2000 Annual Report

             Western Massachusetts Electric Company and Subsidiary

                                     Index


Contents                                                               Page
--------                                                               ----

Management's Discussion and Analysis of Financial
  Condition and Results of Operations.............................       1

Report of Independent Public Accountants..........................      10

Consolidated Statements of Income.................................      11

Consolidated Statements of Comprehensive Income...................      11

Consolidated Balance Sheets.......................................    12-13

Consolidated Statements of Common Stockholder's Equity............      14

Consolidated Statements of Cash Flows.............................      15

Notes to Consolidated Financial Statements........................      16

Selected Consolidated Financial Data..............................      38

Consolidated Quarterly Financial Data (Unaudited).................      38

Consolidated Statistics (Unaudited)...............................      39

Preferred Stockholder and Bondholder Information..................   Back Cover



Western Massachusetts Electric Company and Subsidiary

-------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------------------------------------

FINANCIAL CONDITION
-------------------

Overview
--------

The Western Massachusetts Electric Company's (WMECO or the company) earnings
totaled $35.3 million in 2000, compared with $2.9 million in 1999 and a loss
of $9.6 million in 1998.  WMECO is an operating company in the Northeast
Utilities system (NU system) and is wholly owned by Northeast Utilities (NU).
WMECO benefited from the return to service of the Millstone 2 unit in May 1999,
the strong performance of the Millstone 2 and 3 units in 2000 and the absence
of restructuring charges in 2000.  Millstone 2 operated at a capacity factor
of 82 percent in 2000, while Millstone 3 operated at a capacity factor of
virtually 100 percent in 2000.  In 2000, WMECO's revenues increased to $513.7
million, up 24 percent from $414.2 million in 1999, primarily due to higher
wholesale and retail revenues.  Revenues were $393.3 million in 1998.

Consolidated Edison, Inc. Merger
--------------------------------

In 2000, NU and Consolidated Edison, Inc. (Con Edison) received most of the
approvals needed to complete the merger announced in October 1999.
Shareholders from both companies approved the merger in April 2000, and all
state regulatory approvals were granted by the end of the year.  Additionally,
the Federal Energy Regulatory Commission (FERC) approved the merger in May
2000, the Nuclear Regulatory Commission approved the transaction in August
2000, and the United States Department of Justice approved the merger in
February 2001.  Necessary approval from the Securities and Exchange Commission
(SEC) was expected to be received in mid-March 2001.

On February 28, 2001, NU's Board of Trustees requested that Con Edison provide
reasonable assurance, in writing, that it intended to comply with the terms of
the definitive merger agreement between the two companies.  This included
assurances that Con Edison would consummate the pending merger at the price set
forth in the agreement promptly following the receipt of SEC approval.  The
original request for assurance was to be received by March 2, 2001, however,
that date was later extended to March 5, 2001.  On March 5, 2001, Con Edison
advised NU that it was not willing to close the merger on the agreed terms.
NU notified Con Edison that it was treating its refusal to proceed on the terms
set forth in the merger agreement as a repudiation and breach of the merger
agreement, and that NU would file suit to obtain the benefits of the
transaction as negotiated for NU shareholders.  On March 6, 2001, Con Edison
filed suit in the U.S. District Court for the Southern District of New York
(Southern District), seeking declaratory judgment that NU failed to satisfy
conditions precedent under the merger agreement.  On March 12, 2001, NU filed
suit against Con Edison in the Southern District seeking damages in excess of
$1 billion arising from Con Edison's breach of the merger agreement.  NU cannot
predict the outcome of this matter nor its effect on NU.

Liquidity
---------

WMECO's net cash flows provided by operating activities from operations
increased to $71.5 million in 2000 compared to $2.1 million in 1999 and $27.6
million in 1998.  The increase in cash flows from operations is primarily
attributable to increased earnings and higher amortization of regulatory
assets, a noncash expense.  Cash flows from operations were more than adequate
to meet the payment of WMECO's common and preferred dividends ($14.8 million)
and investments in electric utility plant, nuclear fuel and nuclear
decommissioning trusts ($38.6 million).  The level of common dividends totaled
$12 million in 2000, as compared to no common dividends paid in 1999 and 1998.
WMECO currently forecasts construction expenditures of $26.6 million for the
year 2001.

The transfer of 1,289 megawatts (MW) of hydroelectric generation assets to
Northeast Generation Company, an affiliated company, from WMECO and The
Connecticut Light and Power Company (CL&P) in March 2000, produced a
significant source of cash for WMECO and CL&P.  WMECO used this cash primarily
to retire long-term debt and to return equity capital to the parent company.
During 2000, $94.2 million of long-term debt was retired compared to $100.9
million in 1999 and $9.8 million in 1998.

In November 2000, WMECO and CL&P reduced their revolving credit agreement to
$350 million from $500 million to reflect lower borrowing needs post-
restructuring.  This agreement was renewed with more favorable terms as a
result of the NU system's improving credit profile.  In January 2001, Moody's
Investors Service and Standard and Poor's upgraded their credit ratings for
WMECO primarily as a result of the anticipated sale of the Millstone units
and NU's general financial recovery.  In February 2001, Fitch IBCA upgraded
its credit ratings for WMECO.  These upgrades return WMECO's unsecured debt
to investment grade ratings for the first time in five years and will save
the NU system in excess of $4.7 million annually in financing costs.

For further information regarding the WMECO's borrowing facilities, see
Note 2, "Short-Term Debt," to the consolidated financial statements.

In 2001, NU expects to reduce the capitalization of its regulated electric
operating companies significantly as a result of continued asset sales and
securitization of stranded costs.  WMECO expects to receive gross proceeds
of $196.2 million as a result of the sale of its ownership interest in the
Millstone units to Dominion Resources, Inc. (Dominion).  This sale is expected
to close as early as the end of March 2001.  The cash proceeds are expected to
be used to repay subsidiary debt and capital lease obligations and to return
equity capital to the parent company.

During February 2001, the Massachusetts Department of Telecommunications and
Energy (DTE) approved the securitization of $155 million of stranded costs by
WMECO.   A significant portion of those proceeds will be used to buyout a
purchased-power contract with the remainder used to retire WMECO's debt and to
return equity capital to the parent company.  Securitization for WMECO is
expected to take place early in the second quarter of 2001.

Restructuring
-------------

As a result of industry restructuring, WMECO stopped supplying power directly
to customers in 2000.  Instead, WMECO became an energy delivery company,
delivering electricity to customers that is produced by other companies and
sometimes bought by customers through intermediaries.  In 2000, customers in
Massachusetts had the option of choosing alternative power suppliers or relying
on WMECO to acquire the power for them through standard offer service.

WMECO continues to generate power through either direct ownership of generating
plants, such as Millstone 2 and 3, or through purchased-power contracts.  WMECO
sold its share of the capacity associated with Millstone 2 and 3 to Select
Energy, Inc. and five unaffiliated companies.  These contracts will expire on
December 31, 2001.  The revenues generated from these contracts are expected to
recover WMECO's share of the nuclear operating costs through the divestiture
of the Millstone units.

In 2000, WMECO supplied power to standard offer customers at a rate of slightly
more than $0.045 per kilowatt-hour.  As a result of new one-year standard offer
supply contracts signed in December 2000, that rate will increase significantly
in 2001 to approximately $0.073 per kilowatt-hour.  In January 2001, the DTE
approved an average overall rate increase of approximately 17.4 percent for
WMECO standard offer customers, allowing WMECO to fully recover these increased
power procurement costs.  A higher rate was also approved for customers who
take default service from WMECO.  Under the new standard offer contracts, three
unaffiliated companies provide up to 630 MW of power to WMECO's standard offer
customers and one unaffiliated company serves WMECO's default load of up to
70 MW through December 31, 2001.  WMECO renegotiates its standard offer supply
contracts on an annual basis.

For further information regarding commitments and contingencies related to
restructuring, see Note 9A, "Commitments and Contingencies - Restructuring,"
to the consolidated financial statements.

Regional Transmission Organization
----------------------------------

Pursuant to FERC Order 888 (issued in April 1996), the NU system companies,
including WMECO, operate their transmission system under an open access,
nondiscriminatory transmission tariff.

In December 1999, the FERC issued an order calling on all transmission owners
to voluntarily join Regional Transmission Organizations (RTOs) in order to
boost competition in electric markets.  In general, each of these organizations
would be an independent operator over all transmission facilities, and would
perform, among other functions, tariff administration, construction planning
and reliability management for the particular regional transmission system.
NU's active voting interest in such an organization would be limited to 5
percent under the proposal.

The NU system companies, including WMECO, and other parties have appealed this
order.  Of primary concern to NU is the ratemaking authority granted to RTOs
and its impact on the ability of transmission owners to earn appropriate
returns on their transmission investment under the organizational structure
and the minimum functions proposed in the order.  The NU system companies,
including WMECO, were required to participate in a collaborative process
established by the FERC beginning in March of 2000.  On January 16, 2001,
NU along with the Independent System Operator and five other New England
transmission owning utilities filed a proposal to establish a New England
RTO.

Nuclear Plant Performance And Divestiture
-----------------------------------------

Millstone
The Millstone units completed one of their best years ever in 2000.
Millstone 2 operated at a capacity factor of 82 percent in 2000 and completed
a refueling outage in early June more than four days ahead of schedule.  The
40-day, 21-hour outage set a world record for a refueling that included a
full generator rewind.  Millstone 3 operated at virtually a 100 percent
capacity factor in 2000 and ran for 585 consecutive days before beginning a
scheduled refueling outage on February 3, 2001.  Millstone 3 is expected to
return to service by the end of the first quarter of 2001.

