002, rates were reduced on January 1,
2002, April 1, 2002 and July 1, 2002.

In December 2000, the MDTE approved a standard offer fuel index
of 1.321 cents per kilowatt-hour (kWh) that was added to each
NSTAR Electric company's standard offer service rates for the
first half of 2001.  In June 2001, the MDTE approved an
additional increase of 1.23 cents per kWh effective July 1, 2001
based on a fuel adjustment formula contained in its standard
offer tariffs to reflect the prices of natural gas and oil.  In
December 2001, the MDTE approved a decrease in this fuel index of
1.125 cents to 1.426 cents per kWh for the first quarter of 2002
based on a decrease in the cost of fuel.  Effective April 1,
2002, each NSTAR Electric company's fuel index was set to zero.
The MDTE has ruled that these fuel index adjustments are excluded
from the 15% rate reduction requirement under the Restructuring
Act.

In December 2001, NSTAR Electric filed proposed transition rate
adjustments for 2002, including a preliminary reconciliation of
costs and revenues through 2001.  The MDTE subsequently approved
tariffs for each retail electric subsidiary effective January 1,
2002.  The filings were updated in February 2002 to include final
costs for 2001.  The MDTE approved the reconciliation of costs
and revenues for Boston Edison through 2000 in its approval on
November 16, 2001 of a Settlement Agreement between Boston Edison
and the Massachusetts Attorney General (AG) resolving all
outstanding issues in Boston Edison's prior reconciliation
filings.  As a part of this settlement, Boston Edison agreed to
reduce the costs sought to be collected through the transition
charge by approximately $2.9 million as compared to the amounts
that were originally sought.  This settlement did not have a
material adverse effect on NSTAR's consolidated financial
position, results of operations or cash flows.

On June 1, 2001, the MDTE issued its final orders on the
reconciliation of ComElectric and Cambridge Electric's
transition, standard offer service, default service and
transmission costs and revenues for 1998.  ComElectric and
Cambridge Electric reached a settlement with the AG regarding the
1999 and 2000 reconciliation proceedings.  Under this settlement,
the companies' future recovery of transition costs would be
reduced by approximately $7.8 million.  This settlement was
approved by the MDTE on June 5, 2002 and did not have a material
adverse effect on NSTAR's 2002 consolidated financial position,
cash flows or results of operations.

e.  Natural Gas Industry Restructuring and Rates

NSTAR Gas generates revenues primarily through the sale and/or
transportation of natural gas.  Gas sales and transportation
services are divided into two categories: firm, whereby NSTAR Gas
must supply gas and/or transportation services to customers on
demand; and interruptible, whereby NSTAR Gas may, generally
during colder months, temporarily discontinue service to high
volume commercial and industrial customers.  Sales and
transportation of gas to interruptible customers do not
materially affect NSTAR Gas' operating income because
substantially all of the margin on such service is returned to
its firm customers as cost reductions.

In addition to delivery service rates, NSTAR Gas' tariffs include
a 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 or
default service customers.  The LDAC provides for the recovery of
certain costs applicable to both sales and transportation
customers.  The CGAC is filed semi-annually for approval by the
MDTE.  The LDAC is filed annually for approval.

Since March 2001, due to the significant declines in wholesale
natural gas prices, NSTAR Gas received six consecutive approvals
from the MDTE to reduce the CGAC factor and pass those savings on
to customers.

In October 2002, due to the increase in wholesale natural gas
prices, NSTAR Gas was allowed by the MDTE to increase the CGAC
factor for the period from November 1, 2002 through April 30,
2003 to $0.6139 per therm, a 16.7% increase in the CGAC from
rates in effect on November 1, 2001.

Other Legal Matters

In the normal course of its business, NSTAR and its subsidiaries
are involved in certain legal matters, including civil lawsuits.
Management is unable to fully determine a range of reasonably
possible court-ordered damages, settlement amounts, and related
litigation costs ("legal liabilities") that would be in excess of
amounts accrued.  Based on the information currently available,
NSTAR does not believe that it is probable that any such
additional legal liability will have a material impact on its
consolidated financial position.  However, it is reasonably
possible that additional legal liabilities that may result from
changes in estimates could have a material impact on its results
of operations for a reporting period.

Income Tax Issues

a.  Tax Valuation Allowance

SFAS 109 prohibits the recognition of deferred income tax
benefits unless the utilization of future income tax benefits is
more likely than not.  NSTAR has determined that it was not
likely that a current or future income tax benefit would be
realized relating to the write-downs of its RCN investment that
was recorded in the second quarter of 2002 and previously in the
first quarter of 2001.  These write-downs resulted from the
significant declines in the market value of the
telecommunications sector, including RCN.  As a result, NSTAR
recorded a $74.2 million tax valuation allowance on the entire
tax benefit associated with these write-downs. During the nine
months ended September 30, 2002, as a result of certain
unanticipated capital gain transactions, NSTAR recognized $3.2
million of this tax benefit.  Therefore, the tax valuation
allowance balance as of September 30, 2002 was reduced to $71
million.

A portion of the $71 million tax valuation allowance relates to
NSTAR's previous equity investment in the Joint Venture (JV) with
RCN Telecom Services, Inc. of Massachusetts wherein NSTAR had
claimed operating losses generated from its JV interest through
June 19, 2002 for federal income tax purposes.  Although the
initial review of the operating loss deductions have produced no
adjustment by the IRS, NSTAR is continuing to reserve the $20
million in its valuation allowance pending either further review
by taxing authorities or an analysis by NSTAR's tax advisor.  The
tax years in question are 1999 through 2002, and currently years
1999 and 2000 are under review by the IRS as part of their normal
review of NSTAR's consolidated federal income tax returns.  A
determination is anticipated by the end of 2002 or early 2003.
Should NSTAR prevail in its treatment of these losses as
operating losses, it would allow for the reduction of the
valuation allowance and an immediate recognition of approximately
$20 million as a credit to income tax expense.

NSTAR has and will continue to research potential transactions
that improve the operational efficiencies of NSTAR while
maximizing the utilization of these potential tax benefits.
Should NSTAR be successful in its tax and operational planning to
allow for all or a portion of this tax benefit to be ultimately
realized, NSTAR will reflect a credit to its income tax expense.
Future earnings could be positively impacted by the outcome of
this strategy.  The maximum potential positive future earnings
impact is currently estimated at $71 million, including the $20
million discussed above.  Management is currently unable to
determine when, whether, or the extent to which NSTAR will be
able to recognize this potential benefit.

b.  Tax Gain on Generating Assets

The cost of transitioning to competition was mitigated, in part,
by the sale of Commonwealth Energy System's (COM/Energy) (now a
wholly owned subsidiary of NSTAR) non-nuclear generating assets.
COM/Energy completed the sale of substantially all of its non-
nuclear generating assets on December 30, 1998.  Proceeds from
the sale of these assets amounted to approximately $453.9
million, or 6.1 times their book value of approximately $74.2
million.  The proceeds from the sale, net of book value,
transaction costs and certain other adjustments amounted to
$358.6 million and were used to reduce transition costs of
Cambridge Electric and ComElectric related to electric industry
restructuring that otherwise would have been collected through a
non-bypassable transition charge.  COM/Energy determined that
this transaction was not a taxable event because it did not
provide an economic benefit to COM/Energy.  The amount, if not
for this treatment, that would otherwise have been paid in taxes
is approximately $136 million.  Should COM/Energy ultimately lose
this issue, tax deductions resulting in tax savings of
approximately $136 million would ultimately be realized by
COM/Energy over a period of years.  During the second quarter of
2002, NSTAR was notified that the IRS intended to file a Request
for Technical Advice with the IRS National Office with regard to
COM/Energy's tax treatment of this item.

The IRS is in the process of auditing the COM/Energy tax returns
for the years 1997, 1998 and 1999.  Before completion of the
audit, which may be at the end of the first quarter of 2003, it
is expected that the IRS National Office will provide a response
to the request.  Should NSTAR's position be challenged as a
result of the IRS decision, it is probable that NSTAR will make a
tax payment of approximately $61 million in order to stop the
accrual of interest on the potential remaining tax deficiency for
all years involved through 2002.  NSTAR intends to vigorously
defend its position, which is supported by an opinion from an
independent tax advisor, relative to this transaction and
anticipates pursuing a refund of any amounts paid plus interest.
In addition, NSTAR would pursue regulatory rate recovery for the
interest on tax deficiencies should any amounts ultimately be
incurred as a result of this transaction.  The MDTE has provided
written acknowledgements to NSTAR, COM/Energy and the IRS
indicating: (1) its understanding of the issue; and (2)
COM/Energy's ability to seek recovery of costs relating to the
tax deficiency that may be incurred.  NSTAR believes that the
expectation of recovery from customers is probable in view of the
MDTE's and COM/Energy's position and the monetary benefits to be
realized by COM/Energy's customers should it be successful in
defending its position.  However, if NSTAR is unsuccessful with
the IRS and its regulatory treatment, it is possible that it
could have an adverse impact on NSTAR's results of operations,
cash flows and financial position.

