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 June 30, 2001


                               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 the registrant 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 August 1, 2001
   Common Shares, $1 par value          53,032,546 shares
</TABLE>

<TABLE>
<CAPTION>
Part I - Financial Information
Item 1.  Financial Statements
                              NSTAR
           Condensed Consolidated Statements of Income
                           (Unaudited)
            (in thousands, except per share amounts)
<S>                               <C>          <C>       <C>        <C>
                                     Three Months Ended         ix Months Ended
                                           June 30,                 June 30,
                                       2001        2000        2001         2000
Operating revenues                 $732,273    $630,194  $1,597,095   $1,288,712

Operating expenses:
  Purchased power and cost of
     gas sold                       434,374     333,137     965,135      674,013
  Operations and maintenance         95,030      98,349     203,326      208,816
  Depreciation and amortization      55,047      59,675     114,120      117,967
  Demand side management and
    renewable energy programs        18,700      17,563      38,332       35,728
  Property and other taxes           22,464      20,873      49,576       46,745
  Income taxes                       24,981      23,642      55,661       49,087

    Total operating expenses        650,596     553,239   1,426,150    1,132,356


Operating income                     81,677      76,955     170,945      156,356

Other income (deductions):
  Write-down of RCN                       -           -    (173,944)           -
investment, net
  Other income, net                   3,662       3,369       3,046        5,964

                                      3,662       3,369    (170,898)       5,964
Operating and other income           85,339      80,324          47      162,320

Interest charges:
  Long term debt                     29,603      27,886      59,224       52,520
  Transition property
    securitization certificates      10,431      11,456      21,229       23,402
  Other                               8,592       9,186      15,987       18,301
  Allowance for borrowed funds used
    during construction                (997)     (1,132)     (1,847)      (1,930)
      Total interest charges         47,629      47,396      94,593       92,293

Net income (loss)                    37,710      32,928     (94,546)      70,027
Preferred stock dividends of
  subsidiary                          1,490       1,490       2,980        2,980
Earnings (loss) available for
  common shareholders              $ 36,220    $ 31,438   $ (97,526)    $ 67,047
                                   ========    ========   =========     ========

Weighted average common shares
outstanding:
    Basic                            53,033      55,597      53,033       56,430
                                     ======      ======      ======       ======
    Diluted                          53,214      55,778      53,178       56,591
                                     ======      ======      ======       ======

Earnings (loss) per common share:

    Basic                             $0.68       $0.57     $(1.84)        $1.19
                                      =====       =====      ======        =====
    Diluted                           $0.68       $0.56     $(1.83)        $1.18
                                      =====       =====      ======        =====
Dividends declared per common        $0.515       $0.50       $1.03        $1.00
share                                 =====       =====      ======        =====

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           Six Months
                                          Ended June 30,        Ended June 30,
                                      2001         2000       2001        2000

Net income (loss)                  $37,710     $ 32,928  $(94,546)    $ 70,027
Other comprehensive income, net:
  Changes in unrealized gain         8,353      (68,691)    41,493     (45,235)
    (loss) on investments
Comprehensive income               $46,063     $(35,763)  $(53,053)   $ 24,792
(loss)                             =======     ========   ========    ========


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      Six Months Ended
                                        June 30,               June 30,
                                    2001         2000       2001        2000

Balance at the beginning of
  the period                    $285,970     $394,907   $447,087    $389,989
Add (Deduct):
  Net income (loss)               37,710       32,928    (94,546)     70,027
    Subtotal                     323,680      427,835    352,541     460,016
Deduct:
Dividends declared:
  Common shares                   27,312       27,240     54,623      55,487
  Preferred stock                  1,490        1,490      2,980       2,980
    Subtotal                      28,802       28,730     57,603      58,467

Provision for preferred stock
  redemption andissuance costs        60           60        120         120
Common share repurchase program        -        3,959          -       6,343
Balance at the end of
   the period                   $294,818     $395,086   $294,818    $395,086
                                ========     ========   ========    ========



The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
                              NSTAR
              Condensed Consolidated Balance Sheets
                         (in thousands)
                           (Unaudited)

 <S>                                   <C>            <C>
                                           June 30,   December 31,
                                               2001           2000
Assets
Utility plant in service, at original
  cost                                   $3,789,104     $3,724,754
  Less: accumulated depreciation          1,296,318      1,249,685
                                          2,492,786      2,475,069
Construction work in progress                65,473         48,524
  Net utility plant                       2,558,259      2,523,593

Non-utility property, net                   102,350        105,827

Goodwill                                    469,752        475,877
Equity investments                           24,876         25,791
Other investments                            77,454        170,829

Current assets:
  Cash and cash equivalents                   7,751         21,873
  Restricted cash                            22,616         22,152
  Accounts receivable, net                  485,675        454,499
  Regulatory assets                         176,747        242,663
  Accrued unbilled revenues                  73,159        101,732
  Fuel, materials and supplies, at
    average cost                             47,767         44,659
  Other                                      42,405         32,447
    Total current assets                    856,120        920,025

Deferred debits:
  Regulatory assets                       1,050,377      1,029,341
  Prepaid pension expense                   170,551        149,890
  Other                                     142,945        146,542

  Total assets                           $5,452,684     $5,547,715
                                         ==========     ==========






The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
                              NSTAR
              Condensed Consolidated Balance Sheets
                         (in thousands)
                           (Unaudited)
 <S>                                   <C>           <C>
                                         June 30,     December 31,
                                             2001             2000
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                 880,417         876,749
  Retained earnings                        294,818         446,587
    Total common equity                  1,228,268       1,376,369

Accumulated other comprehensive
  income (loss)                              7,349         (34,144)

Cumulative nonmandatory redeemable
  preferred stock                           43,000          43,000

Long-term debt                           1,381,997       1,440,431
Transition property securitization
  certificates                             548,000         584,130
    Total long-term debt                 1,929,997       2,024,561

    Total capitalization                 3,208,614       3,409,786

Current liabilities:
  Long-term debt and preferred stock
   due within one year                     115,879          58,695
  Transition property securitization
    certificates due within one year        41,871          36,443
  Notes payable                            611,797         468,347
  Accounts payable                         181,240         275,778
  Deferred taxes                            88,874         128,788
  Accrued interest                          29,448          44,220
  Dividends payable                         28,305          28,305
  Other                                    316,118         301,873
    Total current liabilities            1,413,532       1,342,449

Deferred credits:
  Accumulated deferred income taxes        573,612         537,756
  Accumulated deferred investment tax
    credits                                 38,970          39,960
  Other                                    217,956         217,764
    Total deferred credits                 830,538         795,480

Commitments and contingencies

    Total capitalization and            $5,452,684      $5,547,715
      liabilities                       ==========      ==========

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>
                                           Six Months Ended June30,
                                                 2001           2000

Operating activities:
  Net (loss) income                         $(94,546)      $  70,027
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
    Depreciation and amortization             114,120        118,792
    Deferred income taxes and investment
tax       credits                             (29,337)        18,017
    Loss on write-down of RCN investment      168,376              -
    Allowance for borrowed funds used
during       construction                      (1,847)        (1,930)
  Net changes in working capital               (3,187)       (27,442)
  Other, net                                  (86,029)       (82,784)
Net cash provided by operating activities      67,550         94,680