On August 7, 2000, WMECO and certain other joint owners reached an agreement
to sell substantially all of the Millstone units, located in Waterford,
Connecticut, to Dominion, for approximately $1.3 billion, including
approximately $105 million for nuclear fuel. Dominion has also agreed to assume
responsibility for decommissioning the three units and NU will transfer to
Dominion all funds in the Millstone decommissioning trust.  Additionally, NU is
obligated to top-off the decommissioning trust if its value does not equal an
agreed upon amount at closing.  That amount is pursuant to the purchase and
sale agreement (PSA) with Dominion, subject to adjustment for delays in the
closing of the sale and Millstone 1 not meeting the "cold and dark" condition
specified in the PSA.

If the transaction is consummated as proposed, WMECO would receive gross
proceeds of approximately $196.2 million on a pretax basis for its respective
ownership interest.  The proceeds from the sale of this interest will be used
to reduce the company's stranded costs under restructuring and the cash
proceeds will be used to repay subsidiary debt and capital lease obligations
and to return equity capital to the parent company.

In preparation for the divestiture of the Millstone units, it was discovered
that two full-length irradiated fuel rods are missing.  NU believes that the
two rods remain stored in the Millstone 1 spent fuel pool or were shipped in
a shielded cask to a facility licensed to accept radioactive material.  NU's
investigation into the location of the two rods is ongoing.  NU is responsible
for any potential liabilities, which are not determinable at this time, related
to these missing fuel rods.

NU currently expects to close on the sale of Millstone as early as the end
of March 2001.

Yankee Companies
In 1999, the Vermont Yankee Nuclear Power Corporation (VYNPC) agreed to sell
its nuclear generating unit for $22 million to an unaffiliated company.  Among
other commitments, the acquiring company agreed to assume the obligation to
decommission the unit after it is taken out of service, and the owners of VYNPC
(including WMECO) agreed to fund their shares of the decommissioning costs up
to a negotiated amount.  Subsequent to the time that agreement was executed,
the original proposed acquiring company increased its purchase price and three
other unaffiliated companies have indicated their interest in buying VYNPC's
generating unit on terms that have not been disclosed.  On February 14, 2001,
the Vermont Public Service Board dismissed the acquiring company's petition for
approval and VYNPC agreed to work with the Vermont regulators to develop an
auction process for the sale of the unit.  At present, WMECO expects that the
unit will be sold, but the identity of the owner and the terms of sale,
including price, future decommissioning obligations and future power purchase
obligations, are not known.

Nuclear Decommissioning
In connection with the aforementioned sale of the Millstone units, Dominion has
agreed to assume responsibility for decommissioning the Millstone units.

For further information regarding nuclear decommissioning, see Note 10,
"Nuclear Decommissioning and Plant Closure Costs," to the consolidated
financial statements.

Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent nuclear fuel in 1998.  However, delays in
confirming the suitability of a permanent storage site continually have
postponed plans for the DOE's long-term storage and disposal site.  Extended
delays or a default by the DOE could lead to consideration of costly
alternatives.  WMECO has the primary responsibility for the interim storage of
its spent nuclear fuel prior to divestiture of its nuclear units.

For further information regarding spent nuclear fuel disposal costs, see
Note 9D, "Commitments and Contingencies - Spent Nuclear Fuel Disposal Costs,"
to the consolidated financial statements.

Other Matters
-------------

Environmental Matters
WMECO is subject to environmental laws and regulations structured to mitigate
or remove the effect of past operations and to improve or maintain the quality
of the environment.  For further information regarding environmental matters,
see Note 9C, "Commitments and Contingencies - Environmental Matters," to the
consolidated financial statements.

Other Commitments and Contingencies
For further information regarding other commitments and contingencies, see
Note 9, "Commitments and Contingencies," to the consolidated financial
statements.

Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts including, but not limited to,
statements regarding future earnings, refinancings, the use of proceeds from
restructuring, and the recovery of operating costs.  Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements.  Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.

RESULTS OF OPERATIONS

The components of significant income statement variances for the past
two years are provided in the table below.


                                          Income Statement Variances
                                             (Millions of Dollars)

                               2000 over/(under) 1999   1999 over/(under) 1998
                               -----------------------------------------------
                                  Amount    Percent        Amount    Percent
                                  ------    -------        ------    -------

Operating Revenues                $ 99        24%           $ 21         5%

Operating Expenses:
Fuel, purchased and net
  interchange power                 95        62              21        16
Other operation                    (26)      (25)            (16)      (13)
Maintenance                        (14)      (30)             (9)      (16)
Depreciation                       (10)      (36)            (13)      (32)
Amortization of
  regulatory assets, net            21        80              20        (a)
Federal and state
  income taxes                       2        12              17        (a)
Taxes other than
  income taxes                      (3)      (14)              1         5
Gain on sale of
  utility plant                     22       100             (22)        -
                                  ----       ---            ----       ---
Total operating expenses            87        23              (1)        -
                                  ----       ---            ----       ---
Operating income                    12        30              22        (a)
                                  ----       ---            ----       ---

Other Income:
Equity in earnings of
  regional nuclear
  generating and
  transmission companies             2        (a)             (1)      (76)
Nuclear related costs               15        84             (18)        -
Other, net                           5        (a)             (2)      (90)
Other income taxes                  (4)      (39)              8        (a)
Net other income                    18        (a)            (13)       (a)
Interest charges, net               (2)       (7)             (4)      (12)
                                  ----       ---            ----       ---
Net income/(loss)                 $ 32        (a)           $ 13        (a)
                                  ====       ===            ====       ===

(a) Percent greater than 100.

Operating Revenues
Operating revenues increased by $99 million or 24 percent in 2000, primarily
due to higher wholesale and retail revenues.  Wholesale revenues increased
($82 million) as a result of the sale of output from Millstone 2 and 3, and
the amortization of the gain on the transfer of certain hydroelectric
generation assets ($6 million).  Retail revenues increased by $11 million due
to retail rate increases in late 1999 and early 2000.  Retail sales compared
to 1999 were flat.

Operating revenues increased by $21 million or 5 percent in 1999, primarily due
to higher wholesale and retail revenues.  Wholesale revenues increased ($17
million) due to higher energy sales and related capacity and transmission
revenues.  Retail revenues increased by $4 million due to the retail kilowatt-
hour sales increase of 3.6 percent which increased revenues by $16 million and
was partially offset by the retail rate decrease in 1998 ($12 million).

Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense increased in 2000, primarily
due to the transition, under industry restructuring, of purchasing full
requirements for customers from standard offer suppliers, in addition to the
remaining fuel costs of the nuclear units and cogenerators.

Fuel, purchased and net interchange power expense increased in 1999, primarily
due to a reversal of fuel expense deferrals which were recorded in other
operation and maintenance (O&M) expenses as a result of the WMECO restructuring
order, partially offset by lower replacement power costs.

Other Operation and Maintenance
Other O&M expenses decreased in 2000, primarily due to lower spending at the
nuclear units ($17 million), the decommissioning status of Millstone 1 ($7
million), lower administrative and general expenses ($14 million), lower fossil
and hydroelectric expenses due to the sale of certain fossil generation assets
and transfer of certain hydroelectric generation assets ($6 million), partially
offset by higher transmission expenses ($4 million).

Other O&M expenses decreased in 1999, primarily due to lower costs at the
Millstone units ($17 million), deferrals associated with the restructuring
order ($5 million), and lower fossil and hydroelectric O&M costs ($4 million),
partially offset by higher transmission expenses ($4 million).

Depreciation
Depreciation decreased in 2000, primarily due to the effect of discontinuing
Statement of Financial Accounting Standards No. 71, "Accounting for the Effects
of Certain Types of Regulation," for the generation portion of the business and
the resulting reclassification of depreciable nuclear plant balances to
regulatory assets ($14 million), the sale of certain fossil generation assets
and the transfer of certain hydroelectric generation assets.

Depreciation decreased in 1999, primarily due to lower rates utilized in 1999
as a result of the 1999 restructuring orders and the retirement of Millstone 1.

Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net increased in 2000, primarily due to
changes in amortization levels as a result of industry restructuring ($24
million) and higher amortization associated with the reclassified nuclear plant
balances ($14 million), partially offset by the amortization in 1999 of the
gain on the sale of the fossil plants ($12 million).

Amortization of regulatory assets, net increased in 1999, primarily due to
increased amortization associated with the gain on the sale of fossil and
hydroelectric generation assets ($13 million), the amortization of the
Millstone 1 investment ($5 million) and the reclassification of the
depreciation on the nuclear plants transferred to regulatory assets
($4 million).

Federal and State Income Taxes
Federal and state income taxes increased in 2000 and 1999, primarily due
to higher book taxable income.

Taxes Other Than Income Taxes
Taxes other than income taxes decreased in 2000, primarily due to a decrease
in local property taxes.

Gain on Sale of Utility Plant
WMECO recorded a gain on the sale of its fossil and hydroelectric generation
assets in 1999.  A corresponding amount of amortization expense was recorded.

Nuclear Related Costs
Nuclear related costs in 2000 are comprised of a settlement of Millstone 3
joint owner litigation, net of insurance proceeds ($2 million), and a
regulatory settlement ($1 million).

In comparison, costs in 1999 are comprised of one-time charges related to the
return disallowed on Millstone 1 unrecovered plant from March 1998 forward
($11 million), the settlement of Millstone 3 owner litigation, net of insurance
proceeds ($5 million) and the disallowed Millstone 1 plant per the
Massachusetts restructuring order ($2 million).

Other, Net
Other, net, increased in 2000, primarily due to an environmental reserve
recorded in 1999 ($3 million).

Interest Charges, Net
Interest charges, net, decreased in 2000 and 1999, primarily due to
reacquisitions and retirements of long-term debt, partially offset by an
increase in interest charges related to short-term borrowings.



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------

To the Board of Directors
   of Western Massachusetts Electric Company:

We have audited the accompanying consolidated balance sheets of Western
Massachusetts Electric Company (a Massachusetts corporation and a wholly owned
subsidiary of Northeast Utilities) and subsidiary as of December 31, 2000 and
1999, and the related consolidated statements of income, comprehensive income,
common stockholder's equity and cash flows for each of the three years in the
period ended December 31, 2000.  These financial statements are the
responsibility of the company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Western Massachusetts
Electric Company and subsidiary as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.