Results of Operations - Three Months Ended September 30, 2002 vs.
Three Months Ended September 30, 2001

The following section of Management's Discussion and Analysis
compares the results of operations for each of the three month
periods ended September 30, 2002 and 2001, respectively, and
should be read in conjunction with the condensed consolidated
financial statements and the accompanying notes included
elsewhere in this report.
<TABLE>
<CAPTION>
Earnings per common share were as follows:
<S>                          <C>         <C>     <C>
                              Three Months Ended September 30,
                                 2002       2001   % Change
 Basic -                        $1.38      $1.27        8.7
 Diluted -                      $1.37      $1.26        8.7
</TABLE>
Earnings were $73.2 million, or $1.38 and $1.37 per basic and
diluted common share, respectively, for the three-month period
ended September 30, 2002.  For the same period in 2001, NSTAR
reported income of $67.1 million, or $1.27 and $1.26 per basic
and diluted common share, respectively.

The current quarter's earnings increased by $6.1 million, or
9.1%, primarily due to increased retail electric kilowatt (kWh)
sales of 6.8% that was driven by a hotter than normal summer
season, improved results from non-utility operations and the
absence in the current period of a charge related to a district
energy facility.  Additional positive factors during the current
three-month period included lower bad debt expense, lower long
and short-term interest costs of $2.6 million, net of regulatory
interest, and a $1 million decrease in preferred dividends as a
result of the redemption of Boston Edison's Cumulative Preferred
Stock, 8% Series in December 2001.  These positive factors were
partially offset by increased operations and maintenance costs
for electrical systems reliability upgrades associated with
electric delivery operations, higher pension-related benefits
costs and lower mitigation incentive revenues.

The results of operations for the three-month period ended
September 30, 2002 are not indicative of the results that may be
expected for the entire year due to the seasonality of electric
and gas sales and revenues.  Refer to Note B to the accompanying
Unaudited Condensed Consolidated Financial Statements.

Operating revenues
<TABLE>
<CAPTION>
Operating revenues for the three-month period ended September 30,
2002 decreased 21% from the same period in 2001 as follows:
<S>                                         <C>
  (in thousands)

  Retail electric revenues                         $(175,107)
  Wholesale electric revenues                         (9,997)
  Gas sales revenues                                  (6,312)
  Other revenues                                       1,669
    Decrease in operating revenues                 $(189,747)
                                                    =========
</TABLE>
The most significant factor contributing to this decrease in
operating revenues was the reduction in standard offer and
default service rates charged to customers.

Retail electric revenues were $596 million in the third quarter
of 2002 compared to $771.1 million in the same period of 2001, a
decrease of $175.1 million, or 23%.  The change in retail
revenues includes the significantly lower cost of purchased power
(discussed below) and lower rates implemented in January, April
and July 2002 for standard offer and default services adjusted
for decreases in the cost of energy supply.  Revenues
attributable to standard offer and default services decreased
$102 million and $68.9 million, respectively, in the current
quarter.  The total decrease in retail revenues also includes
lower revenue related to demand-side management and renewable
energy programs of $2.7 million due to the timing of program
expenditures.  Transition revenues increased by $4.8 million due
to higher rates for transition cost recovery offset by a $2.2
million decline in earned mitigation incentive revenues that were
allowed for successfully lowering transition charges.
Transmission revenues increased by $11.6 million due to the
absence in the current period of a $6.7 million reduction in
revenues due to a Cambridge Electric 2001 transmission true-up
filing, and in 2002, $3.3 million higher revenues resulting from
Boston Edison's recently completed true-up filing.  The change in
NSTAR's retail revenues related to standard offer, default
services, transmission and demand-side management and renewable
energy programs are reconciled to the costs incurred and do not
have a significant impact on future earnings.

Electric retail distribution revenues were negatively impacted by
weaker economic conditions as indicated by a decrease in the
Boston hotel occupancy rate that was down 3.8% when compared to
2001 and a Boston office vacancy rate that remains comparably
high.  The unemployment rate in Boston was approximately 4.6%
through August 2002 as compared to approximately 3.5% at the same
time in 2001.  Offsetting these negative economic factors was the
impact of warmer weather conditions that were 34% above normal
for the third quarter of 2002 that positively impacted the margin
for electric sales.

On October 7, 2002, Boston Edison and the AG (Settling Parties)
submitted for approval by the MDTE a Joint Motion for
Approval of Settlement Agreement and a Settlement Agreement
resolving issues in Boston Edison's reconciliation of costs and
revenues for the year 2001.  Among other issues, the Settlement
Agreement includes an adjustment relating to the true-up of
costs relating to securitization.  As a result of this
Settlement Agreement with the AG and an opinion from
NSTAR's regulatory counsel, Boston Edison recognized
approximately $11.4 million in transition charge revenues.
This benefit was significantly offset by other
regulatory true-up adjustments.  NSTAR anticipates a final
approval by the MDTE in the fourth quarter.  However,
should the MDTE issue a final adverse decision, it could have
a material impact on its results of operations for a
particular reporting period.

Below is comparative information on cooling degree days for the
three-month periods ending September 30, 2002 and 2001 and the
number of degree days in a "normal" third quarter period as
represented by a 30-year average.  A "cooling degree-day" is a
unit measuring how much the outdoor mean temperature rises above
a base of 65 degrees.  Each degree below or above the base, is
measured in one degree day.
<TABLE>
<CAPTION>
<S>                                     <C>          <C>      <C>
                                                                 Normal
                                                                30-Year
                                            2002       2001     Average
Cooling degree days                          792        526         593
  Percentage change from prior year         50.6%      26.1%
  Percentage change from 30-year average    33.6%     (11.3)%
</TABLE>

The higher cooling degree days experienced during the current
quarter positively impacted electric distribution revenues.  The
above normal average cooling degree days impacted air
conditioning usage demanded by NSTAR's customers and resulted in
higher electric distribution revenues than would otherwise have
been recorded during a more moderate summer period.

Wholesale electric revenues were $14.4 million in the third
quarter of 2002 compared to $24.4 million in the same period of
2001, a decrease of $10 million, or 41%.  This decrease in
wholesale revenues reflects a 31% decrease in kWh sales due to
the expiration of two municipal power supply contracts on May 31,
2002 and a decline in rates.  After October 31, 2005, NSTAR will
no longer have contracts for the supply of wholesale power.
Amounts collected from wholesale customers are credited to retail
customers through the transition charge.  Therefore, the
expiration of these contracts has no impact on results of
operations.

Gas sales revenues were $35.1 million in the quarter ended
September 30, 2002 compared to $41.4 million in the same period
of 2001, a decrease of $6.3 million, or 15%.  The decrease in
revenues is attributable to a 11% decline in the cost of gas from
suppliers compared to the same period last year, and the 19.4%
decline in Billions of British Thermal Unit (BBTU) firm sales and
transportation due to the downturn in the economy and the impact
of the warmer temperatures.  NSTAR Gas' firm sales and
transportation to residential, commercial and industrial
customers were approximately 30%, 40% and 28%, respectively, of
total firm sales and transportation for the current three-month
period.

Other revenues were $55.5 million in the three months ended
September 30, 2002 compared to $53.8 million in the same period
of 2001, an increase of $1.7 million, or 3%.  This increase
primarily reflects higher chilled water sales due to the warmer
weather and higher chilled water demand rates, partially offset
by lower steam sales that primarily reflect the loss of a large
customer.