Investing activities:
  Plant expenditures (excluding AFUDC)        (94,872)       (73,352)
  Other investments                               915       (60,919)

Net cash used in investing activities         (93,957)      (134,271)
Financing activities:
  Common share repurchases                          -       (147,881)
  Long-term debt redemptions                  (42,859)      (102,176)
  Transition property securitization
    certificates redemptions                  (30,702)       (49,020)
  Long-term debt issue, net                         -        298,825
  Net change in notes payable                 143,450        (42,000)
  Dividends paid                              (57,604)       (57,227)
Net cash provided by (used in) financing
  activities                                   12,285        (99,479)

Net decrease in cash and cash equivalents     (14,122)      (139,070)
Cash and cash equivalents at
  beginning of year                            21,873        168,599

Cash and cash equivalents at end of
  period                                    $   7,751      $  29,529
                                            =========      =========

Supplemental disclosures of cash flow
  information:
Cash paid during the period for:
  Interest, net of amounts capitalized      $  88,647      $  54,250
                                            =========      =========

  Income taxes                              $ 133,994      $  19,470
                                            =========      =========

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 Unaudited Condensed Consolidated Financial Statements

The accompanying Notes should be read in conjunction with Notes
to the Consolidated Financial Statements incorporated in NSTAR's
2000 Annual Report on Form 10-K.

A)  About NSTAR

NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts including more than one
million electric customers in 81 communities and 244,000 gas
customers in 51 communities.  NSTAR also supplies electricity at
wholesale for resale to municipalities.  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 Electric).  Effective November 1, 2000, NSTAR's
three retail electric companies are operating under the brand
name "NSTAR Electric."  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 liquefied natural gas
services (Hopkinton LNG Corp.).

B)  Basis of Presentation

The financial information presented as of June 30, 2001 and for
the periods ended June 30, 2001 and 2000 have been prepared from
NSTAR's books and records without audit by independent
accountants.  Financial information as of December 31, 2000 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 preparation of financial statements in conformity with GAAP
requires management of NSTAR and its subsidiaries to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from these estimates.

The results of operations for the periods ended June 30, 2001 and
2000 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 conditions.  Gas sales and
revenues are typically higher in the winter months than during
other periods of the year.

C)  Goodwill and Costs to Achieve Amortization

Goodwill on the accompanying Condensed Consolidated Balance
Sheets is associated with the merger of BEC Energy (BEC) and
Commonwealth Energy System (COM/Energy), effective August 25,
1999.  The merger was accounted for by NSTAR as an acquisition of
COM/Energy by BEC under the purchase method of accounting.  An
integral part of the merger is the rate plan of the retail
utility subsidiaries of BEC and COM/Energy that was approved by
the Massachusetts Department of Telecommunications and Energy
(MDTE) in July 1999.  Significant elements of the rate plan
include a four-year distribution rate freeze, recovery of the
acquisition premium (goodwill) of approximately $490 million over
40 years resulting in annual amortization of approximately $12.2
million, and recovery of filed transaction and integration costs
(costs to achieve) of $111 million over 10 years.  NSTAR's retail
utility subsidiaries will reconcile the ultimate costs to achieve
with that estimate, and any difference is expected to be
recovered over the remainder of the amortization period.  As a
result of the merger, cost savings have been realized due to
reduced staffing levels and operating efficiencies.  Future cost
savings are expected to result from the avoidance of costs that
would have otherwise been incurred by BEC and COM/Energy.

In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142).  This
Statement, which is effective for fiscal years beginning after
December 15, 2001, establishes accounting and reporting standards
for acquired goodwill and other intangible assets.  It prohibits
entities from continuing amortization of these assets.  Instead,
goodwill and other intangible assets will be subject to review
for impairment.  Management is currently assessing the impact of
SFAS 142 in light of its regulatory and accounting requirements.
Therefore, NSTAR is unable to reasonably estimate the impact of
the adoption of this statement.

D)  RCN Joint Venture and Investment Conversion

NSTAR Com is a participant in a telecommunications venture with
RCN Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN).  NSTAR Com has accounted for its equity
investment in the joint venture using the equity method of
accounting.  As part of the Joint Venture Agreement, NSTAR Com
has the option to exchange portions of its joint venture interest
for common shares of RCN at specified periods.  To date, NSTAR
Com has received approximately 4.1 million shares of RCN common
shares from prior exchanges of its joint venture interest.

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 and therefore NSTAR Com no longer recognized any results of
operations from its interest in the joint venture.  During the
period January 1, 2000 through April 6, 2000, NSTAR Com
recognized $5.6 million in equity losses from the joint venture
and has not recorded any further joint venture losses since that
date.

On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement.  Among other
items, this proposal settled the number of shares to be received
for the third conversion of NSTAR Com's remaining equity
investment at 7.5 million shares.  Management anticipates having
a final amended Joint Venture Agreement in place in 2001.

As previously disclosed, management continues to evaluate the
carrying value of its entire investment in RCN.  Consistent with
the performance of the telecommunication sector as a whole, the
market value of RCN's common shares has decreased significantly
over the past several quarters.  Management has determined that
this decline in market value is "other-then-temporary" in
accordance with the SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."

In addition, during the first quarter of 2001, the status of the
amendment to the Joint Venture Agreement with RCN regarding the
7.5 million shares, lead management to determine that its
investment in the joint venture was also impaired based on future
market expectations for RCN common shares related to this
investment.

Therefore, NSTAR Com, recognized an impairment of its entire
investment in RCN in the first quarter of 2001.  This write-down
resulted in an one-time, 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."

The RCN shares received, as well as the remaining interest in the
joint venture related to the pending 7.5 million shares, are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $50.6 million at June 30, 2001.  The fair value of
the shares currently held may increase or decrease, at any time,
as a result of changes in the market value of RCN common shares.
The unrealized gain or loss associated with shares currently held
will fluctuate due to the changes in fair value of these shares
during each period and is reflected, net of associated income
taxes, as Comprehensive (loss) income on the accompanying
Condensed Consolidated Statements of Comprehensive Income (Loss).
The cumulative increase or decrease in fair value of these shares
as of June 30, 2001 and December 31, 2000 is reflected as
Accumulated other comprehensive income (loss) on the accompanying
Condensed Consolidated Balance Sheets.  Management will continue
to evaluate the carrying value of its investment in RCN.

At June 30, 2001 and December 31, 2000, NSTAR Com had $4.5
million and $47.9 million, respectively, in accounts receivable
due from RCN.

E)  Other Investments

In the second quarter of 2001, NSTAR completed its determination
of the accounting for equity securities it previously received in
connection with the demutualization of John Hancock Mutual Life
Insurance Company and Metropolitan Life Insurance Company.  NSTAR
and its subsidiaries, as policyholders, received a distribution
of common stock of each company.  As a result, NSTAR recognized
$4.5 million of other income on these transactions.

These securities are currently available for sale and are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets.  The value of these common shares
was adjusted to reflect market values as of June 30, 2001.  The
unrealized gain or loss associated with these shares will
fluctuate due to changes in current market values and is
reflected net of applicable income taxes and is included as a
component of Comprehensive income (loss) on the accompanying
Condensed Consolidated Statements of Comprehensive Income (Loss).
The cumulative increase or decrease in fair value of these shares
as of June 30, 2001 is reflected as Accumulated other
comprehensive income (loss) on the accompanying Condensed
Consolidated Balance Sheets.