                                                /s/ ARTHUR ANDERSEN LLP
                                                    ARTHUR ANDERSEN LLP


Hartford, Connecticut
January 23, 2001 (except with
respect to the matter discussed
in Note 14, as to which the
date is March 13, 2001)




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,                   2000       1999        1998
---------------------------------------------------------------------------------
                                                      (Thousands of Dollars)

<S>                                             <C>        <C>         <C>
Operating Revenues............................. $ 513,678  $ 414,231   $ 393,322
                                                ---------- ----------  ----------
Operating Expenses:
  Operation -
     Fuel, purchased and net interchange power.   246,130    151,714     130,401
     Other.....................................    75,940    101,842     117,663
  Maintenance..................................    33,111     47,586      56,622
  Depreciation.................................    17,693     27,771      40,901
  Amortization of regulatory assets............    47,775     26,488       6,016
  Federal and state income taxes...............    21,174     18,849       2,109
  Taxes other than income taxes................    17,759     20,677      19,756
  Gain on sale of utility plant................      -       (22,437)       -
                                                ---------- ----------  ----------
        Total operating expenses...............   459,582    372,490     373,468
                                                ---------- ----------  ----------
Operating Income...............................    54,096     41,741      19,854
                                                ---------- ----------  ----------

Other Income/(Loss):
  Equity in earnings of regional nuclear
    generating companies.......................     2,251        407       1,699
  Nuclear related costs........................    (2,808)   (18,035)       -
  Other, net...................................     1,242     (3,618)     (1,905)
  Income taxes.................................     6,029      9,906       2,198
                                                ---------- ----------  ----------
        Other income/(loss), net...............     6,714    (11,340)      1,992
                                                ---------- ----------  ----------
        Income before interest charges.........    60,810     30,401      21,846
                                                ---------- ----------  ----------
Interest Charges:
  Interest on long-term debt...................    14,051     24,255      28,027
  Other interest...............................    11,491      3,259       3,398
                                                ---------- ----------  ----------
        Interest charges, net..................    25,542     27,514      31,425
                                                ---------- ----------  ----------

Net Income/(Loss).............................. $  35,268  $   2,887   $  (9,579)
                                                ========== ==========  ==========

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net Income/(Loss).............................. $  35,268  $   2,887   $  (9,579)
                                                ---------- ----------  ----------
Other comprehensive income, net of tax:
  Unrealized gains on securities...............        22         10         183
  Minimum pension liability adjustments........      -          -            (33)
                                                ---------- ----------  ----------
        Other comprehensive income, net of tax.        22         10         150
                                                ---------- ----------  ----------
Comprehensive Income/(Loss)                     $  35,290  $   2,897   $  (9,429)
                                                ========== ==========  ==========

</TABLE>
The accompanying notes are an integral part of these financial statements.



WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
AT DECEMBER 31,                                                  2000          1999
---------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)
<S>                                                         <C>            <C>
ASSETS
------

Utility Plant, at original cost:
  Electric................................................  $  1,112,405   $ 1,175,954

     Less: Accumulated provision for depreciation.........       792,923       813,978
                                                            -------------  ------------
                                                                 319,482       361,976
  Construction work in progress...........................        22,813        21,181
  Nuclear fuel, net.......................................        18,296        18,880
                                                            -------------  ------------
     Total net utility plant..............................       360,591       402,037
                                                            -------------  ------------
Other Property and Investments:
  Nuclear decommissioning trusts, at market...............       144,921       144,567
  Investments in regional nuclear generating
   companies, at equity...................................        11,117        14,723
  Other, at cost..........................................         6,249         6,232
                                                            -------------  ------------
                                                                 162,287       165,522
                                                            -------------  ------------
Current Assets:
  Cash....................................................           985           950
  Receivables less the accumulated provision for
   uncollectible accounts of $1,886 in 2000 and
   $1,640 in 1999.........................................        36,364        31,692
  Accounts receivable from affiliated companies...........        16,146         3,918
  Taxes receivable........................................         -             1,912
  Accrued utility revenues................................        21,222        13,485
  Fuel, materials and supplies, at average cost...........         1,606         3,097
  Prepayments and other...................................         4,817         3,640
                                                            -------------  ------------
                                                                  81,140        58,694
                                                            -------------  ------------
Deferred Charges:
  Regulatory assets.......................................       392,247       594,800
  Unamortized debt expense................................         1,822         1,926
  Prepaid pension.........................................        45,473        26,479
  Other...................................................         4,258         4,146
                                                            -------------  ------------
                                                                 443,800       627,351
                                                            -------------  ------------

Total Assets..............................................  $  1,047,818   $ 1,253,604
                                                            =============  ============
</TABLE>
The accompanying notes are an integral part of these financial statements.



WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
AT DECEMBER 31,                                                  2000          1999
---------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)
<S>                                                            <C>           <C>
CAPITALIZATION AND LIABILITIES
------------------------------

Capitalization:
  Common stock, $25 par value - authorized
   1,072,471 shares; 590,093 shares outstanding in 2000
   and 1,072,471 shares outstanding in 1999...............  $     14,752   $    26,812
  Capital surplus, paid in................................        94,010       171,691
  Retained earnings.......................................        62,952        38,712
  Accumulated other comprehensive income..................           182           160
                                                            -------------  ------------
           Total common stockholder's equity..............       171,896       237,375
  Preferred stock not subject to mandatory redemption.....        20,000        20,000
  Preferred stock subject to mandatory redemption.........        15,000        16,500
  Long-term debt..........................................       139,425       290,279
                                                            -------------  ------------
           Total capitalization...........................       346,321       564,154
                                                            -------------  ------------
Obligations Under Capital Leases..........................         5,935         8,106
                                                            -------------  ------------
Current Liabilities:
  Notes payable to banks..................................       110,000       123,000
  Notes payable to affiliated company.....................           600         9,400
  Long-term debt and preferred stock - current portion....        61,500         1,500
  Obligations under capital leases - current portion......        20,986        21,866
  Accounts payable........................................        25,298        12,974
  Accounts payable to affiliated companies................         8,611         3,208
  Accrued taxes...........................................         8,471           589
  Accrued interest........................................         4,703         6,046
  Other...................................................         7,671        14,384
                                                            -------------  ------------
                                                                 247,840       192,967
                                                            -------------  ------------
Deferred Credits and Other Long-term Liabilities:
  Accumulated deferred income taxes.......................       224,711       242,942
  Accumulated deferred investment tax credits.............        17,580        19,765
  Decommissioning obligation - Millstone 1................       136,130       136,130
  Deferred contractual obligations........................        42,519        63,701
  Other...................................................        26,782        25,839
                                                            -------------  ------------
                                                                 447,722       488,377
                                                            -------------  ------------
Commitments and Contingencies (Note 9)

Total Capitalization and Liabilities......................  $  1,047,818   $ 1,253,604
                                                            =============  ============
</TABLE>
The accompanying notes are an integral part of these financial statements.



WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                                 Accumulated
                                                        Capital     Retained        Other
                                             Common     Surplus,    Earnings    Comprehensive
                                             Stock      Paid In       (a)          Income         Total
---------------------------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)
<S>                                        <C>         <C>         <C>                <C>       <C>
Balance at January 1, 1998...............  $ 26,812    $151,171    $ 58,608    $       -        $236,591

    Net loss for 1998....................                            (9,579)                      (9,579)
    Cash dividends on preferred stock....                            (3,026)                      (3,026)
    Capital stock expenses, net..........                   260                                      260
    Other comprehensive income...........                                                150         150
                                           ---------   ---------   ---------    -------------   ---------
Balance at December 31, 1998.............    26,812     151,431      46,003              150     224,396

    Net income for 1999..................                             2,887                        2,887
    Cash dividends on preferred stock....                            (3,298)                      (3,298)
    Capital stock expenses, net..........                   260                                      260
    Allocation of benefits - ESOP........                            (6,880)                      (6,880)
    Capital contribution from
      Northeast Utilities................                20,000                                   20,000
    Other comprehensive income...........                                                 10          10
                                           ---------   ---------   ---------    -------------   ---------
Balance at December 31, 1999.............    26,812     171,691      38,712              160     237,375

    Net income for 2000..................                            35,268                       35,268
    Cash dividends on preferred stock....                            (2,798)                      (2,798)
    Cash dividends on common stock.......                           (12,002)                     (12,002)
    Repurchase of common stock...........   (12,060)    (77,940)                                 (90,000)
    Capital stock expenses, net..........                   259                                      259
    Tax benefit for 1993-1999 from
      reduction of NU parent losses(b)...                             3,824                        3,824
    Allocation of benefits - ESOP........                               (52)                         (52)
    Other comprehensive income...........                                                 22          22
                                           ---------   ---------   ---------    -------------   ---------
Balance at December 31, 2000.............  $ 14,752    $ 94,010    $ 62,952    $         182    $171,896
                                           =========   =========   =========    =============   =========
</TABLE>
(a)  The company has no dividend restrictions.  However, the company has a
     30% common equity test to meet and therefore, at December 31, 2000, cannot
     pay out approximately $31.5 million in equity.

(b) In June 1999, WMECO paid NU parent $6.9 million for NU shares issued from
    1992 through 1998 on behalf of its employees in accordance with NU's 401(k)
    plan.  This transaction resulted in a reduction of the NU parent loss and
    a tax benefit to WMECO.  The amount in 2000 represents the remaining
    previously unallocated 1993 through 1999 NU parent losses.