Operating expenses

Purchased power costs were $311 million in the quarter ended
September 30, 2002 compared to $499.4 million in the same period
of 2001, a decrease of $188.4 million, or 38%.  The decrease in
expense reflects lower purchased power requirements due to a
decrease of 0.9% in total mWh sales including a 31% decrease in
wholesale sales resulting from the expiration of two municipal
power supply contracts and lower costs that reflect the prices of
natural gas and oil.  Included in the current and prior year
periods was a charge of $22.1 million and a charge of $85.3
million, respectively, that reflects the recognition of
previously deferred standard offer and default service supply
costs resulting from the current period collection of these
costs.  NSTAR adjusts its electric rates to collect the costs
related to energy supply from customers on a reconciling basis.
Due to the rate adjustment mechanisms, changes in the amount of
energy supply expense does not have a significant impact on
earnings.  The cost of gas sold, representing NSTAR Gas' supply
expense, was $22.3 million for the quarter ended September 30,
2002, compared to $25.1 million in the same period of 2001, a
decrease of $2.8 million, or 11%, due to the recognition of the
lower cost of gas and lower sales due to warmer weather
conditions and the downturn in the economy.  These expenses are
also reconciled to the current level of revenues collected.

Operations and maintenance expense was $108.1 million in the
quarter ended September 30, 2002 compared to $102.7 million in
the same period of 2001, an increase of $5.4 million, or 5%.
This increase primarily reflects incremental expenditures
incurred relating to improvements to NSTAR's electric delivery
systems that were substantially completed as of September 30,
2002, as was initially disclosed in NSTAR's 2001 Form 10-K, MD&A
section. In addition, pension and postretirement-related expense
(net of amounts capitalized) increased by approximately $4.4
million due to a downturn in the equity market and lower interest
costs that are expected to continue for the remainder of 2002.
The higher pension costs are in line with NSTAR's previous
disclosure of its forecast that indicated that pension costs for
2002 as compared to 2001 would increase.  This trend is
anticipated to continue and could significantly impact future
periods as a result of further declines in the equity market.
These factors were somewhat offset by a decline in bad debt
expense of $3.3 million due to improved payment performance and a
lower level of accounts receivable.

Depreciation and amortization expense was $56.5 million in the
quarter ended September 30, 2002 compared to $60.5 million in the
same period of 2001, a decrease of $4 million, or 7%.  The
decrease primarily reflects the absence in the current period of
NSTAR's $5 million write-off of its remaining district cooling
plant investment recognized in 2001.  This amount was slightly
offset by other higher depreciable plant in service in the
current period.

Demand side management (DSM) and renewable energy programs
expense was $17.9 million in the quarter ended September 30, 2002
compared to $19.8 million in the same period of 2001, a decrease
of $1.9 million, or 10%, primarily due to timing of DSM expense
which is consistent with the collection of conservation and
renewable energy revenues.  These costs are collected from
customers on a reconciling basis and as a result, fluctuations in
program costs should not have an impact on earnings.  In
addition, NSTAR earns incentive revenues in return for increased
customer participation.

Property and other taxes were $22.3 million in the quarter ended
September 30, 2002 compared to $22.5 million in the same period
of 2001, a decrease of $0.2 million, or 1%.  This decrease was
due to slightly lower payroll taxes and a decline of $1.7 million
in municipal property taxes due to lower rates in NSTAR's service
area excluding the City of Boston.  The factors were offset by a
$1.7 million increase in property taxes to the City of Boston due
to infrastructure additions.

Income taxes from operations were $45.7 million in the quarter
ended September 30, 2002 compared to $45.8 million in the same
period of 2001, a decrease of $0.1 million, or 1%, reflecting
marginally lower pre-tax operating income.

Other income

Other income was $4 million in the quarter ended September 30,
2002 compared to $0.1 million in the same period of 2001, a net
increase in income of $3.9 million due primarily to the
recognition of gains of $0.9 million resulting from the sale of
equity securities in connection with the demutualization of John
Hancock Financial Services, Inc. (John Hancock) and MetLife, $1.2
million of income earned in connection with the sale of certain
property, and $1.2 million related to an interest adjustment
relating to a tax deficiency.

Other deductions

Other deductions were $0.7 million in the quarter ended September
30, 2002 compared to $3.2 million in the same period of 2001, a
net decrease in deductions of $2.5 million due primarily to a
reduction of $2.3 million in the level of write-offs related to a
district energy facility.

Interest charges

Interest on long-term debt and transition property securitization
certificates was $37 million in the quarter ended September 30,
2002 compared to $39.9 million in the same period of 2001, a
decrease of $2.9 million, or 7.2%.  The decrease in interest
expense reflects the retirement of $24.3 million of Boston Edison
9.375% Debentures in August 2001, NSTAR Gas' 8.99% Bonds of $3.5
million in December 2001, ComElectric's 9.3%, $30 million Term
Loan in early January 2002, Cambridge Electric's 7.75%, $2.1
million Notes in June 2002, additional sinking fund payments and
the repayment of transition property securitization certificates
outstanding that resulted in reduced interest expense of $1.1
million.

Short-term and other interest expense, excluding regulatory
interest expense, was $8.7 million for the quarter ended
September 30, 2002 compared to $11.4 million in the same period
of 2001, a decrease of $2.7 million, or 24%.  This decrease was
due to a significant reduction in short-term borrowing rates and
an approximate $97 million reduction in the average daily
balances outstanding in the current quarter.  Short-term
borrowing rates averaged approximately 1.9% for the quarter ended
September 30, 2002 as compared to approximately 3.8% in the same
period last year.  Partially offsetting these decreases in short-
term debt expense was a $4 million increase in interest costs
associated with certain tax issues.  The reduction in short-term
and other interest costs was partially offset by a $7.1 million
decrease in the carrying charges due NSTAR associated with
reductions in the level of under-collection of regulatory
deferrals, particularly carrying charges related to deferred
transition costs.  The decrease in borrowing is primarily the
result of lower working capital requirements due to lower
revenues and improved collections of customer accounts
receivable.

Allowance for borrowed funds used in construction (AFUDC)
decreased by $2 million, or 80%, due to the absence in the
current period of capitalized interest related to the
construction of an NSTAR office building and significantly lower
AFUDC rates resulting from lower short-term borrowing rates
discussed above.

Results of Operations - Nine Months Ended September 30, 2002 vs.
Nine Months Ended September 30, 2001

The following section of the MD&A compares the results of
operations for each of the nine-month periods ended September 30,
2002 and 2001, respectively, and should be read in conjunction
with the condensed consolidated financial statements and the
accompanying notes included elsewhere in this report.
<TABLE>
<CAPTION>
Earnings (Loss) per common share were as follows:
<S>                         <C>        <C>        <C>
                              Nine Months Ended September 30,
                                 2002      2001    % Change
 Basic -
 After RCN charge             $  2.13   $ (0.57)      473.7
 Before RCN charge            $  2.65   $  2.71        (2.2)

 Diluted -
 After RCN charge             $  2.12   $ (0.57)      471.9
 Before RCN charge            $  2.64   $  2.70        (2.2)
</TABLE>

Earnings were $112.7 million, or $2.13 and $2.12 per basic and
diluted common share, respectively, for the first nine months of
2002.  Earnings for 2002 were $140.3 million, or $2.65 and $2.64
per basic and diluted common share, respectively, before a non-
cash, after-tax charge of $27.6 million, or $0.52 per basic
share, related to NSTAR's investment in RCN that is further
discussed below.  For the same period in 2001, NSTAR reported a
loss of $30.4 million or $0.57 per basic and diluted common
share.  Results for 2001 were $143.6 million, or $2.71 per basic
$2.70 per diluted common share, before a non-cash, after-tax
charge of $173.9 million recognized in March 2001, or $3.28 per
basic share, related to NSTAR's investment in RCN.

Absent the RCN charge in both years, the current period's
earnings declined by $3.3 million, or 2.3%, due to the impact of
the downturn in the economy on the region, particularly in the
commercial and industrial sectors, higher operation and
maintenance expense and unseasonably warm winter weather
conditions during the first quarter of 2002.  These factors
contributed significantly to the 12.5% decline in firm gas sales
and transportation for the nine-month period.  These negative
factors were partially offset by a strong summer period for
retail electric sales as a result of warmer than normal weather,
and the favorable disposition of certain regulatory matters.  The
nine-month retail electric energy sales increased 6.8%, resulting
in total increased sales for the nine-month period of 0.2%.
There was an average of 465 (12%) fewer heating degree days in
NSTAR Gas' service territory through September 30, 2002 as
compared to the same period last year.  However, there were 149
(19%) more cooling degree days as compared to the same period in
2001 and 183 (24%) more cooling degree days as compared to the
normal average 30-year period.  Other positive factors during the
current nine-month period included lower bad debt expense of $6.7
million, a $3.2 million deferred tax benefit resulting from an
adjustment to NSTAR's tax valuation allowance, lower long and
short-term interest costs of $13.6 million, excluding the impact
of regulatory interest, and a $3 million decrease in preferred
dividends as a result of the redemption of Boston Edison's
Cumulative Preferred Stock, 8% Series in December 2001.  Overall,
operations and maintenance expense increased $17 million that
reflects higher pension-related and postretirement benefits
expense (net of amounts capitalized) of approximately $12
million, higher costs relating to the system reliability program
and lower available earned mitigation incentive revenues of $6.5
million.