F)  Contingencies

1. Environmental Matters

The subsidiaries of NSTAR are involved in approximately 30 state-
regulated properties where oil or other hazardous materials were
previously spilled or released.  The companies are required to
clean up these properties in accordance with specific state
regulations.  There are uncertainties associated with these costs
due to the complexities of cleanup technology, regulatory
requirements and the particular characteristics of the different
sites.  NSTAR subsidiaries also face possible liability as a
potentially responsible party (PRP) in the cleanup of six multi-
party hazardous waste sites in Massachusetts and other states
where it is 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.  Approximately $6.3 million and $7 million is
included as a liability in the accompanying Condensed
Consolidated Balance Sheets at June 30, 2001 and December 31,
2000, respectively, related to the non-recoverable portion of
these cleanup liabilities.  Management is unable to fully
determine a range of reasonably possible cleanup costs in excess
of the accrued amount.  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.  However, it
is reasonably possible that additional provisions for cleanup
costs that may result from a change in estimates could have a
material impact on the results of a reporting period in the near
term.

NSTAR Gas is participating in the assessment of a number of
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.  As of June 30, 2001, NSTAR Gas has
recorded a liability of $2.6 million as an estimate for site
cleanup costs for several MGP sites for which NSTAR Gas was
previously cited as a PRP.

Estimates related to environmental remediation costs are reviewed
and adjusted periodically as further investigation and assignment
of responsibility occurs. NSTAR is unable to estimate its
ultimate liability for future environmental remediation costs.
However, 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.

2. Industry and Corporate Restructuring Legal Proceedings

The MDTE order approving the Boston Edison electric restructuring
settlement agreement was appealed by certain parties to the
Massachusetts Supreme Judicial Court.  One appeal remains
pending.  However, there has to date been no briefing, hearing or
other action taken with respect to this proceeding.
However, if an unfavorable outcome were to occur, there could be
a material adverse impact on business operations, the
consolidated financial position, cash flows and the results of
operations for a reporting period.

3. Regulatory Proceedings

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 1999.

In a Boston Edison 1999 reconciliation filing with the MDTE, the
Massachusetts Attorney General contested cost allocations related
to Boston Edison's wholesale customers since 1998.  On June 1,
2001, the MDTE approved Boston Edison's revenue-credit ratemaking
approach for wholesale sales to be consistent with Boston
Edison's restructuring settlement and MDTE precedent that
predated industry restructuring.  The accounting reconciliation
of wholesale revenues and costs will be addressed in Boston
Edison's outstanding filing covering the 1999 and 2000
reconciliation.

In October 1997, the MDTE opened a proceeding to investigate
Boston Edison's compliance with a 1993 order that permitted the
formation of Boston Energy Technology Group and authorized Boston
Edison to invest up to $45 million in non-utility activities.
Hearings were completed during 1999.  Management is currently
unable to determine the timing and outcome of this proceeding.
However, if an unfavorable outcome were to occur, there could be
a material adverse impact on business operations, the
consolidated financial position, cash flows and results of
operations for a reporting period.

On June 13, 2001, the MDTE approved a settlement agreement
between Cambridge Electric and the Massachusetts Institute of
Technology (MIT) involving a dispute over the customer transition
charge (CTC) assessed by Cambridge Electric to MIT.  Under the
settlement, Cambridge Electric has refunded to MIT approximately
$1.7 million and MIT has withdrawn (i) its appeal at the
Massachusetts Supreme Judicial Court of the MDTE's rate order
associated with the merger of BEC Energy and Commonwealth Energy
System and (ii) its separate rate complaint at the MDTE involving
the CTC.

4. Other Litigation

In the normal course of its business, NSTAR and its subsidiaries
are also involved in certain other legal matters.  Management is
unable to fully determine a range of reasonably possible legal
costs in excess of amounts accrued.  Based on the information
currently available, it does not believe that it is probable that
any such additional costs will have a material impact on its
consolidated financial position.

F)  Income Taxes
<TABLE>
<CAPTION>
The following table reconciles the statutory federal income tax
rate to the annual estimated effective income tax rate for 2001
and the actual effective income tax rate for the year ended
December 31, 2000:
<S>                                         <C>        <C>
                                             2001       2000
Statutory tax rate                           35.0%      35.0%

State income tax, net of federal income tax
  benefit                                     5.6        5.1
Investment tax credits                       (1.3)      (0.6)
Write-down of RCN investment
 (federal and state)                         48.4         -
Other                                         4.6        2.1
  Effective tax rate                         92.3%      41.6%
                                             ====       ====
</TABLE>

Income tax expense includes $5.6 million related to the write-
down of the RCN investment, net as reflected on the accompanying
Condensed Consolidated Statements of Income.  This $5.6 million
charge was recognized due to the fact that NSTAR Com had recorded
a deferred tax asset in excess of what is currently deemed
realizable.  In addition, NSTAR Com has determined that no
current tax benefit is anticipated on the write-down of its
remaining joint venture investment.  Therefore, NSTAR Com has
recorded a $64.5 million valuation allowance for the entire tax
benefit related to the write-down of its RCN investment.  If all
or a portion of these tax benefits are ultimately realized, NSTAR
Com will reflect a corresponding reduction in income tax expense.
Excluding the income tax effect of the RCN impairment charge and
the estimated valuation allowance, the effective tax rate would
have been approximately 42.7%.

G)  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.
Statement of Financial Accounting Standards 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 Stock 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       Six Months Ended
                                      June 30,               June 30,
                                  2001       2000         2001       2000
Before one-time RCN charge:
  Earnings available for
   common shareholders       $  36,220   $  31,438   $  76,418  $  67,047

  Basic EPS                      $0.68       $0.57       $1.44      $1.19
  Diluted EPS                    $0.68       $0.56       $1.44      $1.18
After one-time RCN charge:
  Earnings (loss) available
   for common shareholders   $  36,220   $  31,438   $ (97,526) $  67,047
  Basic EPS                      $0.68       $0.57      $(1.84)     $1.19
  Diluted EPS                    $0.68       $0.56      $(1.83)     $1.18
Weighted average common
shares   outstanding for        53,033      55,597      53,033     56,430
basic EPS

Effect of diluted shares:
Weighted average dilutive
  potential common shares          181         181         145        161
Weighted average common
  shares outstanding
  for diluted EPS               53,214      55,778      53,178     56,591

</TABLE>

H)  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 operating segments engage in
business activities that include telecommunications, district
heating and cooling operations, and liquefied natural gas
services.
<TABLE>
<CAPTION>
Financial data for the operating segments are as follows:
<S>                       <C>           <C>        <C>           <C>
                             Utility Operations     Non-Utility   Consolidated
                              Electric      Gas     Operations       Total
Three months ended June 30,
2001
Operating revenues         $   641,020    $ 65,634   $ 25,619      $  732,273
Segment net income (loss)  $    42,350    $ (1,073)  $ (3,567)     $   37,710

2000
Operating revenues         $   542,178    $ 68,388   $ 19,628      $  630,194
Segment net income (loss)  $    32,789    $  1,961   $ (1,822)     $   32,928


Six months ended June 30,
2001
Operating revenues         $ 1,276,817    $262,808   $ 57,470      $1,597,095
Segment net income (loss)  $    69,991    $ 15,413  $(179,950)     $  (94,546)

2000
Operating revenues         $ 1,057,993    $194,409   $ 36,310      $1,288,712
Segment net income (loss)  $    56,509    $ 18,044   $ (4,526)     $   70,027

Total assets
June 30, 2001              $ 4,609,514    $522,778   $320,392      $5,452,684
December 31, 2000          $ 4,529,014    $534,430   $484,271      $5,547,715

</TABLE>
Item 2.  Management's Discussion and Analysis

NSTAR is an energy delivery company serving approximately 1.3
million customers in Massachusetts including more than one
million electric customers in 81 communities and 244,000 gas
customers in 51 communities.  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
Electric).  Effective November 1, 2000, NSTAR's three retail
electric companies are operating under the brand name "NSTAR
Electric."  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 liquefied natural gas services (Hopkinton LNG
Corp.).