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


WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                For the Years Ended December 31,
--------------------------------------------------------------------------------------------------
(Thousands of Dollars)                                             2000        1999        1998
--------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>         <C>
Operating Activities:
  Net income/(loss)........................................... $   35,268  $    2,887  $   (9,579)
  Adjustments to reconcile to net cash
   provided by operating activities:
    Depreciation..............................................     17,693      27,771      40,901
    Deferred income taxes and investment tax credits, net.....    (11,549)     (6,544)      7,405
    Amortization of recoverable energy costs, net.............      9,386         -           -
    Amortization of regulatory assets, net....................     47,775      26,488       6,016
    Tax benefit for 1993-1999 from
      reduction of NU parent losses...........................      3,824         -           -
    Nuclear related costs.....................................      2,808      18,035         -
    Allocation of ESOP benefits...............................        (52)     (6,880)        -
    Gain on sale of utility plant.............................        -       (22,437)        -
    Other uses of cash........................................    (28,834)    (24,096)     (6,553)
  Changes in working capital:
    Receivables and accrued utility revenues..................    (24,637)    (44,045)      1,622
    Fuel, materials and supplies..............................      1,491       1,956         807
    Accounts payable..........................................     17,727     (14,636)    (20,962)
    Investments in securitizable assets.......................        -        21,865       3,415
    Accrued taxes.............................................      7,882        (675)        742
    Other working capital (excludes cash).....................     (7,321)     22,368       3,748
                                                               ----------- ----------- -----------
Net cash flows provided by operating activities...............     71,461       2,057      27,562
                                                               ----------- ----------- -----------
Investing Activities:
  Investments in plant:
    Electric utility plant....................................    (27,267)    (30,192)    (19,895)
    Nuclear fuel..............................................     (7,848)     (5,817)     (1,801)
                                                               ----------- ----------- -----------
    Net cash flows used for investments in plant..............    (35,115)    (36,009)    (21,696)

  Investments in nuclear decommissioning trusts...............     (3,437)    (11,387)    (12,918)
  Other investment activities, net............................      3,589       1,807        (171)
  Net proceeds from the transfer/sale of utility plant........    185,787      48,524         -
  Capital contributions from Northeast Utilities..............        -        20,000         -
                                                               ----------- ----------- -----------
Net cash flows provided by/(used in) investing activities.....    150,824      22,935     (34,785)
                                                               ----------- ----------- -----------

Financing Activities:
  Net (decrease)/increase in short-term debt..................    (21,800)     81,500      21,550
  Reacquisitions and retirements of long-term debt............    (94,150)   (100,850)     (9,800)
  Reacquisitions and retirements of preferred stock...........     (1,500)     (1,500)     (1,500)
  Repurchase of common shares.................................    (90,000)        -           -
  Cash dividends on preferred stock...........................     (2,798)     (3,298)     (3,026)
  Cash dividends on common stock..............................    (12,002)        -           -
                                                               ----------- ----------- -----------
Net cash flows (used in)/provided by financing activities.....   (222,250)    (24,148)      7,224
                                                               ----------- ----------- -----------

Net increase in cash for the period...........................         35         844           1
Cash - beginning of period....................................        950         106         105
                                                               ----------- ----------- -----------
Cash - end of period.......................................... $      985  $      950  $      106
                                                               =========== =========== ===========
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
  Interest, net of amounts capitalized........................ $   26,055  $   30,958  $   22,902
                                                               =========== =========== ===========
  Income taxes................................................ $   18,554  $   (6,296) $   (2,624)
                                                               =========== =========== ===========
Increase in obligations:
  Niantic Bay Fuel Trust...................................... $    1,532  $    1,112  $    2,375
                                                               =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.  About Western Massachusetts Electric Company
         Western Massachusetts Electric Company (WMECO or the company) along
         with The Connecticut Light and Power Company (CL&P), Public Service
         Company of New Hampshire (PSNH), North Atlantic Energy Corporation
         (NAEC), and Holyoke Water Power Company (HWP) are the operating
         companies comprising the Northeast Utilities system (NU system) and
         are wholly owned by Northeast Utilities (NU).  The NU system serves
         in excess of 30 percent of New England's electric needs and is one of
         the 25 largest electric utility systems in the country as measured by
         revenues.  The NU system furnishes franchised retail electric service
         in western Massachusetts, Connecticut and New Hampshire through WMECO,
         CL&P and PSNH.  NAEC sells all of its entitlement to the capacity and
         output of the Seabrook Station nuclear unit (Seabrook) to PSNH under
         the terms of two life-of-unit, full cost recovery contracts.  HWP,
         also is engaged in the production and distribution of electric power.

         On March 1, 2000, NU completed its acquisition of Yankee Energy
         System, Inc., the parent company of Yankee Gas Services Company,
         Connecticut's largest natural gas distribution system.

         NU is registered with the Securities and Exchange Commission (SEC)
         as a holding company under the Public Utility Holding Company Act of
         1935 (1935 Act) and the NU system, including WMECO, is subject to
         provisions of the 1935 Act.  Arrangements among the NU system
         companies, outside agencies and other utilities covering
         interconnections, interchange of electric power and sales of utility
         property are subject to regulation by the Federal Energy Regulatory
         Commission (FERC) and/or the SEC.  WMECO is subject to further
         regulation for rates, accounting and other matters by the FERC and
         the Massachusetts Department of Telecommunications and Energy (DTE).

         Several wholly owned subsidiaries of NU provide support services for
         the NU system companies, including WMECO, and, in some cases, for
         other New England utilities.  Northeast Utilities Service Company
         (NUSCO) provides centralized accounting, administrative, information
         resources, engineering, financial, legal, operational, planning,
         purchasing, and other services to the NU system companies, including
         WMECO.  Northeast Nuclear Energy Company acts as agent for the NU
         system companies and other New England utilities in operating the
         Millstone nuclear units.  North Atlantic Energy Service Corporation
         has operational responsibility for Seabrook.

     B.  Presentation
         The consolidated financial statements of WMECO include the accounts of
         its subsidiary.  Intercompany transactions have been eliminated in
         consolidation.

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States requires management
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent 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 those estimates.

         Certain reclassifications of prior years' data have been made to
         conform with the current year's presentation.

         All transactions among affiliated companies are on a recovery of cost
         basis which may include amounts representing a return on equity and
         are subject to approval by various federal and state regulatory
         agencies and the DTE.

     C.  New Accounting Standards
         Derivative Instruments:  Effective January 1, 2001, WMECO adopted
         Statement of Financial Accounting Standards (SFAS) No. 133,
         "Accounting for Derivative Instruments and Hedging Activities," as
         amended.  SFAS No. 133 requires that derivative instruments be
         recorded as an asset or liability measured at its fair value and that
         changes in the fair value of derivative instruments be recognized
         currently in earnings unless specific hedge accounting criteria are
         met.

         In order to implement SFAS No. 133 by January 1, 2001, NU established
         a cross-functional project team to identify all derivative
         instruments, measure the fair value of those derivative instruments,
         designate and document various hedge relationships, and evaluate the
         effectiveness of those hedge relationships.  NU has completed the
         process of identifying all derivative instruments and has established
         appropriate fair value measurements of those derivative instruments in
         place at January 1, 2001.  In addition, for those derivative
         instruments which are hedging an identified risk, NU has designated
         and documented all hedging relationships anew.

         Management believes the adoption of this new standard will not have a
         material impact on WMECO's financial position or results of
         operations.

         Revenue Recognition:  In December 1999, the SEC issued Staff
         Accounting Bulletin (SAB) No. 101, "Revenue Recognition."  The
         adoption of SAB No. 101, as amended, did not have a material impact
         on WMECO's consolidated financial statements.

     D.  Investments and Jointly Owned Electric Utility Plant
         Regional Nuclear Generating Companies: WMECO owns common stock in four
         regional nuclear companies (Yankee Companies).  WMECO's ownership
         interests in the Yankee Companies at December 31, 2000 and 1999, which
         are accounted for on the equity method due to WMECO's ability to
         exercise significant influence over their operating and financial
         policies are 9.5 percent of the Connecticut Yankee Atomic Power
         Company (CYAPC), 7 percent of the Yankee Atomic Electric Company
         (YAEC), 3 percent of the Maine Yankee Atomic Power Company (MYAPC),
         and 2.5 percent of the Vermont Yankee Nuclear Power Corporation
         (VYNPC).  WMECO's total equity investment in the Yankee Companies at
         December 31, 2000 and 1999, is $11.1 million and $14.7 million,
         respectively.  Each Yankee Company owns a single nuclear generating
         unit.  However, VYNPC is the only unit still in operation at
         December 31, 2000.

         Millstone:  WMECO has a 19 percent joint ownership in both
         Millstone 1, a 660 megawatt (MW) nuclear unit, which is currently in
         decommissioning status, and Millstone 2, an 870 MW nuclear generating
         unit.  WMECO has a 12.24 percent joint ownership interest in
         Millstone 3, a 1,154 MW nuclear generating unit.  On August 7, 2000,
         WMECO and certain other joint owners reached an agreement to sell
         substantially all of the Millstone units to Dominion Resources, Inc.
         (Dominion) for approximately $1.3 billion, including approximately
         $105 million for nuclear fuel.  NU currently expects to close on the
         sale of Millstone as early as the end of March 2001.

         Plant-in-service and the accumulated provision for depreciation for
         WMECO's share of Millstone 2 and 3 are as follows:

         ----------------------------------------------------------------------
         At December 31,                                 2000        1999
         ----------------------------------------------------------------------
                                                       (Millions of Dollars)

         Plant-in-service
         Millstone 2.............................       $182.3       $180.4
         Millstone 3.............................        382.7        380.5
         Accumulated provision for depreciation
         Millstone 2.............................       $174.5       $166.7
         Millstone 3.............................        357.3        358.7
         ----------------------------------------------------------------------

     E.  Depreciation
         The provision for depreciation is calculated using the straight-line
         method based on estimated remaining useful lives of depreciable
         utility plant-in-service, adjusted for salvage value and removal
         costs, as approved by the appropriate regulatory agency where
         applicable.  Except for major facilities, depreciation rates are
         applied to the average plant-in-service during the period.  Major
         facilities are depreciated from the time they are placed in service.
         When plant is retired from service, the original cost of the plant,
         including costs of removal less salvage, is charged to the accumulated
         provision for depreciation.  The costs of closure and removal of
         nonnuclear facilities are accrued over the life of the plant as a
         component of depreciation.  The depreciation rates for the several
         classes of electric plant-in-service are equivalent to a composite
         rate of 2.2 percent in 2000, 2.3 percent in 1999 and 2.9 percent in
         1998.