Consistent with the performance of the telecommunications sector
as a whole, the market value of RCN's common shares continued to
decrease significantly.  On June 19, 2002, NSTAR received an
additional 7.5 million shares from the third and final exchange
of its investment in the RCN joint venture pursuant to an amended
Joint Venture Agreement.  The market value of RCN common shares
has continued to decline during 2002 and has not closed above
NSTAR's carrying value of $3.75 per share since November 27,
2001.  As a result, NSTAR recognized a $27.6 million write-down
of its total 11.6 million RCN shares to a market value of $1.37
per share as of June 30, 2002.  In the first quarter of 2001,
management had determined that this decline in market value was
"other-than-temporary" in accordance with the SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities" and recorded a non-cash, after-tax charge of $173.9
million.

The results of operations for the nine-month periods ended
September 30, 2002 and 2001, exclusive of the RCN write-down, are
not indicative of the results that may be expected for the entire
year due to the seasonality of electric and gas sales and
revenues.  Refer to Note B of the accompanying Condensed
Consolidated Financial Statements.

Operating revenues
<TABLE>
<CAPTION>
Operating revenues for the first nine months of 2002 decreased
19% from the same period in 2001 as follows:
<S>                                           <C>
  (in thousands)

  Retail electric revenues                          $(337,992)
  Wholesale electric revenues                         (19,078)
  Gas sales revenues                                  (95,287)
  Other revenues                                      (11,174)
    Decrease in operating revenues                  $(463,531)
                                                     =========
 </TABLE>

The decrease in operating revenues was significantly impacted by
the decline in standard offer and default service rates charged
to customers, below-normal temperatures during the winter period
as shown by the decline in heating degree days in the table below
and the downturn in the economy.

Retail electric revenues were $1,611.7 million in the first nine
months of 2002 compared to $1,949.7 million in the same period of
2001, a decrease of $338 million, or 17%.  The change in retail
revenues includes the significantly lower cost of purchased power
(discussed below) and lower rates implemented in January, April
and July 2002 for standard offer and default services adjusted
for decreases in the cost of energy supply.  Revenues
attributable to standard offer and default services decreased
$179.9 million and $121 million, respectively.  Components of the
total decrease in retail revenues includes lower revenue related
to demand-side management and renewable energy programs of $10.1
million due to the timing of program expenditures.  Transition
revenues increased by $28.1 million due to higher rates for
transition cost recovery and include a $6.5 million decline
in mitigation incentive revenues that were allowed for
successfully lowering transition charges. Transmission revenues
increased by $20 million primarily as a result of rate
increases and the absence in the current period of
a $6.7 million reduction in 2001 revenues and expenses that
reflected an MDTE approved transmission true-up filing.  The
change in NSTAR's retail revenues related to standard offer,
default services and demand-side management and renewable energy
are reconciled to the costs incurred.

The 0.2% increase in retail kWh sales in the current nine-month
period reflects, by customer sectors, no change in residential,
an improvement of 1.5% in commercial and the continued sales
decline of 6.8% in industrial customer classes.  The slight
overall improvement in sales is attributable to the warmer than
prior year summer period.  However, the economic downturn
continues to have an negative impact on sales as indicated by the
lower Boston hotel occupancy rate that was down 3.8% when
compared to 2001 and by the Boston office vacancy rate that
remains comparably high.  The unemployment rate in Boston was
approximately 4.6% through August 2002 as compared to
approximately 3.5% at the same time in 2001.  NSTAR Electric's
sales to residential and commercial customers were approximately
30% and 60%, respectively, of its total retail sales mix for the
current nine-month period and provided 42% and 51% of
distribution revenue, respectively.  Industrial sector sales
declined due primarily to a slowdown in economic conditions that
resulted from reduced production or facility closings.  The
industrial sector comprises approximately 10% of NSTAR's energy
sales and 7% of distribution revenue.

On October 7, 2002, Boston Edison andthe AG (Settling Parties)
submitted for approval by the MDTE a Joint Motion for
Approval of Settlement Agreement and a Settlement Agreement
resolving issues in Boston Edison's reconciliation of costs and
revenues for the year 2001.  Among other issues, the Settlement
Agreement includes an adjustment relating to the true-up of
costs relating to securitization.  As a result of this
Settlement Agreement with the AG and an opinion from
NSTAR's regulatory counsel, Boston Edison recognized
approximately $11.4 million in transition charge revenues.
This benefit was significantly offset by other
regulatory true-up adjustments.  NSTAR anticipates a final
approval by the MDTE in the fourth quarter.  However,
should the MDTE issue a final adverse decision, it could have
a material impact on its results of operations for a
particular reporting period.

Weather conditions greatly impact the change in electric and, to
a larger extent, gas sales and revenues in NSTAR's service area.
The first quarter of 2002 was significantly warmer than the same
period in 2001, followed by slightly below normal temperatures
for the second quarter and above-normal temperatures in the third
quarter.  Below is comparative information on heating and cooling
degree days for the nine-month periods ending September 30, 2002
and 2001 and the number of degree days in a "normal" January
through September period as represented by a 30-year average.  A
"degree-day" is a unit measuring how much the outdoor mean
temperature falls below (for heating) or rises above (for
cooling), a base of 65 degrees.  Each degree below or above the
base, is measured in one degree day.
<TABLE>
<CAPTION>
<S>                                        <C>       <C>         <C>
                                                                  Normal
                                                                 30-Year
                                             2002      2001      Average

Heating degree days                         3,486     3,951        3,933
  Percentage change from prior year         (11.8)%     1.3%
  Percentage change from 30-year average    (11.4)%     0.5%

Cooling degree days                           951       802         768
  Percentage change from prior year          18.6%     37.6%
  Percentage change from 30-year average     23.8%      4.4%
</TABLE>

The lower heating degree days experienced during the current nine-
month period, as compared to the same period in 2001, impacted
gas energy sales more than electric energy sales due to the
decline in heating degree days from the same period last year and
the normal average days when heating would have been in demand.
The 11.8% decrease in heating degree days in 2002 significantly
impacts earnings from gas operations due to the relatively short
winter period when there is potential heating demand.

Wholesale electric revenues were $50.5 million in the first nine
months of 2002 compared to $69.6 million in the same period of
2001, a decrease of $19.1 million, or 27%.  This decrease in
wholesale revenues reflects a 19% decrease in kWh sales due to
the expiration of two municipal power supply contracts on May 31,
2002 and a decline in rates.  After October 31, 2005, NSTAR will
no longer have contracts for the supply of wholesale power.
Amounts collected from wholesale customers are credited to retail
customers through the transition charge.  Therefore, the
expiration of these contracts has no impact on results of
operations.

Gas sales revenues were $209.5 million in the first nine months
of 2002 compared to $304.8 million in the same period of 2001, a
decrease of $95.3 million, or 31%.  The decrease in revenues is
attributable to a 43% decline in the cost of gas from suppliers
compared to the same period last year, a 12.5% decline in BBTU
firm sales and transportation due to the downturn in the economy
and the warmer weather in the winter heating period of early
2002.  NSTAR Gas' firm sales and transportation to residential,
commercial and industrial customers were approximately 47%, 38%
and 10%, respectively, of total firm sales and transportation for
the current nine-month period.

Other revenues were $152.5 million in the first nine months of
2002 compared to $163.7 million in the same period of 2001, a
decrease of $11.2 million, or 7%.  This decrease primarily
reflects lower revenues from non-utility operations due to lower
steam sales that reflect warmer weather during the early part of
2002, lower rates, and the loss of a large customer, partially
offset by higher chilled water revenues due to the warmer summer
period and higher demand rates.