The electric and natural gas industries have continued to change
in response to legislative, regulatory and marketplace demands
for improved customer service at lower prices.  These demands
have resulted in an increasing trend in the industry to seek
competitive advantages and other benefits through business
combinations.  NSTAR was created to operate in this new
marketplace by combining the resources of its utility
subsidiaries and concentrating its activities in the transmission
and distribution of energy.

Goodwill and Costs to Achieve Amortization

Goodwill on the accompanying Condensed Consolidated Balance
Sheets is associated with the merger of BEC Energy (BEC) and
Commonwealth Energy System (COM/Energy), effective August 25,
1999.  The merger was accounted for by NSTAR as an acquisition of
COM/Energy by BEC under the purchase method of accounting.  An
integral part of the merger is the rate plan of the retail
utility subsidiaries of BEC and COM/Energy that was approved by
the Massachusetts Department of Telecommunications and Energy
(MDTE) in July 1999.  Significant elements of the rate plan
include a four-year distribution rate freeze, recovery of the
acquisition premium (goodwill) of approximately $490 million over
40 years resulting in annual amortization of approximately $12.2
million, and recovery of filed transaction and integration costs
(costs to achieve) of $111 million over 10 years.  NSTAR's retail
utility subsidiaries will reconcile the ultimate costs to achieve
with that estimate, and any difference is expected to be
recovered over the remainder of the amortization period.  As a
result of the merger, cost savings have been realized due to
reduced staffing levels and operating efficiencies.  Future cost
savings are expected to result from the avoidance of costs that
would have otherwise been incurred by BEC and COM/Energy.

Refer to "New Accounting Standards" below for a further
discussion on Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets," effective for fiscal
years beginning after December 15, 2001.

Generating Assets Divestiture

On October 26, 2000, the MDTE approved the filing made by
Cambridge Electric and ComElectric (together, "the Companies")
for the partial buydown of their contract with Canal Electric for
power from the Seabrook nuclear generating facility (Seabrook
Contract).  The buydown transaction was effected by means of an
amendment to the Seabrook Contract.  In November 2000, a total of
$141.6 million of funds held by an affiliate, Energy Investment
Services, Inc. (EIS), was transferred to ComElectric and
Cambridge Electric.  EIS was established as the vehicle to invest
the net proceeds from the sale of the Companies' generation
assets.  The Companies, in turn, reduced their respective future
stranded costs to be recovered from customers.  The Federal
Energy Regulatory Commission approved Canal's request to amend
the Seabrook Contract on March 6, 2001 to reflect the buydown
effective November 1, 2000.  Approval of a November 1, 2000
buydown amount is pending at the MDTE.

Retail Electric Rates

The 1997 Massachusetts Electric Restructuring Act (Restructuring
Act) requires electric distribution companies to obtain and
resell power to retail customers, which choose not to buy energy
from a competitive energy supplier through either standard offer
service or default service.  As a result of the Restructuring
Act, standard offer customers of the retail electric subsidiaries
of NSTAR currently pay rates that are 15% lower, on an inflation-
adjusted basis, than rates in effect prior to March 1, 1998, the
retail access date.  All distribution customers must pay a
transition charge as a component of their rate.

From March 1, 1998, NSTAR Electric's accumulated cost to provide
default and standard offer service was in excess of the revenues
it was allowed to bill.  As a result, NSTAR recorded a regulatory
asset of approximately $242.7 million at December 31, 2000 that
is reflected as a component of Current assets on the accompanying
Condensed Consolidated Balance Sheets.  As a result of new rates
for standard offer and default service that became effective
January 1, 2001, the regulatory asset has declined to $176.7
million as of June 30, 2001.

The retail electric subsidiaries of NSTAR must, on an annual
basis, file a forecast reconciliation of their rates for the
upcoming year along with any proposed adjustments of prior year
revenues and costs for standard offer, default service,
transmission and transition charges.  The MDTE will approve rates
for the coming year before the current year-end to allow the new
rates to become effective the first of January.  Later in the
year, the estimates for the prior year are trued-up to the actual
amounts for the year.  The MDTE reviews these costs and approves
the amounts subject to any required adjustments.  Occasionally,
an issue will be left to be resolved in a later filing.  This was
the case with the wholesale revenue credit issue for Boston
Edison that was resolved in the June 1, 2001 order.

In November 2000, the retail electric subsidiaries of NSTAR made
filings containing proposed rate adjustments for 2001, including
a reconciliation of costs and revenues through 2000 (the filing
was updated in April 2001 to include final costs for 2000).  The
MDTE has approved Tariffs effective January 1, 2001.  The MDTE
has not yet ruled on the reconciliation component of these
filings.  Management is unable to determine the outcome of the
MDTE proceedings.  However, based upon past procedures and on
information currently available, management does not believe that
it is probable that the final MDTE approval will have a material
adverse impact on NSTAR's consolidated financial position,
results of operations and cash flows in the near term.

In addition to the annual rate filings referenced above, retail
electric subsidiaries of NSTAR also made separate filings with
the MDTE concerning charges for a standard offer fuel adjustment
and for default service.  In December 2000, the MDTE approved an
increase of 1.321 cents per kWh in each company's standard offer
service rates for the first-half of 2001, and in June 2001, the
MDTE approved an additional increase of 1.23 cents per kWh based
on a fuel adjustment formula contained in its standard offer
tariffs that reflects the prices of natural gas and oil.  The
MDTE has ruled that these fuel adjustments are excluded from the
15% rate reduction requirement under the Restructuring Act.  The
MDTE will re-examine these rates in January 2002.

In December 2000 and June 2001, the MDTE approved market-based
default service rates for each company for the first and second
six-month periods of 2001, respectively.  Approximately one-third
of NSTAR Electric's customers are currently on default service
and, beginning in July 2001, these customers will automatically
be provided with either a fixed or a variable price, depending on
their rate class.  These and future prices for default service
are based upon market solicitations for power supply for default
service consistent with provisions of the Restructuring Act and
MDTE orders.

Long-Term Power Purchase Contracts

NSTAR Electric has existing long-term power purchase contracts.
These long-term contracts are expected to supply approximately
90%-95% of its standard offer service obligations.  NSTAR
Electric has entered into six-month and shorter-term agreements
to meet the remaining standard offer service obligation.  In July
2001, NSTAR Electric issued a request for proposals for standard
offer and wholesale service requirements commencing January 1,
2002 for a term of between six and thirty-eight months.