         As a result of discontinuing the application of SFAS No. 71,
         "Accounting for the Effects of Certain Types of Regulation," for
         WMECO's generation business in 1999, the company recorded a charge
         to accumulated depreciation for the nuclear plant in excess of the
         estimated fair market value at the time in the amount of $330 million
         and a corresponding regulatory asset was created.

     F.  Revenues
         Revenues are based on authorized rates applied to each customer's use
         of electricity.  In general, rates can be changed only through a
         formal proceeding before the DTE.  Regulatory commissions also have
         authority over the terms and conditions of nontraditional rate-making
         arrangements.  At the end of each accounting period, WMECO accrues a
         revenue estimate for the amount of energy delivered but unbilled.

     G.  Regulatory Accounting and Assets
         The accounting policies of WMECO and the accompanying consolidated
         financial statements conform to accounting principles generally
         accepted in the United States applicable to rate-regulated enterprises
         and historically reflect the effects of the rate-making process in
         accordance with SFAS No. 71.  As a result of final restructuring
         orders issued in 1999, WMECO discontinued the application of SFAS
         No. 71 for the generation portion of its business.

         WMECO's transmission and distribution business will continue to be
         cost-based and management believes the application of SFAS No. 71
         continues to be appropriate.  Management continues to believe it is
         probable that WMECO will recover its investments in long-lived assets,
         including regulatory assets through charges to their transmission and
         distribution customers.  The majority for WMECO will be recovered
         through a transition charge over a 12-year period.  In addition, all
         material regulatory assets are earning a return.  The components of
         WMECO's regulatory assets are as follows:

         ----------------------------------------------------------------------
         At December 31,                                 2000        1999
         ----------------------------------------------------------------------
                                                       (Millions of Dollars)

         Recoverable nuclear costs...............       $257.7       $428.9
         Income taxes, net.......................         50.3         49.0
         Unrecovered contractual obligations.....         42.5         63.7
         Recoverable energy costs, net...........          6.9         16.3
         Other...................................         34.8         36.9
                                                        ------       ------
                                                        $392.2       $594.8
                                                        ======       ======
         ----------------------------------------------------------------------

         As a result of discontinuing the application of SFAS No. 71 in 1999
         for WMECO's generation business, the company reclassified nuclear
         plant in excess of its estimated fair market value from plant to
         regulatory assets.  As of December 31, 2000 and 1999, excluding the
         impact of the transfer of generation assets to Northeast Generation
         Company in 2000, the unamortized balance ($286.9 million and $316.1
         million, respectively) is classified as recoverable nuclear costs.
         Also included in that regulatory asset component for 2000 and 1999
         are $104.9 million and $112.8 million, respectively, which includes
         Millstone 1 recoverable nuclear costs relating to the recoverable
         portion of the undepreciated plant and related assets ($39.6 million
         and $43.8 million, respectively) and the decommissioning and closure
         obligation ($65.3 million and $69 million, respectively).

     H.  Income Taxes
         The tax effect of temporary differences (differences between the
         periods in which transactions affect income in the financial
         statements and the periods in which they affect the determination of
         taxable income) is accounted for in accordance with the rate-making
         treatment of the applicable regulatory commissions.

         The tax effect of temporary differences, including timing differences
         accrued under previously approved accounting standards, that give rise
         to the accumulated deferred tax obligation is as follows:

         ----------------------------------------------------------------------
         At December 31,                                 2000        1999
         ----------------------------------------------------------------------
                                                       (Millions of Dollars)

         Accelerated depreciation and
           other plant-related differences.......       $193.7      $213.4

         Regulatory assets -
           income tax gross up...................         19.5        19.0

         Other...................................         11.5        10.5
                                                        ------      ------
                                                        $224.7      $242.9
                                                        ======      ======
         ----------------------------------------------------------------------

     I.  Unrecovered Contractual Obligations
         Under the terms of contracts with the Yankee Companies, the
         shareholder-sponsored companies, including WMECO, are responsible for
         their proportionate share of the remaining costs of the units,
         including decommissioning.  As management expects that WMECO will be
         allowed to recover these costs from its customers, WMECO has recorded
         a regulatory asset, with a corresponding obligation, on its
         consolidated balance sheet.

     J.  Recoverable Energy Costs
         Under the Energy Policy Act of 1992 (Energy Act), WMECO is assessed
         for its proportionate share of the costs of decontaminating and
         decommissioning uranium enrichment plants owned by the United States
         Department of Energy (DOE) (D&D Assessment).  The Energy Act requires
         that regulators treat D&D Assessments as a reasonable and necessary
         current cost of fuel, to be fully recovered in rates like any other
         fuel cost.  WMECO is currently recovering these costs through rates.
         As of December 31, 2000 and 1999, WMECO's total D&D Assessment
         deferrals were $8.6 million and $9.6 million, respectively.

2.   SHORT-TERM DEBT
     Limits:  The amount of short-term borrowings that may be incurred by WMECO
     is subject to periodic approval by either the SEC under the 1935 Act or by
     state regulators.  Currently, SEC authorization allows WMECO to incur
     total short-term borrowings up to a maximum of $250 million.  In addition,
     the charter of WMECO contains preferred stock provisions restricting the
     amount of unsecured debt the company may incur.  As of December 31, 2000,
     WMECO's charter permits WMECO to incur $94 million of additional
     unsecured debt.

     Credit Agreement:  On November 17, 2000, WMECO and CL&P entered into a
     364-day revolving credit facility for $350 million, replacing the previous
     $500 million facility which was to expire on November 17, 2000.  WMECO may
     draw up to $150 million under the facility which, until the nuclear
     divestiture, is secured by second mortgages on Millstone 2 and 3.  Once
     WMECO and CL&P receive the proceeds from securitization, the $350 million
     revolving credit facility will be reduced to $250 million, with a $100
     million limit for WMECO.  Unless extended, the credit facility will expire
     on November 16, 2001.  At December 31, 2000 and 1999, there were $110
     million and $123 million, respectively, in borrowings under these
     facilities.

     Under the aforementioned credit agreement, WMECO may borrow at fixed or
     variable rates plus an applicable margin based upon certain debt ratings,
     as rated by the lower of Standard and Poor's or Moody's Investors Service.
     The weighted average interest rate on WMECO's notes payable to banks
     outstanding on December 31, 2000 and 1999, was 8.05 percent and 7.70
     percent, respectively.  Maturities of short-term debt obligations were for
     periods of three months or less.

     This credit agreement provides that WMECO must comply with certain
     financial and nonfinancial covenants as are customarily included in such
     agreements, including, but not limited to, common equity ratios and
     interest coverage ratios.  WMECO currently is and expects to remain in
     compliance with these covenants.

     Money Pool:  Certain subsidiaries of NU, including WMECO, are members of
     the Northeast Utilities System Money Pool (Pool).  The Pool provides a
     more efficient use of the cash resources of the NU system and reduces
     outside short-term borrowings.  NUSCO administers the Pool as agent for
     the member companies.  Short-term borrowing needs of the member companies
     are first met with available funds of other member companies, including
     funds borrowed by NU parent.  NU parent may lend to the Pool but may not
     borrow.  Funds may be withdrawn from or repaid to the Pool at any time
     without prior notice.  Investing and borrowing subsidiaries receive or
     pay interest based on the average daily federal funds rate.  Borrowings
     based on loans from NU parent, however, bear interest at NU parent's cost
     and must be repaid based upon the terms of NU parent's original borrowing.
     At December 31, 2000 and 1999, WMECO had $0.6 million and $9.4 million,
     respectively, of borrowings outstanding from the Pool.  The interest rate
     on borrowings from the Pool at December 31, 2000 and 1999, was 5.4 percent
     and 4.9 percent, respectively.

3.   LEASES
     WMECO finances its respective shares of the nuclear fuel for Millstone 2
     and 3 under the Niantic Bay Fuel Trust (NBFT) capital lease agreement.
     This capital lease agreement has an expiration date of June 1, 2040.  At
     December 31, 2000 and 1999, the present value of WMECO's capital lease
     obligation to the NBFT was $26.6 million and $29.8 million, respectively.
     In connection with the planned nuclear divestiture, the NBFT capital lease
     will be terminated, the nuclear fuel will be transferred to Dominion and
     the related $180 million Series G Intermediate Term Note Agreement will be
     extinguished with the divestiture proceeds.

     WMECO makes quarterly lease payments for the cost of nuclear fuel consumed
     in the reactors based on a units-of-production method at rates which
     reflect estimated kilowatt-hours of energy provided plus financing costs
     associated with the fuel in the reactors.  Upon permanent discharge from
     the reactors, WMECO's ownership interest in the nuclear fuel transfers to
     WMECO.

     WMECO also has entered into lease agreements, some of which are capital
     leases, for the use of data processing and office equipment, vehicles,
     nuclear control room simulators, and office space.  The provisions of
     these lease agreements generally provide for renewal options.

     Capital lease rental payments charged to operating expense were $9.6
     million in 2000, $2.6 million in 1999 and $4.1 million in 1998.  Interest
     included in capital lease rental payments was $2.8 million in 2000, $3.1
     million in 1999 and $2.8 million in 1998.  Operating lease rental payments
     charged to expense were $3.2 million in 2000, $4.8 million in 1999 and
     $5.8 million in 1998.