Operating expenses

Purchased power costs were $942.3 million in the first nine
months of 2002 compared to $1,292.7 million in the same period of
2001, a decrease of $350.4 million, or 27%.  The decrease in
expense reflects lower purchased power requirements due to lower
costs that reflect the prices of natural gas and oil and a 19%
decrease in wholesale sales due to the expiration of two
municipal power supply contracts.  Included in the current and
prior period was $10.2 million and $156.4 million, respectively,
that reflects the recognition of previously deferred standard
offer and default service supply costs resulting from the current
period collection of these costs.  NSTAR adjusts its electric
rates to collect the costs related to energy supply from
customers on a reconciling basis.  Due to the rate adjustment
mechanisms, changes in the amount of energy supply expense is not
expected to have an impact on earnings.  The cost of gas sold,
representing NSTAR Gas' supply expense, was $111.6 million for
the first nine months of 2002 compared to $196.9 million in the
same period of 2001, a decrease of $85.3 million, or 43%,
reflecting the lower cost of gas supply and the significant
reduction in sales due to milder weather conditions.  These
expenses are also reconciled to the current level of revenues
collected.

Operations and maintenance expense was $323 million in the first
nine months of 2002 compared to $306 million in the same period
of 2001, an increase of $17 million, or 6%.  This increase
primarily reflects incremental expenditures incurred relating to
improvements to NSTAR's electric delivery system that were
substantially completed as of September 30,2002 as was initially
disclosed in NSTAR's 2001 Form 10-K MD&A section, an increase of
approximately $9.5 million and $3.1 million in pension-related
and postretirement expense (net of amounts capitalized),
respectively, due to a downturn in the equity markets and lower
interest costs and a $2.3 million loss incurred that related to a
settlement adjustment.  The higher pension costs are in line with
NSTAR's forecast that pension costs would increase by
approximately $20 million (before capitalization) for 2002 as
compared to 2001.  However, it is now anticipated that pension
costs for 2002 will be slightly less than $20 million.  This
increasing trend in pension cost is anticipated to continue
through 2003, as a result of further declines in the equity
market.  These factors were somewhat offset by the absence of
$3.7 million in storm costs incurred in the first quarter of 2001
and a decline in bad debt expense of $6.7 million.

Depreciation and amortization expense was $174 million in the
first nine months of 2002 compared to $174.6 million in the same
period of 2001, a decrease of $0.6 million, or 1%.  The decrease
primarily reflects the absence in the current period of NSTAR's
$5 million write-off of its remaining district cooling plant
investment recognized in 2001.  This amount was nearly offset by
other higher depreciable plant in service in the current period.

Demand side management (DSM) and renewable energy programs
expense was $49.8 million in the first nine months of 2002
compared to $58.2 million in the same period of 2001, a decrease
of $8.4 million, or 14%, primarily due to timing of DSM expense
which is consistent with the collection of conservation and
renewable energy revenues.  These costs are collected from
customers on a fully reconciling basis and as a result,
fluctuations in program costs have no impact on earnings.  In
addition, NSTAR earns incentive amounts in return for increased
customer participation.

Property and other taxes were $73.5 million in the first nine
months of 2002 compared to $72.1 million in the same period of
2001, an increase of $1.4 million, or 2%.  This increase was due
to higher municipal property taxes, particularly for the City of
Boston of $3.5 million.  Payroll and other taxes remained in line
with last year.

Income taxes from operations were $87.3 million in the first nine
months of 2002 compared to $101.5 million in the same period of
2001, a decrease of $14.2 million, or 14%, primarily reflecting
lower pre-tax operating income.

Other income

Other income was $12 million in the first nine months of 2002
compared to $1.1 million in the same period of 2001, an increase
in income of $10.9 million.  The increase was due primarily to
deferred tax valuation allowance adjustments of $3.2 million and
the recognition of a incremental gain of $0.3 million as compared
to the prior year resulting from the sale of equity securities in
connection with the demutualization of John Hancock and MetLife.
Other income in 2002 also reflects $1.2 million related to an
exchange of property and $1.2 million in interest income related
to an adjustment of interest on potential income tax deficiencies.

Other deductions

Other deductions were $1.4 million in the first nine months of
2002 compared to $3.4 million in the same period of 2001, a
decrease of $2 million that primarily resulted from a lower
provision for the potential cost of removal and settlement of a
district cooling facility, a reduction of $2.3 million.

Interest charges

Interest on long-term debt and transition property securitization
certificates was $112.2 million in the first nine months of 2002
compared to $120.3 million in the same period of 2001, a decrease
of $8.1 million, or 7%.  The decrease in interest expense
reflects the retirement of $24.3 million in Boston Edison 9.375%
Debentures in August 2001, NSTAR Gas' 8.99% Series I Bonds of
$3.5 million in December 2001, Cambridge Electric's 7.75% Series
D Notes of $2.1 million in June 2002 and ComElectric's 9.3%, $30
million Term Loan in early January 2002, additional sinking fund
payments and the reduction in transition property securitization
certificates outstanding that resulted in reduced interest
expense of $3.2 million.

Short-term and other interest expense, excluding regulatory
interest expense, was $17.7 million in the first nine months of
2002 compared to $31.2 million in the same period of 2001, a
decrease of $13.5 million, or 44%.  This decrease was due to a
significant reduction in short-term borrowing rates despite a
nearly $19 million higher average level of debt outstanding in
the current nine-month period.  Short-term borrowing rates
averaged approximately 1.9% in the first nine-months of 2002 as
compared to approximately 4.7% in the same period last year.
Partially offsetting this decrease in short-term expense was a
$4.1 million increase in interest costs associated with certain
tax issues.  The reduction in short-term and other interest costs
was partially offset by a $12.4 million increase in the carrying
charges due NSTAR associated with reductions in the level of
under-collection of regulatory deferrals, particularly carrying
charges related to deferred transition costs.

Allowance for borrowed funds used in construction (AFUDC)
decreased by $5.5 million, or 86%, due to the absence in the
current period of capitalized interest related to the
construction of an NSTAR office building and the impact of lower
AFUDC rates resulting from lower short-term borrowing rates.

Liquidity and Capital Resources

NSTAR's short-term debt decreased by $503.6 million to $121.3
million at September 30, 2002 as compared to $624.8 million at
December 31, 2001.  The decrease resulted primarily from the
application of proceeds from Boston Edison's $500 million
financing (described below) that was completed with the receipt
of those funds on October 15, 2002.  In addition, operating
activities provided $513.7 million of cash flows, offset by
$253.7 million of cash flows used in investing activities and
$230.8 million of cash flows used in financing activities
excluding the change in short-term debt.

Period to period fluctuations in the levels of net cash provided
by operating activities for the nine-month periods ended
September 30, 2002 and 2001 are not indicative of the results
that may be expected for an entire year.

The net cash provided by operating activities of $513.7 million
was partially attributable to net earnings of $114.2 million,
which, when adjusted for depreciation and amortization, deferred
income taxes and investment tax credits, provided $293.5 million
of operating cash as compared to $98.2 million for the same
period in 2001.  The $55.7 million change in deferred income
taxes and investment tax credits primarily reflects the deferred
tax impact of changes in regulatory deferrals year to year.  In
addition, a recent change in the tax laws that allows for an
additional 30% acceleration of tax depreciation on current year
additions, as well as the impact of accelerated depreciation on
normal capital additions that resulted in approximately $21
million in deferred income tax expense.  Also, contributing to
higher year to date deferred income tax expense is the
acceleration of property tax deductions, lower mitigation
incentive revenues recognized in 2002 and the change in other
regulatory deferrals and other items.  Correspondingly, these
items significantly impact the level of required estimated
federal and state income payments.  Through September 2001,
approximately $142 million was paid in income tax payments as
compared to $54 million for the same period in 2002.  Also
contributing to operating cash was a decrease in receivables of
$189.7 million, which was partially offset by a decrease in
payables of $2.8 million.  Included in the decrease in
receivables was the receipt of $64 million associated with the
non-recurring construction financing of NSTAR's new corporate
office building.  In 2001, NSTAR was funding construction cash
requirements for this facility.

Net working capital, excluding short-term borrowings and the
current portion of long-term debt, increased by $257.1 million to
$170 million for the nine months ended September 30, 2002 as
compared to a shortfall of $87.1 million for the same period in
2001.  This increase is primarily due to the improved accounts
receivable collection activity, lower power supply payments to
vendors and a reduction in estimated tax payments in 2002 of
approximately $87 million that represents the impact on current
income tax expense for the timing differences described under the
caption of deferred income taxes.  Refer to the recent change in
tax laws noted above.  A portion of this tax benefit is expected
to turn around during the fourth quarter of 2002 primarily as a
result of changes in the level of property tax deductions.