In November 2000, NSTAR Electric entered into power purchase
agreements to meet its entire default service supply obligation
for the period January through June of 2001.  In May 2001, NSTAR
Electric entered into purchased power agreements to meet the
default service obligation for the remainder of 2001.  NSTAR
Electric expects to continue to make periodic market
solicitations for default service power supply consistent with
provisions of the Restructuring Act and MDTE orders.  The cost of
providing standard offer and default service, which includes
purchased power costs, is recovered from customers on a fully
reconciling basis.

Natural Gas Industry Restructuring and Rates

Effective November 1, 2000, the MDTE approved regulations that
provide for full customer choice to LDCs (local distribution
companies) such as NSTAR Gas.  NSTAR Gas has modified its
billing, customer and gas supply systems to accommodate full
retail choice.  The MDTE previously had approved the compliance
process submitted by NSTAR Gas and other LDCs that implement the
unbundling of retail gas services to all customers.  Among the
important provisions are: setting the LDC as the default service
provider, certification of competitive suppliers/marketers,
extension of the MDTE's consumer protection rules to residential
customers taking competitive service, requirement for LDCs to
provide suppliers/marketers with customer usage data, and
requirement for suppliers/marketers to disclose service terms to
potential customers.  The MDTE has also ruled on requiring the
mandatory assignment of the LDC's upstream pipeline and storage
capacity and downstream peaking capacity to customers who elect a
competitive gas supply during a three-year transition period.
This eliminates potential stranded cost exposure for the LDCs
until they are relieved from their responsibility as suppliers of
last resort and the establishment of a "workably competitive"
interstate pipeline capacity market.  Gas restructuring is not
likely to have a significant financial impact on LDCs.

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.

NSTAR Gas' sales are positively impacted by colder weather
because a substantial portion of its customer base uses natural
gas for space heating purposes.

In December 2000 and in a revised filing in January 2001, NSTAR
Gas filed for interim increases to its CGAC for the period
February through April 2001 in order to recover significant
increases in the costs to buy natural gas supplies.  These
filings were made to ensure that prices to customers are set at
levels that recover all incurred costs in order to avoid the
accumulation of significant under-recoveries that would impair
NSTAR Gas' ability to serve its customers.  On January 31, 2001,
the MDTE approved an adjustment to increase the CGAC factor to
$1.1123 per therm from the prior factor of $0.7608 per therm.
Subsequently, on February 28, 2001, as a result of a decline in
wholesale natural gas prices, NSTAR Gas received approval from
the MDTE to reduce the factor per therm to $0.94 effective March
1, 2001.  Furthermore, in conjunction with its semi-annual filing
made on March 15, 2001, NSTAR Gas proposed a CGAC factor of
$0.7754 per therm for the period commencing May 1, 2001 through
October 31, 2001.  This factor, approved by the MDTE, includes
the collection in the summer period of a portion of next winter's
gas costs in order to reduce cost deferrals projected for the end
of October 2001.

Results of Operations - Three Months Ended June 30, 2001 vs.
Three Months Ended June 30, 2000
<TABLE>
<CAPTION>
Earnings per common share were as follows:
<S>                         <C>        <C>    <C>
                            Three Months Ended June 30,

                               2001     2000   % Change

 Basic                        $0.68    $0.57     19.3%
 Diluted                      $0.68    $0.56     21.4%
</TABLE>

Earnings were $36.2 million, or $0.68 per basic and diluted
common share, for the second quarter of 2001 compared to $31.4
million, or $0.57 per basic and $0.56 per diluted common share in
the same period of 2000.  Factors that contributed to the $4.8
million improvement in earnings include an increase of 1.1% in
retail electric sales, an increase of approximately $3.3 million
(after-tax) in mitigation incentive revenue, a decline in
operations and maintenance expenses of approximately $3.3 million
and $4.5 million in other income related to shares received
resulting from insurance companies' demutualization (as further
discussed below).  These factors were partially offset by a
decline in firm gas and transportation sales of 10.6%, the
absence in the current period of $4.5 million in interest income
from a former wholesale customer related to the Pilgrim contract
buyout and higher current period interest costs resulting from
higher short-term debt primarily reflecting higher power supply
costs.

Earnings per common share for the second quarter of 2001 reflect
a lower level of common shares outstanding resulting from the
repurchase of approximately 2.6 million shares during the second
quarter of 2000.  The results of operations for the three-month
period ended June 30, 2001 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
Unaudited Condensed Consolidated Financial Statements.

Operating revenues
<TABLE>
<CAPTION>
Operating revenues increased 16% during the second quarter of
2001 as follows:
<S>                                             <C>
  (in thousands)
  Retail electric revenues                      $ 109,968
  Wholesale electric revenues                         514
  Other revenues                                   (4,223)
  Gas revenues                                     (4,180)
    Increase in operating revenues              $ 102,079

</TABLE>

Retail electric revenues were $594 million in the second quarter
of 2001 compared to $484 million in the same period of 2000, an
increase of $110 million, or 23%.  The change in retail revenues
includes a 1.1% increase in retail kilowatt-hour (kWh) sales,
higher rates implemented in January 2001 for standard offer and
default services ($114.3 million) and the recognition of
incentive revenue entitlements for successfully lowering certain
transition charges ($5.5 million).  These increases in revenue
were partially offset by a $2.8 million decline in transition
revenues and the absence in the current quarter of $4.7 million
in customer refunds made in the second quarter of 2000.  The
increase in NSTAR's retail revenues related to standard offer and
default services are fully reconciled to the costs incurred and
have no impact on net income.  The current quarter's 1.1%
increase in retail kWh sales primarily reflects growth in the
residential and commercial sectors of 1.4% and 2.6%,
respectively.  NSTAR Electric's sales to residential and
commercial customers were approximately 29% and 60%,
respectively, of its total retail sales mix for the current three-
month period.

Wholesale electric revenues were $19.5 million in the second
quarter of 2001 compared to $19 million in the same period of
2000, an increase of $0.5 million, or 3% due primarily to
increased demand from a public transit authority.

Other revenues were $52.6 million in the second quarter of 2001
compared to $56.8 million in the same period of 2000, a decrease
of $4.2 million, or 7%.  This decrease primarily reflects lower
non-utility revenues.

Gas revenues were $66.2 million in the second quarter of 2001
compared to $70.3 million in the same period of 2000, a decrease
of $4.1 million, or 6%.  The decrease in revenues is primarily
attributable to the 10.6% decline in firm sales and
transportation service, partially offset by the higher cost of
gas supply.  NSTAR Gas' firm and transportation sales to
residential and combined commercial and industrial customers were
each approximately 47% of total firm sales and transportation for
the current quarter.

Operating expenses

Purchased power costs were $395.1 million in the second quarter
of 2001 compared to $293.6 million in the same period of 2000, an
increase of $101.5 million, or 35%.  The increase in expense
reflects higher purchased power requirements due to a 1.1%
increase in retail and wholesale sales and higher purchased power
costs that reflect the prices of natural gas and oil.  NSTAR
adjusts its electric rates to collect the costs related to energy
supply from customers on a fully reconciling basis.  Due to the
rate adjustment mechanisms, changes in the amount of energy
supply expense have no impact on earnings.  The cost of gas sold,
representing NSTAR Gas' supply expense, was $39.3 million for the
second quarter of 2001 compared to $39.5 million in the same
period of 2000, a decrease of $0.2 million or 1% primarily due to
a 10.6% decrease in firm gas and transportation sales.  These
expenses are also fully reconciled to the current level of
revenues collected and therefore, have no impact on net income.