     Future minimum rental payments, excluding annual nuclear fuel lease
     payments and executory costs such as property taxes, state use taxes,
     insurance, and maintenance, under long-term noncancelable leases, as
     of December 31, 2000, are as follows:

     --------------------------------------------------------------------------
     Year                                 Capital Leases     Operating Leases
     --------------------------------------------------------------------------
                                                 (Millions of Dollars)

     2001................................     $ 0.1                $ 3.5
     2002................................       0.1                  3.4
     2003................................       0.1                  3.1
     2004................................        -                   2.8
     2005................................        -                   2.6
     After 2005..........................        -                  13.1
                                              -----                -----
     Future minimum lease payments.......       0.3                $28.5
                                                                   =====
     Present value of future nuclear
       fuel lease payments...............      26.6
                                              -----
     Present value of future minimum
       lease payments....................     $26.9
                                              =====
     --------------------------------------------------------------------------

4.   PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
     Details of preferred stock not subject to mandatory redemption are as
     follows:

     --------------------------------------------------------------------------
                             December 31,      Shares
                                2000         Outstanding      December 31,
                             Redemption      December 31,    -------------
     Description               Price            2000         2000     1999
     --------------------------------------------------------------------------
                                                          (Millions of Dollars)

     7.72% Series B of 1971   $103.51          200,000       $20.0    $20.0
     --------------------------------------------------------------------------

5.   PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
     Details of preferred stock subject to mandatory redemption are as
     follows:

     --------------------------------------------------------------------------
                             December 31,       Shares
                                2000          Outstanding      December 31,
                             Redemption       December 31,    -------------
     Description               Price             2000         2000     1999
     --------------------------------------------------------------------------
                                                          (Millions of Dollars)

     7.60% Series of 1987      $25.26          660,000        $16.5   $18.0

     Less preferred stock
       to be redeemed
       within one year                          60,000          1.5     1.5
                                                              -----   -----
                                                              $15.0   $16.5
                                                              =====   =====
     --------------------------------------------------------------------------

     This series is subject to certain refunding limitations for the first five
     years after issuance.  The redemption price reduces in future years.

     The minimum sinking fund requirements of the series subject to mandatory
     redemption aggregate $1.5 million per year for each year for 2001 through
     2005.  In case of default on sinking fund payments, no payments may be
     made on any junior stock by way of dividends or otherwise (other than in
     shares of junior stock) so long as the default continues.  If WMECO is in
     arrears in the payment of dividends on any outstanding shares of preferred
     stock, WMECO is prohibited from redeeming or purchasing less than all of
     the outstanding preferred stock.

6.   LONG-TERM DEBT
     Details of long-term debt outstanding are as follows:

     --------------------------------------------------------------------------
      At December 31,                                    2000       1999
     --------------------------------------------------------------------------
                                                      (Millions of Dollars)
     First Mortgage Bonds:
     7 3/8% Series B, due 2001...................       $ 60.0     $ 60.0
     7 3/4% Series V, due 2002...................         40.0       84.2
     7 3/4% Series Y, due 2024...................           -        50.0
                                                        ------     ------
                                                         100.0      194.2
     Pollution Control Notes:
       Tax Exempt 1993 Series A, 5.85% due 2028..         53.8       53.8
     Fees and interest due for spent nuclear
       fuel disposal costs.......................         45.6       43.0
     Less amounts due within one year............         60.0         -
     Unamortized premium and discount, net.......           -        (0.7)
                                                        ------     ------
     Long-term debt, net.........................       $139.4     $290.3
                                                        ======     ======
     --------------------------------------------------------------------------

     Long-term debt maturities and cash sinking fund requirements, excluding
     fees and interest due for spent nuclear fuel disposal costs, on debt
     outstanding at December 31, 2000, for the years 2001 through 2005 are
     $60 million, $40 million, and no requirements for 2003, 2004 and 2005.

     Essentially all utility plant of WMECO is subject to the liens of the
     company's first mortgage bond indenture.

     WMECO has secured $53.8 million of pollution control notes with second
     mortgage liens on Millstone 1, junior to the liens of its first mortgage
     bond indenture.

7.   INCOME TAX EXPENSE
     The components of the federal and state income tax provisions were
     charged/(credited) to operations as follows:

     --------------------------------------------------------------------------
     For the Years Ended December 31,                2000      1999      1998
     --------------------------------------------------------------------------
                                                       (Millions of Dollars)
     Current income taxes:
     Federal......................................  $ 15.8    $ 13.5    $ (7.4)
     State........................................    10.9       2.0      (0.1)
                                                    ------    ------    ------
       Total current..............................    26.7      15.5      (7.5)
                                                    ------    ------    ------
     Deferred income taxes, net:
       Federal....................................    (0.8)     (3.5)      6.5
       State......................................    (8.6)     (0.9)      2.4
                                                    ------    ------    ------
         Total deferred...........................    (9.4)     (4.4)      8.9
                                                    ------    ------    ------
     Investment tax credits, net..................    (2.1)     (2.2)     (1.5)
                                                    ------    ------    ------
     Total income tax expense/(credit)............  $ 15.2    $  8.9    $ (0.1)
                                                    ======    ======    ======
     --------------------------------------------------------------------------

     The components of total income tax expense/(credit) are classified as
     follows:

     --------------------------------------------------------------------------
     For the Years Ended December 31,                2000      1999      1998
     --------------------------------------------------------------------------
                                                       (Millions of Dollars)

     Income taxes charged to operating expenses...   $21.2    $18.8     $ 2.1
     Other income taxes...........................    (6.0)    (9.9)     (2.2)
                                                     -----    -----     -----
     Total income tax expense/(credit)............   $15.2    $ 8.9     $(0.1)
                                                     =====    =====     =====
     --------------------------------------------------------------------------

     Deferred income taxes are comprised of the tax effects of temporary
     differences as follows:

     --------------------------------------------------------------------------
     For the Years Ended December 31,                2000      1999      1998
     --------------------------------------------------------------------------
                                                       (Millions of Dollars)
     Depreciation, leased nuclear  fuel,
       settlement credits and disposal costs......  $ 0.9    $ (2.3)    $ 5.8
     Regulatory deferral..........................  (16.4)     (1.4)      1.3
     Regulatory disallowance......................     -       (4.2)       -
     Pension accruals.............................    5.9       4.2       1.0
     Other........................................    0.2      (0.7)      0.8
                                                    -----     -----     -----
     Deferred income taxes, net...................  $(9.4)    $(4.4)    $ 8.9
                                                    =====     =====     =====
     --------------------------------------------------------------------------

     A reconciliation between income tax expense/(credit) and the expected tax
     expense/(credit) at 35 percent of pretax income/(loss) is as follows:

     --------------------------------------------------------------------------
     For the Years Ended December 31,                2000      1999      1998
     --------------------------------------------------------------------------
                                                       (Millions of Dollars)
     Expected federal income tax..................  $17.6      $ 4.1   $(3.4)
     Tax effect of differences:
       Depreciation...............................   (1.2)       0.2     2.2
       Amortization of regulatory assets..........    1.3        6.2     0.9
       Investment tax credit amortization.........   (2.1)      (2.2)   (1.5)
       State income taxes, net of
         federal benefit..........................    1.5        0.7     1.5
       Dividends received deduction...............   (1.7)      (0.4)   (0.7)
       Other, net.................................   (0.2)       0.3     0.9
                                                    -----      -----   -----
     Total income tax expense/(credit)............  $15.2      $ 8.9   $(0.1)
                                                    =====      =====   =====
     --------------------------------------------------------------------------


8.   PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
     The NU system companies, including WMECO, participate in a uniform
     noncontributory defined benefit retirement plan covering substantially
     all regular NU system employees.  Benefits are based on years of service
     and the employees' highest eligible compensation during 60 consecutive
     months of employment.  WMECO's portion of the NU system's total pension
     credit, part of which was credited to utility plant, was $19 million in
     2000, $10.8 million in 1999 and $7.4 million in 1998.

     Currently, WMECO's policy is to annually fund an amount at least equal
     to that which will satisfy the requirements of the Employee Retirement
     Income Security Act and Internal Revenue Code.

     The NU system companies, including WMECO, also provide certain health
     care benefits, primarily medical and dental, and life insurance benefits
     through a benefit plan to retired employees.  These benefits are available
     for employees retiring from WMECO who have met specified service
     requirements.  For current employees and certain retirees, the total
     benefit is limited to two times the 1993 per retiree health care cost.
     These costs are charged to expense over the estimated work life of the
     employee.  WMECO annually funds postretirement costs through external
     trusts with amounts that have been rate-recovered and which also are
     tax deductible.

     Pension and trust assets are invested primarily in domestic and
     international equity securities and bonds.