The net cash used in investing activities of $253.7 million was
utilized primarily for capital expenditures used in transmission
and distribution systems and included $34 million expended on
NSTAR's corporate office facility.  The net cash used in
financing activities of $234.3 million was primarily the result
of repayments of short-term borrowings of $3.6 million, long-term
debt redemptions and sinking fund payments of $145 million and
dividends paid of $85.8 million.

NSTAR's primary estimated future uses of cash for 2002 include
capital expenditures, dividend payments and debt reductions.

The IRS is in the process of auditing the COM/Energy tax returns
for the years 1997, 1998 and 1999.  Before completion of the
audit, and before the end of 2002, it is expected that the IRS
National Office will provide a response to the request for a
Technical Advice.  Should NSTAR's position be overturned as a
result of the IRS decision, it is probable that NSTAR will make a
payment to the IRS of approximately $61 million in order to stop
the accrual of interest on the potential tax deficiency.  NSTAR
intends to vigorously defend its position, which is supported by
an opinion from an independent tax advisor, relative to this
transaction and anticipates pursuing a refund of the amount paid
plus interest.  Refer to "Income Tax Issues" in this MD&A for a
further discussion.

NSTAR's internally generated funds consist of cash flows from
operating activities, adjusted to exclude changes in working
capital and the payment of dividends.  NSTAR companies supplement
internally generated funds as needed, primarily through the
issuance of short-term commercial paper and bank borrowings.

The capital spending level forecasted for 2002 is $315 million,
which includes approximately $271 million for electric and gas
operations and the balance for other capital requirements of non-
utility operations.  Also, included in this level of spending are
costs associated with NSTAR's System Improvement Program.  For
the nine-month period ended September 30, 2002, capital spending
was $254.2 million including the System Improvement Program that
is essentially complete as of September 30, 2002, $34 million
made in connection with a new corporate office building, customer
growth projects incurred by NSTAR Gas and expenditures in
connection with a non-utility turbine project.  These capital
spending programs and the related estimates included in this
report are subject to revision due to changes in regulatory
requirements, changes in transmission and distribution system
requirements, environmental standards, availability and cost of
capital, interest rates and other assumptions.  Other investments
in 2002 reflect $9.4 million of proceeds from the total sale of
NSTAR's holdings of equity securities of John Hancock Financial
Services, Inc. and MetLife, Inc.  Management continuously reviews
its capital expenditure and financing programs.

On October 15, 2002, Boston Edison sold $400 million of 4.875%
ten-year debentures and $100 million of three-year floating note
debentures priced at LIBOR plus 50 basis points.  The net
proceeds were used to repay outstanding short-term debt balances.
For financial reporting purposes, $500 million of short-term debt
has been reclassified on the accompanying Condensed Consolidated
Balance Sheets as Long-term debt.

Additionally, in the nine-month period ended September 30, 2002,
debt financing activities included the retirement of $49.9
million in securitization certificates, the retirement of
ComElectric's 9.3%, $30 million Term Loan in January, the
retirement of Cambridge Electric's 7.75%, $2.1 million Series D
Notes in June and $60 million for the early redemption of Boston
Edison's 8.25% Debentures in September 2002.  In the fiscal year
2001, financing activities included redemptions of securitization
certificates of $62 million, redemption of all 500,000 shares
outstanding of Boston Edison's Cumulative Preferred Stock, 8%
Series, at the mandatory redemption price of $100 per share,
Boston Edison's early redemption of $24.3 million 9.375%
debentures, and other scheduled sinking fund payments.  There
were no new long-term debt issuances in the nine-month period
ended September 30, 2002 prior to Boston Edison's $500 million
financing recently completed or in 2001.

Financial Covenant Requirements

NSTAR and Boston Edison have no financial covenant requirements
under their long-term debt arrangements.  ComElectric, Cambridge
Electric and NSTAR Gas have financial covenant requirements under
their long-term debt arrangements and were in compliance at
September 30, 2002 and December 31, 2001.  NSTAR's long-term debt
other than the Mortgage Bonds of NSTAR Gas is unsecured.

With respect to Transition Property Securitization Certificates
held by Boston Edison's subsidiary, BEC Funding, LLC, this debt
is collaterized with a securitized regulatory asset with a
balance of $510.9 million as of September 30, 2002.  Boston
Edison, as servicing agent for BEC Funding, collected $26.4
million and $78.4 million in the three and nine-month periods
ended September 30, 2002, respectively.  These collected funds
are remitted on the day of collection to the Bank of New York,
trustee of BEC Funding.

NSTAR has a $450 million revolving credit agreement with a group
of banks effective through November 2002.  NSTAR anticipates
lowering this credit facility to $350 million under similar
terms.  At September 30, 2002 and December 31, 2001, there were
no amounts outstanding under this revolving credit agreement.
This arrangement serves as back-up to NSTAR's $450 million
commercial paper program that, at September 30, 2002 and December
31, 2001, had $292 million and $315.5 million outstanding,
respectively.  In October 2002, following receipt of the proceeds
of Boston Edison's $500 million debt issue referenced below and
the reduction of Boston Edison's short-term debt level to zero,
the remaining balance of that debt issue will be applied against
the debt of the parent company, NSTAR.  Under the terms of this
credit agreement, NSTAR is required to maintain a consolidated
common equity ratio of not less than 35% at all times, excluding
Accumulated other comprehensive income, and to maintain a ratio
of consolidated earnings before interest and taxes to
consolidated total interest expense of not less than 2 to 1 for
each period of four consecutive fiscal quarters.  Commitment fees
must be paid on the total agreement amount.  At September 30,
2002 and December 31, 2001, NSTAR was in full compliance with all
of the aforementioned covenants.

Boston Edison has approval from the FERC to issue up to $350
million of short-term debt until December 31, 2002.  On May 31,
2002, Boston Edison received FERC authorization to issue short-
term debt securities from time to time on or before December 31,
2004, with maturity dates no later than December 31, 2005, in
amounts such that the aggregate principal does not exceed $350
million at any one time.  Boston Edison has a $300 million
revolving credit agreement with a group of banks effective
through December 2002.  Boston Edison anticipates renewing the
facility agreement under similar terms.  At September 30, 2002
and December 31, 2001, there were no amounts outstanding under
this revolving credit agreement.  This arrangement serves as back-
up to Boston Edison's $300 million commercial paper program that,
at September 30, 2002 and December 31, 2001, had outstanding
balances of 219.5 and $191.5 million, respectively.  In October
2002, following receipt of the proceeds of its $500 million debt
issue referenced below, the balance at September 30, 2002 will be
reduced to zero.  Under the terms of this agreement, Boston
Edison is required to maintain a common equity ratio of not less
than 30% at all times, excluding Accumulated other comprehensive
income.  Commitment fees must be paid on the total agreement
amount.  Separately, Boston Edison has an additional $45 million
line of credit and had no amounts outstanding at September 30,
2002 or at December 31, 2001.  This line of credit expires on
November 14, 2002 and will not renewed by Boston Edison.  At
September 30, 2002 and December 31, 2001, Boston Edison was in
full compliance with all of the aforementioned covenants.

On October 15, 2002, Boston Edison sold $400 million of 4.875% 10-
year debentures and $100 million of 3-year floating rate
debentures priced at LIBOR plus 50 basis points.  The net
proceeds were used to repay consolidated outstanding short-term
debt balances.  For financial reporting purposes, this long-term
debt has been classified on the accompanying Condensed
Consolidated Balance Sheets as Long-term debt with a
corresponding reduction in Notes payable.

On July 15, 2002, Boston Edison notified the trustee of its 8.25%
Series Debentures, due September 15, 2022, that the entire $60
million principal amount of these debentures, and approximately a
$2.3 million premium, would be called for redemption on September
16, 2002.  This Debenture along with its redemption premium was
paid; this transaction had minimal impact on earnings.

In addition, ComElectric, Cambridge Electric and NSTAR Gas,
collectively, have $170 million available under several lines of
credit.  Approximately $109.8 million and $118 million was
outstanding under these lines of credit at September 30, 2002 and
December 31, 2001, respectively.  ComElectric has approval from
FERC to issue short-term debt in an amount not exceeding $100
million until November 29, 2002.  On May 31, 2002, ComElectric
and Cambridge Electric received FERC authorization to issue short-
term debt securities from time to time on or before November 30,
2004 and June 27, 2004, with maturity dates no later than
November 29, 2005 and June 26, 2005, respectively, in amounts
such that the aggregate principal does not exceed $125 million
and $60 million, respectively, at any one time.  NSTAR Gas is not
required to seek approval from FERC to issue short-term debt.