Operations and maintenance expense was $95 million in the second
quarter of 2001 compared to $98.3 million in the same period of
2000, a decrease of $3.3 million, or 3%.  This decrease reflects
lower expenses primarily resulting from a decrease in employment
benefits and from merger-related operating efficiencies.

Depreciation and amortization expense was $55 million in the
second quarter of 2001 compared to $59.7 million in the same
period of 2000, a decrease of $4.7 million, or 8%.  The decrease
reflects the buy-down of the Seabrook investment in November 2000
utilizing a portion of the proceeds from the sale of Canal
Electric's generating units, partially offset by a slightly
higher level of depreciable plant in service.

Demand side management (DSM) and renewable energy programs
expense was $18.7 million in the second quarter of 2001 compared
to $17.6 million in the same period of 2000, an increase of $1.1
million, or 6% primarily due to increased spending levels for
programs.  These costs are collected from customers on a fully
reconciling basis.  Therefore, the increase has no impact on
earnings.

Property and other taxes were $22.5 million in the second quarter
of 2001 compared to $20.9 million in the same period of 2000, an
increase of $1.6 million, or 8%.  The increase was due to the
fact that during 2000, Boston Edison was reimbursed for the
majority of its payments, in lieu of property taxes, to the Town
of Plymouth by Entergy.  Entergy purchased the Pilgrim Station in
1999.

Income taxes from operations were $25 million in the second
quarter of 2001 compared to $23.6 million in the same period of
2000, an increase of $1.4 million, or 6%, reflecting higher pre-
tax operating income.

Other income

Other income was $3.7 million in the second quarter of 2001
compared to $3.4 million in the same period of 2000, a net
increase of $0.3 million.  The current period primarily reflects
$4.5 million of income associated with the receipt of common
stock in connection with the demutualization of two insurance
companies and interest income supporting a construction financing
loan on the Summit office complex.  In the second quarter of
2000, Boston Edison recognized $4.5 million of interest income
from a former wholesale contract customer associated with the
Pilgrim contract buyout.

Interest charges

Interest on long-term debt and transition property securitization
certificates was $40 million in the second quarter of 2001
compared to $39.3 million in the same period of 2000, an increase
of $0.7 million, or 2%.  The increase primarily reflects issuance
of $200 million of 8% NSTAR bonds in October 2000, offset by the
retirement of several long-term debt issues during the second
half of 2000 by Boston Edison.  The current period also reflects
a reduction of securitization certificates interest of $1 million
due to the partial retirement of this debt.  Other interest
expense decreased $0.6 million, or 6%, due to lower rates, offset
by higher bank borrowings.

Results of Operations - Six Months Ended June 30, 2001 vs. Six
Months Ended June 30, 2000
<TABLE>
<CAPTION>
Earnings (loss) per common share were as follows:

<S>                              <C>         <C>     <C>
                                    Six Months Ended June 30,
                                      2001     2000   % Change

 Basic
 Before one-time RCN charge          $1.44    $1.19       21.0
 After one-time RCN charge          $(1.84)   $1.19     (254.6)

 Diluted
 Before one-time RCN charge          $1.44    $1.18       22.0
 After one-time RCN charge          $(1.83)   $1.18     (255.1)
</TABLE>

Earnings before the one-time RCN charge were $76.4 million, or
$1.44 per basic and diluted common share, for the first half of
2001 before a one-time, non-cash, after-tax charge of $173.9
million, or $3.28 per basic share, related to NSTAR's total
investment in RCN Corporation (RCN).  Factors that contributed to
the $9.4 million, or 14%, improvement in earnings before the one-
time charge include an increase in retail electric sales of 1.1%,
an increase in firm gas and transportation sales of 1.9%, lower
operations and maintenance expenses, a decrease of approximately
3.4 million common shares outstanding and a one-time gain ($2.9
million after-tax or approximately $0.05 per share) associated
with the receipt of equity securities issued in conjunction with
the demutualization of two mutual insurance companies who provide
coverage to NSTAR subsidiaries.  These factors were offset
somewhat by higher interest costs that reflect the issuance of
approximately $500 million in long-term debt during 2000 and a
higher level of short-term debt.

As previously disclosed and further discussed in this report,
NSTAR is in the process of converting its joint venture
investment in RCN into shares of RCN common stock.  NSTAR's
investment in RCN includes 4.1 million common shares that it
currently holds and 7.5 million common shares that it expects to
receive for its remaining interest in the joint venture.
Consistent with the performance of the telecommunications sector
as a whole, the market value of RCN's common shares has decreased
significantly over the past several months.  As a result, NSTAR
recognized an impairment of its investment in RCN.  NSTAR
determined that this decline in market value is "other-than-
temporary" as defined by SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."  Including the impact
of this adjustment, which resulted in a one-time, non-cash, after-
tax charge of $173.9 million, NSTAR reported a loss of $97.5
million, or $1.84 per basic share and $1.83 per diluted share,
for the six months ended June 30, 2001, compared to earnings of
$67 million, or $1.19 per basic share and $1.18 per diluted
share, for the same period in 2000.

Earnings per common share for the first-half of 2001 reflect a
lower level of common shares outstanding resulting from the
repurchase of 3.4 million shares during 2000 that had a positive
impact of approximately nine cents per share.  The results of
operations for the six-months ended June 30, 2001 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 Unaudited Condensed
Consolidated Financial Statements.

Operating revenues
<TABLE>
<CAPTION>
Operating revenues increased 24% during the first half of 2001 as
follows:
<S>                                           <C>
  (in thousands)
  Retail electric revenues                       $ 218,461
  Wholesale electric revenues                        5,862
  Other revenues                                    14,461
  Gas revenues                                      69,599
    Increase in operating revenues               $ 308,383
</TABLE>

Retail electric revenues were $1,178.6 million in the first half
of 2001 compared to $960.1 million in the same period of 2000, an
increase of $218.5 million, or 23%.  The change in retail
revenues includes higher rates implemented in January 2001 for
standard offer ($91.5 million) and default services ($122
million), a 1.1% increase in retail kilowatt-hour (kWh) sales,
the absence in the current period of a $31 million fuel charge
refund to customers in the same period last year and the
recognition in the current period, of incentive revenue
entitlements for successfully lowering certain transition charges
($11 million).  These increases in revenue were partially offset
by an $18.4 million decline in transition revenues due to a
decline in rates charged to customers.  The increase in NSTAR's
retail revenues related to standard offer and default services
are fully reconciled to the costs incurred and have no impact on
net income.  The 1.1% increase in year-to-date retail kWh sales
primarily reflects growth in the residential and commercial
sectors of 2.5% and 1.9%, respectively.  NSTAR Electric's sales
to retail residential and commercial customers were approximately
31% and 58%, respectively, of its total retail sales mix for the
current six-month period.

Wholesale electric revenues were $45.2 million in the first half
of 2001 compared to $39.4 million in the same period of 2000, an
increase of $5.8 million, or 15%.  This increase in wholesale
revenues primarily reflects increased demand from a public
transit authority.