     The following table represents information on the plans' benefit
     obligation, fair value of plan assets, and the respective plans' 7
     funded status:

-------------------------------------------------------------------------------
                                                At December 31,
-------------------------------------------------------------------------------
                                   Pension Benefits     Postretirement Benefits
-------------------------------------------------------------------------------
(Millions of Dollars)              2000       1999         2000         1999
-------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
  at beginning of year.........   $(118.1)   $(118.7)     $(29.5)      $(30.1)
Service cost...................      (2.2)      (2.4)       (0.4)        (0.5)
Interest cost..................      (8.9)      (8.5)       (2.2)        (2.1)
Plan amendment.................        -        (7.3)         -            -
Transfers......................       0.5        0.2          -            -
Actuarial (loss)/gain..........      (3.0)      10.2        (0.5)         0.4
Benefits paid..................       8.2        7.8         2.6          2.6
Settlements and other..........       2.4        0.6         0.7          0.2
-------------------------------------------------------------------------------
Benefit obligation
  at end of year...............   $(121.1)   $(118.1)     $(29.3)      $(29.5)
-------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
  at beginning of year.........   $ 223.9    $ 201.6      $ 16.6       $ 14.6
Actual return on plan assets...      (0.9)      29.9         0.8          1.7
Employer contribution..........        -          -          2.5          2.9
Benefits paid..................      (8.2)      (7.8)       (2.6)        (2.6)
Transfers......................      (0.5)       0.2          -            -
-------------------------------------------------------------------------------
Fair value of plan assets
  at end of year...............   $ 214.3    $ 223.9      $ 17.3       $ 16.6
-------------------------------------------------------------------------------
Funded status at December 31...   $  93.2    $ 105.8      $(12.0)      $(12.9)
Unrecognized transition
  (asset)/obligation...........      (0.9)      (1.2)       19.1         21.2
Unrecognized prior
  service cost.................       6.6        7.6          -            -
Unrecognized net gain..........     (53.4)     (85.7)       (6.6)        (8.2)
-------------------------------------------------------------------------------
Prepaid benefit cost...........   $  45.5    $  26.5      $  0.5       $  0.1
-------------------------------------------------------------------------------

     The following actuarial assumptions were used in calculating the plans'
     year end funded status:

      -------------------------------------------------------------------------
                                                At December 31,
      -------------------------------------------------------------------------
                                   Pension Benefits     Postretirement Benefits
      -------------------------------------------------------------------------
                                     2000    1999           2000      1999
      -------------------------------------------------------------------------
      Discount rate.............     7.50%   7.75%          7.50%     7.75%
      Compensation/progression
        rate....................     4.50    4.75           4.50      4.75
      Health care cost
        trend rate (a)..........      N/A     N/A           5.26      5.57
      -------------------------------------------------------------------------

      (a) The annual per capita cost of covered health care benefits was
          assumed to decrease to 4.91 percent by 2001.

     The components of net periodic benefit (credit)/cost are:

     --------------------------------------------------------------------------
                                     For the Years Ended December 31,
     --------------------------------------------------------------------------
                                                           Postretirement
                                 Pension Benefits              Benefits
     --------------------------------------------------------------------------
     (Millions of Dollars)   2000      1999      1998     2000   1999     1998
     --------------------------------------------------------------------------
     Service cost.........  $  2.2   $  2.4    $  2.2    $ 0.4   $ 0.5   $ 0.5
     Interest cost........     8.9      8.5       7.9      2.2     2.1     2.1
     Expected return
       on plan assets.....   (19.0)   (16.9)    (14.8)    (1.3)   (1.0)   (0.9)
     Amortization of
       unrecognized net
       transition (asset)/
       obligation.........    (0.2)    (0.2)     (0.2)     1.6     1.6     1.6
     Amortization of prior
       service cost.......     0.6      0.6       0.1       -       -       -
     Amortization of
       actuarial gain.....    (4.9)    (3.4)     (2.6)      -       -       -
     Other
       amortization, net..      -        -         -      (0.4)   (0.3)   (0.4)
     Settlements and
       other..............    (6.6)    (1.8)       -        -       -       -
     --------------------------------------------------------------------------
     Net periodic benefit
      (credit)/cost.......  $(19.0)  $(10.8)   $ (7.4)   $ 2.5   $ 2.9   $ 2.9
     --------------------------------------------------------------------------

     For calculating pension and postretirement benefit costs, the following
     assumptions were used:

     --------------------------------------------------------------------------
                                     For the Years Ended December 31,
     --------------------------------------------------------------------------
                                                           Postretirement
                                 Pension Benefits              Benefits
     --------------------------------------------------------------------------
                            2000      1999      1998     2000    1999     1998
     --------------------------------------------------------------------------
     Discount rate........  7.75%     7.00%     7.25%    7.75%   7.00%    7.25%
     Expected long-term
       rate of return.....  9.50      9.50      9.50      N/A     N/A      N/A
     Compensation/
      progression rate....  4.75      4.25      4.25     4.75    4.25     4.25
     Long-term rate
       of return -
       Health assets,
         net of tax.......   N/A       N/A       N/A     7.50    7.50     7.75
       Life assets........   N/A       N/A       N/A     9.50    9.50     9.50
     --------------------------------------------------------------------------

     Assumed health care cost trend rates have a significant effect on the
     amounts reported for the health care plans.  The effect of changing the
     assumed health care cost trend rate by one percentage point in each year
     would have the following effects:

     --------------------------------------------------------------------------
                                            One Percentage     One Percentage
     (Millions of Dollars)                  Point Increase     Point Decrease
     --------------------------------------------------------------------------
     Effect on total service and
       interest cost components                  $0.1              $(0.1)
     Effect on postretirement
       benefit obligation                        $1.4              $(1.3)
     --------------------------------------------------------------------------

     The trust holding the health plan assets is subject to federal income
     taxes.

9.   COMMITMENTS AND CONTINGENCIES

     A.  Restructuring
         A settlement has been reached with the Massachusetts Attorney General
         finalizing a $155 million securitization plan.  WMECO expects to
         receive approval of its securitization plan in February 2001.

     B.  Nuclear Generation Assets Divestiture
         On August 7, 2000, WMECO and certain other joint owners reached an
         agreement to sell substantially all of the Millstone units, located
         in Waterford, Connecticut, to Dominion, for approximately $1.3
         billion, including approximately $105 million for nuclear fuel.
         Dominion has also agreed to assume responsibility for decommissioning
         the three units and NU will transfer to Dominion all funds in the
         Millstone decommissioning trust.  Additionally, NU is obligated to
         top-off the decommissioning trust if its value does not equal a
         previously agreed upon level as defined.  NU expects to close on the
         sale of Millstone as early as the end of March 2001.

         If the transaction is consummated as proposed, WMECO would receive
         gross proceeds of approximately $196.2 million on a pretax basis for
         its respective ownership interest.  The proceeds from the sale of
         this interest will be used to reduce the company's stranded costs
         under restructuring and the cash proceeds will be used to repay
         subsidiary debt and capital lease obligations and to return equity
         capital to the parent company.

     C.  Environmental Matters
         The NU system, including WMECO, is subject to environmental laws and
         regulations intended to mitigate or remove the effect of past
         operations and improve or maintain the quality of our environment.
         As such, the NU system, including WMECO, have active environmental
         auditing and training programs and believe they are substantially in
         compliance with the current laws and regulations.

         However, the normal course of operations may involve activities and
         substances that expose WMECO to potential liabilities of which
         management cannot determine the outcome.  Additionally, management
         cannot determine the outcome for liabilities that may be imposed for
         past acts, even though such past acts may have been lawful at the
         time they occurred.  Management does not believe, however, that this
         will have a material impact on WMECO's consolidated financial
         statements.

         Based upon currently available information for the estimated
         remediation costs as of December 31, 2000 and 1999, the liability
         recorded by WMECO for its estimated environmental remediation costs
         amounted to $4.6 million and $4.2 million, respectively.

     D.  Spent Nuclear Fuel Disposal Costs
         Under the Nuclear Waste Policy Act of 1982, WMECO must pay the DOE for
         the disposal of spent nuclear fuel and high-level radioactive waste.
         The DOE is responsible for the selection and development of
         repositories for, and the disposal of, spent nuclear fuel and high-
         level radioactive waste.  For nuclear fuel used to generate
         electricity prior to April 7, 1983 (Prior Period Fuel), an accrual has
         been recorded for the full liability and payment must be made prior to
         the first delivery of spent fuel to the DOE.  Until such payment is
         made, the outstanding balance will continue to accrue interest at the
         3-month treasury bill yield rate.  As of December 31, 2000 and 1999,
         fees due to the DOE for the disposal of Prior Period Fuel were $45.6
         million and $43 million, respectively, including interest costs of
         $30 million and $27.4 million, respectively.

         Fees for nuclear fuel burned on or after April 7, 1983, are billed
         currently to customers and paid to the DOE on a quarterly basis.
         WMECO is responsible for fees to be paid for fuel burned until the
         divestiture of the Millstone nuclear units.

     E.  Nuclear Insurance Contingencies
         Insurance policies covering WMECO's ownership share of the NU system's
         nuclear facilities have been purchased for the primary cost of repair,
         replacement or decontamination of utility property, certain extra
         costs incurred in obtaining replacement power during prolonged
         accidental outages and the excess cost of repair, replacement or
         decontamination or premature decommissioning of utility property.

         WMECO is subject to retroactive assessments if losses under those
         policies exceed the accumulated funds available to the insurer.  The
         maximum potential assessments with respect to losses arising during
         the current policy year for the primary property insurance program,
         the replacement power policies and the excess property damage policies
         are $1.1 million, $0.6 million and $1.4 million, respectively.  In
         addition, insurance has been purchased by the NU system in the
         aggregate amount of $200 million on an industry basis for coverage
         of worker claims.

         Under certain circumstances, in the event of a nuclear incident at
         one of the nuclear facilities covered by the federal government's
         third-party liability indemnification program, the NU system,
         including WMECO, could be assessed liabilities in proportion to its
         ownership interest in each of its nuclear units up to $83.9 million.
         The NU system's payment of this assessment would be limited to, in
         proportion to its ownership interest in each of its nuclear units,
         $10 million in any one year per nuclear unit.  In addition, if the
         sum of all claims and costs from any one nuclear incident exceeds the
         maximum amount of financial protection, the NU system, including
         WMECO, would be subject to an additional 5 percent, or $4.2 million,
         liability, in proportion to its ownership interests in each of its
         nuclear units.  Based upon its ownership interests in the Millstone
         units, WMECO's maximum liability, including any additional
         assessments, would be $44.3 million per incident, of which payments
         would be limited to $5 million per year.  In addition, through
         purchased-power contracts with VYNPC, WMECO would be responsible for
         up to an additional assessment of $2.2 million per incident, of which
         payments would be limited to $0.3 million per year.

         WMECO expects to terminate its nuclear insurance upon the divestiture
         of its nuclear units.