On September 13, 2002, ComElectric filed with the MDTE for
approval of long-term debt financing not to exceed $150 million
to be issued from time-to-time on or before December 31, 2004.

NSTAR and its subsidiary companies' debt credit ratings services
are provided by Moody's Investors Service, Standard & Poor's
Rating Services and Fitch Ratings.  All ratings carry a stable
outlook and are as follows:
<TABLE>
<CAPTION>
<S>                                 <C>           <C>       <C>
                                      Moody's       S&P       Fitch
NSTAR                                   A2           A          A
Boston Edison Company                   A1           A         AA-
Commonwealth Electric Company        Not rated       A          A
Cambridge Electric Light Company     Not rated       A          A
NSTAR Gas Company                    Not rated       A          A
</TABLE>

Historically, NSTAR and its subsidiaries have had available a
variety of external sources of financing, as indicated above, at
favorable rates and terms to finance its external cash
requirements.  However, the availability of such financing at
favorable rates and terms depends heavily upon prevailing market
conditions and NSTAR's or its subsidiaries' capital structure and
credit ratings.  In late October 2002, Moody's confirmed its "A2"
rating for NSTAR, its A1 rating for Boston Edison and provided a
stable outlook for both entities.  Moody's noted that "the A2
rating for NSTAR reflects the company's generally low
consolidated business and financial risk profiles."  On October
4, 2002, S&P affirmed its "A" corporate credit rating for NSTAR
and its operating subsidiaries and provided a stable outlook for
all entities.  S&P noted that the "ratings affirmation reflects
NSTAR's above-average business profile and strong financial
profile."  In August 2002, Fitch affirmed the "A" or above
ratings it has for the NSTAR subsidiaries and also provided a
stable outlook for the companies.

An adverse change in NSTAR's or its subsidiaries' credit ratings
or market conditions could have an adverse impact on the terms
and conditions upon which NSTAR or its subsidiaries accesses such
financing.  NSTAR has no provisions in financial guarantees,
commitments, debt or lease agreements that affirm that a change
in its credit rating would trigger a change in terms and
conditions, such as acceleration of payment obligations.
However, NSTAR's subsidiaries could be required to provide
additional security for power supply contract performance, such
as a letter of credit for their pro-rata share of the remaining
value of such contracts.  Refer to "Performance Assurances and
Financial Guarantees" discussed below for further discussion.

NSTAR's goal is to maintain a capital structure that preserves an
appropriate balance between debt and equity.  Management believes
its liquidity and capital resources are sufficient to meet its
current and projected requirements.

Unfunded Pension Obligation

NSTAR's Pension Plan (the Plan) assets have been affected
by significant declines in the equity markets in the past
three years.  These conditions are expected to impact the
funded status of the Plan at year-end.  As a result of the
negative investment performance, it is probable that at
December 31, 2002 the accumulated benefit obligation will
exceed Plan assets.  Therefore, it is also probable that
NSTAR will be required to recognize an additional minimum
liability as prescribed by SFAS No. 87.

The Plan currently meets the minimum funding requirements
of the Employment Retirement Income Security Act of 1974.
However, NSTAR is currently evaluating the extent
to which it may make additional optional cash contributions
to the Plan, the timing of each contribution and the impact
on the additional minimum liability.  Should NSTAR elect to
increase the level of its cash contributions to the Plan,
such cash requirements could be material to its cash flows.
NSTAR believes it has adequate access to capital resources
to support these contributions.  Pension and other
postretirement costs and cash contributions beyond 2003
are largely dependent on the financial markets.

Refer to "Critical Accounting Policies, Pension and Other
Postretirement Benefits" section in this MD&A for
further discussion.

RCN Joint Venture and Investment Conversion

NSTAR Com participated in a telecommunications venture with RCN
Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN).  NSTAR Com accounted for its equity investment
in the joint venture using the equity method of accounting.  As
part of the Joint Venture Agreement, NSTAR Com had the option to
exchange portions of its joint venture interest for common shares
of RCN at specified periods.

On April 6, 2000, NSTAR Com issued its third and final notice to
exchange substantially all of its remaining interest in the joint
venture into common shares of RCN.  Effective with the third
notice, NSTAR Com's profit and loss sharing ratio was reduced to
zero.

On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement.  Although the
agreement was subject to ongoing negotiations, this proposal
established, among other items, the number of shares to be
received upon finalization of the agreement for the third
conversion of NSTAR Com's remaining equity investment at 7.5
million shares.

On June 19, 2002, NSTAR Com and RCN finalized negotiations on an
Amended Joint Venture Agreement and NSTAR Com received the
anticipated 7.5 million shares resulting from its final exchange
of its investment in the RCN joint venture.  With the receipt of
these shares, NSTAR Com holds approximately 11.6 million RCN
common shares, or approximately 10.6% of RCN's outstanding common
shares.  Prior to this final exchange, NSTAR Com had received
approximately 4.1 million shares of RCN resulting from the two
previous exchanges.

In accordance with its accounting policies, NSTAR Com
continuously evaluates the carrying value of its investment in
RCN to assess whether any decline in the market value below its
carrying value is deemed to be other than temporary.  Consistent
with the performance of the telecommunications sector as a whole,
the market value of RCN's common shares decreased significantly
during the later part of 2000 and continued to decrease in 2001.
As a result, in the first quarter of 2001, management determined
that this decline in market value was "other-than-temporary" in
accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."

NSTAR Com recognized an impairment of its investment in RCN, in
the first quarter of 2001.  This write-down resulted in a non-
cash, after-tax charge of $173.9 million that is reported on the
accompanying Condensed Consolidated Statements of Income as
"Write-down of RCN investment, net."

During 2002, the market value of RCN common shares continued to
decline and had not closed above NSTAR's carrying value of $3.75
per share since November 27, 2001.  As a result, NSTAR Com
recognized a write-down of its 11.6 million RCN common shares to
a market value of $1.37 per share as of June 30, 2002.  This
write-down resulted in a non-cash, after-tax charge of $27.6
million that is reported on the accompanying Condensed
Consolidated Statements of Income as "Write-down of RCN
investment, net."

Since June 30, 2002, RCN's market value has continued to decline.
Should this trend continue for the remainder of 2002 and into
early 2003, it is reasonably possible that NSTAR may recognize a
further write-down of its carrying value or write-off its entire
remaining investment in RCN as of December 31, 2002.

The total carrying value of the 11.6 million RCN common shares is
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $5.9 million at September 30, 2002.  The fair value
of the 11.6 million shares held may increase or decrease as a
result of changes in the market value of RCN common shares.  As
of September 30, 2002 and December 31, 2001, the market value per
share of RCN was $0.51 and $2.93, respectively.  The unrealized
gain or loss associated with these shares will fluctuate due to
the changes in fair value of these securities during each period
and is reflected, net of associated income taxes, as a component
of Other comprehensive income, net on the accompanying Condensed
Consolidated Statements of Comprehensive Income (Loss).  The
cumulative increase or decrease in fair value of these shares

including the impact of the write-down adjustments of these
shares are included in Accumulated other comprehensive income on
the accompanying Condensed Consolidated Balance Sheets.

Performance Assurances and Financial Guarantees

NSTAR Electric has entered into a series of purchased power
agreements to meet its default and standard offer service supply
obligations through December 31, 2002.  These agreements are
generally for a term of six months to twelve months.  NSTAR is
currently negotiating with suppliers and anticipates having
purchased power agreements in place to service its Default
Service and Standard Offer obligation in 2003 under similar terms
as those in the past.  NSTAR Electric currently is recovering
payments it is making to suppliers from its customers.  Most of
the NSTAR Electric's power suppliers are subsidiaries of larger
companies with investment grade or better credit ratings.  In
many cases, NSTAR has financial assurances and guarantees in
place with the parent company of the supplier, to minimize NSTAR
Electric risk in the event the supplier encounters financial
difficulties or otherwise fails to perform.  In addition, under
these agreements, in the event that the supplier (or its parent
guarantor) fails to maintain an investment grade credit rating,
it is required to provide additional security for performance.
NSTAR Electric's policy is to enter into power supply
arrangements only if the supplier (or its parent guarantor has an
investment grade or better credit rating.  In view of current
turmoil in the energy supply industry, NSTAR Electric is unable
to determine whether its suppliers (or their parent guarantors)
will become subject to financial difficulties, or whether these
financial assurances and guarantees are sufficient.  In such
event, the supplier (or its guarantor) may not be in a position
to provide the required additional security, and NSTAR Electric
may then terminate the agreement.  Some of these agreements
include a reciprocal provision, where in the unlikely event that
an NSTAR Electric distribution company receives a credit rating
below investment grade, that company could be required to provide
additional security for performance, such as a letter of credit.