Other revenues were $109.9 million in the first half of 2001
compared to $95.4 million in the same period of 2000, an increase
of $14.5 million, or 15%.  This increase primarily reflects
higher steam operations revenues as a result of an increase in
fuel costs.

Gas revenues were $263.4 million in the first half of 2001
compared to $193.8 million in the same period of 2000 an increase
of $69.6 million, or 36%.  The increase in revenues is primarily
attributable to a 1.7% increase in firm sales and transportation
service reflecting a 2.6% increase in heating degree days
combined with a significant increase in the cost of gas from
suppliers.  NSTAR's sales to firm residential and combined
commercial and industrial customers were approximately 51% and
43%, respectively, of its total firm sales and transportation for
the current six-month period.

Operating expenses

Purchased power costs were $793.3 million in the first half of
2001 compared to $570.3 million in the same period of 2000, an
increase of $223 million, or 39%.  The increase in expense
reflects higher purchased power requirements due to a 1.1%
increase in retail sales, an increase in wholesale sales, and
higher purchased power costs that reflect the higher prices of
natural gas and oil.  NSTAR adjusts its electric rates to collect
the costs related to energy supply from customers on a fully
reconciling basis.  Due to the rate adjustment mechanisms,
changes in the amount of energy supply expense have no impact on
earnings.  The cost of gas sold, representing NSTAR Gas' supply
expense, was $171.8 million for the first half of 2001 compared
to $103.7 million in the same period of 2000, an increase of
$68.1 million or 66% due to a 1.9% increase in firm gas sales and
transportation coupled with substantially higher costs from gas
suppliers.  These expenses are also fully reconciled to the
current level of revenues collected.

Operations and maintenance expense was $203.3 million in the
first half of 2001 compared to $208.8 million in the same period
of 2000, a decrease of $5.5 million, or 3%.  This decrease
reflects lower payroll and employee benefit expenses primarily
resulting from lower staffing levels and merger-related operating
efficiencies.

Depreciation and amortization expense was $114.1 million in the
first half of 2001 compared to $118 million in the same period of
2000, a decrease of $3.9 million, or 3%.  The decline reflects
the buy-down of the Seabrook investment in November 2000
utilizing a portion of the proceeds from the sale of Canal
Electric's generating units, partially offset by a slightly
higher level of depreciable plant in service.

Demand side management (DSM) and renewable energy programs
expense was $38.3 million in the first half of 2001 compared to
$35.7 million in the same period of 2000, an increase of $2.6
million, or 7% primarily due to increased spending levels for
programs.  These costs are collected from customers on a fully
reconciling basis.  Therefore, the increase has no impact on
earnings.

Property and other taxes were $49.6 million in the first half of
2001 compared to $46.7 million in the same period of 2000, an
increase of $2.9 million, or 6%.  The increase was due to the
fact that during 2000, Boston Edison was reimbursed for the
majority of its payments, in lieu of property taxes, to the Town
of Plymouth by Entergy.  Entergy purchased the Pilgrim Station in
1999.  This increase was partially offset by lower property taxes
paid to the City of Boston of $1.1 million.

Income taxes from operations were $55.7 million in the first half
of 2001 compared to $49.1 million in the same period of 2000, an
increase of $6.6 million, or 13%, reflecting higher pre-tax
operating income.

Other income (deductions)

Other deductions were $170.9 million in the first half of 2001
compared to income of $6 million in the same period of 2000, a
net decrease in income of $176.9 million directly attributable to
the aforementioned one-time, non-cash, after-tax charge related
to the carrying value of the RCN investment that is discussed
more fully below.  The current year includes $4.5 million of
income associated with the receipt of common stock in connection
with the demutualization of two insurance companies, offset by a
decline in joint venture income from a subsidiary minority
interest.  In addition, in the second quarter of 2000, Boston
Edison recognized $4.5 million of interest income from a former
wholesale contract customer associated with the Pilgrim contract
buyout.

Interest charges

Interest on long-term debt and transition property securitization
certificates was $80.5 million in the first half of 2001 compared
to $75.9 million in the same period of 2000, an increase of $4.6
million, or 6%.  The increase reflects the issuance of $300
million and $200 million of 8% NSTAR bonds in February and
October of 2000, respectively, offset somewhat by the retirement
of $199 million in Boston Edison debt throughout 2000.  The
current period reflects a reduction of securitization
certificates interest of $2.2 million due to the partial
retirement of this debt.  Other interest expense decreased $2.3
million, or 12.6%, due to lower interest rates, higher levels of
interest income related to regulatory deferrals, offset by higher
short-term borrowing from banks.  The increase in borrowing is
primarily the result of working capital requirements.

RCN Joint Venture and Investment Conversion

NSTAR Com is a participant in a telecommunications venture with
RCN Telecom Services, Inc. of Massachusetts, a subsidiary of RCN
Corporation (RCN).  NSTAR Com has accounted for its equity
investment in the joint venture using the equity method of
accounting.  As part of the Joint Venture Agreement, NSTAR Com
has the option to exchange portions of its joint venture interest
for common shares of RCN at specified periods.  To date, NSTAR
Com has received approximately 4.1 million shares of RCN common
shares from prior exchanges of its joint venture interest.

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 and therefore NSTAR Com no longer recognized any results of
operations from its interest in the joint venture.  During the
period January 1, 2000 through April 6, 2000, NSTAR Com
recognized $5.6 million in equity losses from the joint venture
and has not recorded any further joint venture losses since that
date.

On October 18, 2000, NSTAR Com and RCN signed an agreement in
principle to amend the Joint Venture Agreement.  Among other
items, this proposal settled the number of shares to be received
for the third conversion of NSTAR Com's remaining equity
investment at 7.5 million shares.  Management anticipates having
a final amended Joint Venture Agreement in place in 2001.

As previously disclosed, management continues to evaluate the
carrying value of its entire investment in RCN.  Consistent with
the performance of the telecommunication sector as a whole, the
market value of RCN's common shares has decreased significantly
over the past several quarters.  Management has determined that
this decline in market value is "other-then-temporary" in
accordance with the SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."

In addition, during the first quarter of 2001, the status of the
amendment to the Joint Venture Agreement with RCN regarding the
7.5 million shares, lead management to determine that its
investment in the joint venture was also impaired based on future
market expectations for RCN common shares related to this
investment.

Therefore, NSTAR Com, recognized an impairment of its entire
investment in RCN in the first quarter of 2001.  This write-down
resulted in a one-time, 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."

The RCN shares received, as well as the remaining interest in the
joint venture related to the pending 7.5 million shares, are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets at their estimated fair value of
approximately $50.6 million at June 30, 2001.  The fair value of
the shares currently held may increase or decrease, at any time,
as a result of changes in the market value of RCN common shares.
The unrealized gain or loss associated with shares currently held
will fluctuate due to the changes in fair value of these shares
during each period and is reflected, net of associated income
taxes, as Comprehensive (loss) income on the accompanying
Condensed Consolidated Statements of Comprehensive Income (Loss).
The cumulative increase or decrease in fair value of these shares
as of June 30, 2001 and December 31, 2000 is reflected as
Accumulated other comprehensive income (loss) on the accompanying
Condensed Consolidated Balance Sheets.  Management will continue
to evaluate the carrying value of its investment in RCN.

At June 30, 2001 and December 31, 2000, NSTAR Com had $4.5
million and $47.9 million, respectively, in accounts receivable
due from RCN.

Other Investments

In the second quarter of 2001, NSTAR completed its determination
of the accounting for equity securities it previously received in
connection with the demutualization of John Hancock Mutual Life
Insurance Company and Metropolitan Life Insurance Company.  NSTAR
and its subsidiaries, as policyholders, received an appropriate
distribution of common stock of each company.  As a result, NSTAR
recognized $4.5 million of other income on these transactions.

These securities are currently available for sale and are
included in Other investments on the accompanying Condensed
Consolidated Balance Sheets.  The value of these common shares
was adjusted to reflect market values as of June 30, 2001.  The
unrealized gain or loss associated with these shares will
fluctuate due to changes in current market values and is
reflected net of applicable income taxes and is included as a
component of Comprehensive income (loss) on the accompanying
Condensed Consolidated Statements of Comprehensive Income (Loss).
The cumulative increase or decrease in fair value of these shares
as of June 30, 2001 is reflected as Accumulated other
comprehensive income (loss) on the accompanying Condensed
Consolidated Balance Sheets.

Liquidity

NSTAR and its subsidiaries supplement internally generated funds
as needed, primarily through the issuance of short-term
commercial paper and bank borrowings.

In February and October 2000, NSTAR issued $300 million and $200
million, respectively, 8% notes, due February 2010, of long-term
debt related to a $500 million shelf registration.  Proceeds from
these issues were used to reduce short-term borrowings.  These
increases in long-term debt were partially offset in 2000 by $199
million in long-term debt retirements, consisting of Boston
Edison debenture redemptions of $65 million (6.8% Series) in
February, $34 million (9.875% Series) in June and $100 million
(6.05% Series) in August.

NSTAR has a $450 million revolving credit agreement with a group
of banks effective through November 2002.  At June 30, 2001 and
December 31, 2000, there were no amounts outstanding under this
revolving credit agreement.  Also, NSTAR has a $450 million
commercial paper program.  At June 30, 2001 and December 31,
2000, NSTAR had $227 million and $252 million outstanding,
respectively, under its commercial paper program.

On June 15, 2001, Boston Edison notified the holders of its 9
3/8% Series Debentures, due August 15, 2021, that the entire
principal amount of these notes (approximately $24.3 million) has
been called for redemption on August 15, 2001.  The retirement of
this series is expected to be paid with internally-generated
funds.

Boston Edison has approval from the FERC to issue up to $350
million of short-term debt.  Boston Edison has a $200 million
revolving credit agreement with a group of banks effective
through December 2001.  As of June 30, 2001 and December 31,
2000, there were no amounts outstanding under this revolving
credit agreement.  In addition, Boston Edison also has a $100
million line of credit.  Both of these arrangements serve as back-
up to Boston Edison's $300 million commercial paper program that,
as of June 30, 2001 and December 31, 2000, had outstanding $278
million and $97 million, respectively.  Separately, Boston
Edison, effective July 20, 2001, has an additional $50 million
line of credit.

Boston Edison has approval from the MDTE to issue from time to
time up to $500 million of debt securities through 2002.
Proceeds from such issuances covered under this approved
financing will be used for repayment or refinancing of certain
outstanding equity securities, long-term indebtedness, and for
other corporate purposes.  On February 20, 2001, Boston Edison
filed a registration statement on Form S-3 with the Securities
and Exchange Commission (SEC), using a shelf registration
process, to issue up to $500 million in debt securities.  The SEC
declared the registration statement effective on February 28,
2001.  When issued, Boston Edison will use the proceeds to pay at
maturity long-term debt and equity securities, refinance short-
term debt and for other corporate purposes.

In addition, ComElectric, Cambridge Electric and NSTAR Gas,
collectively, have $195 million available under several lines of
credit.  Approximately $106.8 million and $120 million was
outstanding under these lines of credit as of June 30, 2001 and
December 31, 2000, respectively.

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.

New Accounting Standards

In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142).  This
Statement, which is effective for fiscal years beginning after
December 15, 2001, establishes accounting and reporting standards
for acquired goodwill and other intangible assets.  It prohibits
entities from continuing amortization of these assets.  Instead,
goodwill and other intangible assets will be subject to review
for impairment.  Management is currently assessing the impact of
SFAS 142 in light of its regulatory and accounting requirements.
Therefore, NSTAR is unable to reasonably estimate the impact of
the adoption of this statement.

As of January 1, 2001, NSTAR adopted the FASB SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133), as amended by Statements of Financial Accounting
Standards No. 137 and 138, and collectively referred to as SFAS
133.  SFAS 133 established accounting and reporting standards
requiring that every derivative instrument (including certain
derivative instruments embedded in contracts possibly including
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.

The impact of the adoption of SFAS 133 has been assessed by the
management of NSTAR.  As part of this assessment, NSTAR formed an
implementation team in 2000 consisting of key individuals from
various operational and financial areas of the organization.  The
primary role of this team was to inventory and determine the
impact of potential contractual arrangements for SFAS 133
application.  The implementation team has performed extensive
reviews of critical operating areas of NSTAR and has documented
its procedures in applying the requirements of SFAS 133 to
NSTAR's contractual arrangements in effect on January 1, 2001.
Based on NSTAR's assessment to date, the adoption of SFAS 133 has
not had a material adverse effect on its results of operations,
cash flows, or financial position.

Safe harbor cautionary statement

NSTAR occasionally makes forward-looking statements such as
forecasts and projections of expected future performance or
statements of its plans and objectives.  These forward-looking
statements may be contained in filings with the SEC, press
releases and oral statements.  Actual results could potentially
differ materially from these statements.  Therefore, no
assurances can be given that the outcomes stated in such forward-
looking statements and estimates will be achieved.

The preceding sections include certain forward-looking statements
about operating results, environmental and legal issues.

The impacts of continued cost control procedures on operating
results could differ from current expectations.  The effects of
changes in economic conditions, tax rates, interest rates,
technology and the prices and availability of operating supplies
could materially affect the projected operating results.

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 cleanup technology could affect estimated
cleanup liabilities.  The impacts of changes in available
information and circumstances regarding legal issues could affect
estimated litigation costs.


Part II - Other Information

Item 3.  Quantitative and Qualitative Disclosures about Market
Risk

There have been no material changes since year-end.

Item 4. Submission of Matters to a Vote of Security Holders.

None

Item 5. Other Information

None
<TABLE>
<CAPTION>
Item 6.  Exhibits and Reports on Form 8-K
<S> <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  -  Report of Independent Accountants


     Exhibit 99  -  Additional exhibits

         99.1  -  Letter of Independent Accountants

                  Form S-4 Registration Statement filed by NSTAR
                  on May 12, 1999 (Filed No. 333-78285); 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 (Filed No. 333-78285); Form S-8
                  Registration Statement filed by NSTAR on
                  August 19, 1999 (File No. 333-85559).

b)  Form 8-K was filed on April 27, 2001 that reported on NSTAR's
    recognition of an impairment of its entire investment in RCN
     Corporation.
</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.


<TABLE>
<CAPTION>
<S>                              <C>
                                                 NSTAR
                                             (Registrant)



Date: August 14, 2001                 /s/ ROBERT J. WEAFER, JR.
                                      Robert J. Weafer, Jr.
                                      Vice President, Controller
                                      and Chief Accounting
                                      Officer

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