Gas System Expansion

On September 30, 2002, the MDTE approved an agreement between
KeySpan Energy Delivery New England (KeySpan) and NSTAR Gas for
the transfer of certain customers and assets within the Town of
Plymouth, effective November 1, 2002.  Pursuant to prior
agreements, KeySpan had provided gas service to approximately
1,200 customers located in NSTAR Gas's service territory in
Plymouth because these customers could not previously be served
by NSTAR Gas's existing distribution system.  Due to recent
expansion by NSTAR Gas in the surrounding area, it negotiated an
agreement with KeySpan to purchase the assets at net book value
from KeySpan to serve these customers.

Item 3.  Quantitative and Qualitative Disclosures about Market
Risk

There have been no material changes since year-end.

Item 4.  Controls and Procedures

NSTAR's disclosure controls and procedures are designed to ensure
that information required to be disclosed in reports that it
files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and
Exchange Commission.

Within 90 days prior to the date of filing this Quarterly Report
on Form 10-Q, NSTAR carried out an evaluation, under the
supervision and with the participation of NSTAR's management,
including NSTAR's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of
NSTAR's disclosure controls and procedures pursuant to Exchange
Act Rule 13a-14.  Based on that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that NSTAR's
disclosure controls and procedures are effective in timely
alerting them to material information relating to NSTAR's
information required to be disclosed by NSTAR in the reports that
it files or submits under the Securities Exchange Act of 1934.
These reports are recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commission's rules and forms.

Subsequent to the date of that evaluation, there have been no
significant changes in NSTAR's internal controls or in other
factors that could significantly affect internal controls, nor
were any corrective actions required with regard to significant
deficiencies and material weaknesses.

Part II - Other Information
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<CAPTION>
Item 6.  Exhibits and Reports on Form 8-K
<S><C> <C><C>       <C>   <C>
a)      Exhibits filed herewith and incorporated by reference:


          Exhibit 4    -   Instruments defining the rights of
                           security holders, including indentures

                           Management agrees to furnish to the
                           Securities and Exchange Commission, upon
                           request, a copy of any agreements or
                           instruments defining the rights of
                           holders of any long-term debt whose
                           authorization does not exceed 10% of
                           total assets

          Exhibit 15   -   Letter re unaudited interim financial
                           information

                15.1   -   Letter of Independent Accountants

          Exhibit 99   -   Additional exhibits

                99.1   -   Report of Independent Accountants

                           Form S-8 Registration Statement filed by
                           NSTAR on April 30, 2002 (File No. 333-
                           87272); Post-effective Amendment to Form
                           S-4 on Form S-3 filed by NSTAR on August
                           19, 1999 (File No. 333-78285); Post-
                           effective Amendment to form S-4 on Form
                           S-8 filed by NSTAR on August 19, 1999
                           (File No. 333-78285); Form S-8
                           Registration Statement filed by NSTAR on
                           August 19, 1999 (File No. 333-85559)

                99.2   -   Certification Statement of Chief
                           Executive Officer of NSTAR pursuant to
                           Section 906 of the Sarbanes-Oxley Act of
                           2002

                99.3   -   Certification Statement of Chief
                           Financial Officer of NSTAR pursuant to
                           Section 906 of the Sarbanes-Oxley Act of
                           2002

b)      Form 8-K was filed on July 25, 2002 that announced NSTAR's
        financial and operating results for the second quarter of
        2002, including the write-down of its RCN investment.
</TABLE>


                            Signature




Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.


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<CAPTION>
<S>                        <C>    <C>

                                               NSTAR
                                            (Registrant)



Date: November 13, 2002            /s/ R. J. WEAFER, JR
                                   Robert J. Weafer, Jr.
                                   Vice President, Controller
                                     and Chief Accounting Officer
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<CAPTION>
         Sarbanes - Oxley Section 302(a) Certifications
<S> <C>                  <C>         <C>
I, Thomas J. May, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of NSTAR;

2.   Based on my knowledge, this quarterly report does not contain
     any untrue statement of a material fact or omit to state a
     material fact necessary to make the statements made, in light
     of the circumstances under which such statements were made, not
     misleading with respect to the period covered by this quarterly
     report;

3.   Based on my knowledge, the financial statements, and other
     financial information included in this quarterly report, fairly
     present in all material respects the financial condition,
     results of operations and cash flows of NSTAR as of, and for,
     the periods presented in this quarterly report;

4.   NSTAR's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures
     (as defined in Exchange Act Rules 13a-14 and 15d-14) for NSTAR
     and we have:

     a)    designed such disclosure controls and procedures to
           ensure that material information relating to NSTAR,
           including its consolidated subsidiaries, is made known to
           us by others within those entities, particularly during
           the period in which this quarterly report is being
           prepared;

     b)    evaluated the effectiveness of NSTAR's disclosure
           controls and procedures as of a date within 90 days prior
           to the filing date of this quarterly report (the
           "Evaluation Date"); and

     c)    presented in this quarterly report are our conclusions
           about the effectiveness of the disclosure controls and
           procedures based on our evaluation as of the Evaluation
           Date;

5.   NSTAR's other certifying officer and I have disclosed, based on
     our most recent evaluation, to NSTAR's auditors and the audit
     committee of NSTAR's board of trustees:

     a)    all significant deficiencies in the design or operation
           of internal controls which could adversely affect NSTAR's
           ability to record, process, summarize and report
           financial data and have identified for NSTAR's auditors
           any material weaknesses in internal controls; and

     b)    any fraud, whether or not material, that involves
           management or other employees who have a significant role
           in the registrant's internal controls; and

6.   NSTAR's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes
     in internal controls or in other factors that could
     significantly affect internal controls subsequent to the date
     of our most recent evaluation, including any corrective actions
     with regard to significant deficiencies and material
     weaknesses.

Date:  November 13,2002         By:  /s/ THOMAS J. MAY
                                     Thomas J. May
                                     Chairman, President and
                                       Chief Executive Officer

</TABLE>

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<CAPTION>
<S>   <C>  <C>             <C>  <C>


I, James J. Judge, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of NSTAR:

2.   Based on my knowledge, this quarterly report does not contain
     any untrue statement of a material fact or omit to state a
     material fact necessary to make the statements made, in light
     of the circumstances under which such statements were made,
     not misleading with respect to the period covered by this
     quarterly report;

3.   Based on my knowledge, the financial statements, and other
     financial information included in this quarterly report,
     fairly present in all material respects the financial
     condition, results of operations and cash flows of NSTAR as
     of, and for, the periods presented in this quarterly report;

4.   NSTAR's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-
     14) for NSTAR and we have:

     a)    designed such disclosure controls and procedures to
           ensure that material information relating to NSTAR,
           including its consolidated subsidiaries, is made known
           to us by others within those entities, particularly
           during the period in which this quarterly report is
           being prepared;

     b)    evaluated the effectiveness of NSTAR's disclosure
           controls and procedures as of a date within 90 days
           prior to the filing date of this quarterly report (the
           "Evaluation Date"); and

     c)    presented in this quarterly report are our conclusions
           about the effectiveness of the disclosure controls and
           procedures based on our evaluation as of the Evaluation
           Date;

5.   NSTAR's other certifying officer and I have disclosed, based
     on our most recent evaluation, to NSTAR's auditors and the
     audit committee of NSTAR's board of trustees:

     a)    all significant deficiencies in the design or operation
           of internal controls which could adversely affect
           NSTAR's ability to record, process, summarize and report
           financial data and have identified for NSTAR's auditors
           any material weaknesses in internal controls; and

     b)    any fraud, whether or not material, that involves
           management or other employees who have a significant
           role in NSTAR's internal controls; and

6.   NSTAR's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant
     changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the date
     of our most recent evaluation, including any corrective
     actions with regard to significant deficiencies and material
     weaknesses.

Date:   November 13,2002        By: /s/ JAMES J. JUDGE
                                    James J. Judge
                                    Senior Vice President, Treasurer
                                      and Chief Financial Officer
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