     F.  Long-Term Contractual Arrangements
         Yankee Companies:  Under the terms of its agreement, WMECO paid its
         ownership (or entitlement) shares of costs, which included
         depreciation, operation and maintenance (O&M) expenses, taxes, the
         estimated cost of decommissioning, and a return on invested capital.
         These costs were recorded as purchased-power expenses.  WMECO's cost
         of purchases under its contract with VYNPC amounted to $4 million in
         2000, $4.7 million in 1999 and $4.4 million in 1998.  VYNPC is in the
         process of selling its nuclear unit.  Upon completion of the sale,
         this long-term contract will be terminated.

         Nonutility Generators (NUGs): WMECO has entered into various
         arrangements for the purchase of capacity and energy from NUGs.
         WMECO's total cost of purchases under these arrangements amounted to
         $28.5 million in 2000, $28.2 million in 1999 and $29.9 million in
         1998.  The company is in the process of renegotiating the terms of
         these contracts through either a contract buydown or buyout.  WMECO
         expects any payments to the NUGs as a result of these renegotiations
         to be recovered from the company's customers.

         Hydro-Quebec:  Along with other New England utilities, WMECO has
         entered into an agreement to support transmission and terminal
         facilities to import electricity from the Hydro-Quebec system in
         Canada.  WMECO is obligated to pay, over a 30-year period ending in
         2020, its proportionate share of the annual O&M expenses and capital
         costs of those facilities.

         Estimated Annual Costs:  The estimated annual costs of WMECO's
         significant long-term contractual arrangements, absent the effects
         of any contract terminations, buydowns or buyouts are as follows:

         ---------------------------------------------------------------------
                                   2001     2002     2003     2004     2005
         ---------------------------------------------------------------------
                                             (Millions of Dollars)

         VYNPC.............       $ 4.8     $ 4.9    $ 5.0    $ 5.4    $ 5.1
         NUGs..............        29.5      30.4     31.2     31.9     32.6
         Hydro-Quebec......         3.2       3.1      3.0      2.9      2.8
         ---------------------------------------------------------------------

10.  NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
     Millstone:  WMECO's operating nuclear power plants, Millstone 2 and 3,
     have service lives that are expected to end in 2015 and 2025,
     respectively, and upon retirement, must be decommissioned.  Millstone 1's
     expected service life was to end in 2010, however, in July 1998, restart
     activities were discontinued and decommissioning of the unit began.
     In connection with the sale of the Millstone units, Dominion has agreed to
     assume responsibility for decommissioning.  Until the divestiture, WMECO
     recovers sufficient amounts through its allowed rates related to
     decommissioning costs.

     WMECO's ownership share of the estimated cost of decommissioning
     Millstone 2 and 3, in year end 2000 dollars, is $81.8 million and $79.3
     million, respectively.  Nuclear decommissioning costs are accrued over the
     expected service lives of the units and are included in depreciation
     expense and the accumulated provision for depreciation.  Nuclear
     decommissioning expenses for these units amounted to $3.7 million in 2000,
     1999 and 1998.  Nuclear decommissioning expenses for Millstone 1 were
     $2.5 million in 2000, $2.9 million in 1999 and $2.5 million in 1998.
     Through December 31, 2000 and 1999, total decommissioning expenses of $43
     million and $39.3 million, respectively, have been collected from
     customers and are reflected in the accumulated provision for depreciation.

     External decommissioning trusts have been established for the costs of
     decommissioning the Millstone units.  Funding of the estimated
     decommissioning costs assumes after-tax earnings on the Millstone
     decommissioning funds of 5.5 percent.

     As of December 31, 2000 and 1999, $43 million and $39.3 million,
     respectively, have been transferred to external decommissioning trusts.
     Earnings on the decommissioning trusts increase the decommissioning trust
     balances and the accumulated provisions for depreciation.  Unrealized
     gains and losses associated with the decommissioning trusts also impact
     the balance of the trusts and the accumulated provisions for depreciation.
     The fair values of the amounts in the external decommissioning trusts
     were $82.4 million and $77.4 million at December 31, 2000 and 1999,
     respectively.  Upon divestiture, balances in the decommissioning trusts
     will be transferred to the buyer.  NU is obligated to top-off the
     Millstone decommissioning trust if its value does not equal an agreed upon
     amount at closing, pursuant to the conditions set forth in the purchase
     and sale agreement.

     Yankee Companies:  VYNPC owns and operates a nuclear generating unit with
     a service life that is expected to end in 2012.  WMECO's ownership share
     of estimated costs, in year end 2000 dollars, of decommissioning this unit
     is $11.3 million.  In 1999, VYNPC agreed to sell its nuclear generating
     unit for $22 million to an unaffiliated company.  Among other commitments,
     the acquiring company agreed to assume the obligation to decommission the
     unit after it is taken out of service, and the owners of VYNPC (including
     WMECO) agreed to fund their shares of the decommissioning costs up to a
     negotiated amount.  Subsequent to the time that agreement was executed,
     the original proposed acquiring company has increased the price it agreed
     to pay and three other unaffiliated companies have indicated their
     interest in buying VYNPC's generating unit on terms that have not been
     disclosed.  At present, WMECO expects that the unit will be sold, but the
     identity of the owner and the terms of sale, including price, future
     decommissioning obligations and future power purchase obligations, are not
     known.

     As of December 31, 2000 and 1999, WMECO's remaining estimated obligation,
     including decommissioning for the units owned by CYAPC, YAEC and MYAPC,
     which have been shut down was $42.5 million and $63.7 million,
     respectively.

11.  FAIR VALUE OF FINANCIAL INSTRUMENTS
     The following methods and assumptions were used to estimate the fair
     value of each of the following financial instruments:

     Nuclear Decommissioning Trusts:  WMECO's portion of the investments held
     in the NU system companies' nuclear decommissioning trusts were marked-
     to-market by $32.3 million as of December 31, 2000, and $35.4 million as
     of December 31, 1999, with corresponding offsets to the accumulated
     provision for depreciation.  The amounts adjusted in 2000 and in 1999
     represent cumulative net unrealized gains.  Cumulative gross unrealized
     holding losses were immaterial for both 2000 and 1999.

     Preferred stock and long-term debt:  The fair value of WMECO's fixed-rate
     securities is based upon the quoted market price for those issues or
     similar issues.  Adjustable rate securities are assumed to have a fair
     value equal to their carrying value.  The carrying amounts of WMECO's
     financial instruments and the estimated fair values are as follows:

     --------------------------------------------------------------------------
                                                    At December 31, 2000
     --------------------------------------------------------------------------
                                                   Carrying         Fair
     (Millions of Dollars)                          Amount          Value
     --------------------------------------------------------------------------
     Preferred stock not subject
       to mandatory redemption...............       $ 20.0         $ 20.2

     Preferred stock subject to
       mandatory redemption..................         16.5           16.5

     Long-term debt -
       First mortgage bonds..................        100.0          100.3

       Other long-term debt..................         99.4           93.7
     --------------------------------------------------------------------------

     --------------------------------------------------------------------------
                                                    At December 31, 1999
     --------------------------------------------------------------------------
                                                   Carrying         Fair
     (Millions of Dollars)                          Amount          Value
     --------------------------------------------------------------------------
     Preferred stock not subject
       to mandatory redemption...............       $ 20.0         $ 19.1

     Preferred stock subject to
       mandatory redemption..................         18.0           18.0

     Long-term debt -
       First mortgage bonds..................        194.2          196.3

       Other long-term debt..................         96.8           89.9
     --------------------------------------------------------------------------

12.  OTHER COMPREHENSIVE INCOME
     The accumulated balance for each other comprehensive income item is as
     follows:

     --------------------------------------------------------------------------
                                                        Current
                                       December 31,     Period     December 31,
                                           1999         Change         2000
     --------------------------------------------------------------------------
     (Thousands of Dollars)
     --------------------------------------------------------------------------
     Unrealized gains
       on securities................       $193          $22           $215
     Minimum pension
       liability adjustments...........     (33)          -             (33)
     --------------------------------------------------------------------------
     Accumulated other
       comprehensive income............    $160          $22           $182
     --------------------------------------------------------------------------

     --------------------------------------------------------------------------
                                                        Current
                                       December 31,     Period     December 31,
                                           1998         Change         1999
     --------------------------------------------------------------------------
     (Thousands of Dollars)
     --------------------------------------------------------------------------
     Unrealized gains
       on securities...................    $183           $10          $193
     Minimum pension
       liability adjustments...........     (33)           -            (33)
     --------------------------------------------------------------------------
     Accumulated other
       comprehensive income............    $150           $10          $160
     --------------------------------------------------------------------------

     The changes in the components of other comprehensive income are reported
     net of the following income tax effects:

     --------------------------------------------------------------------------
                                                  2000      1999      1998
     --------------------------------------------------------------------------
     (Thousands of Dollars)
     --------------------------------------------------------------------------
     Unrealized gains on securities.........      $(14)     $(7)     $(117)
     Minimum pension liability adjustments..         -        -         21
     Other comprehensive income.............      $(14)     $(7)     $ (96)
     --------------------------------------------------------------------------

13.  SEGMENT INFORMATION
     Effective January 1, 1999, the NU system companies, including WMECO,
     adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
     Related Information."  The NU system is organized between regulated
     utilities and competitive energy subsidiaries.  WMECO is included in the
     regulated utilities segment of the NU system and has no other reportable
     segments.

14.  SUBSEQUENT EVENT
     Merger Agreement With Consolidated Edison, Inc.:  In 2000, NU and
     Consolidated Edison, Inc. (Con Edison) received most of the approvals
     needed to complete the merger announced in October 1999.  Shareholders
     from both companies approved the merger in April 2000, and all state
     regulatory approvals were granted by the end of the year.  Additionally,
     the FERC approved the merger in May 2000, the Nuclear Regulatory
     Commission approved the transaction in August 2000, and the United States
     Department of Justice approved the merger in February 2001.  Necessary
     approval from the SEC was expected to be received in mid-March 2001.

     On February 28, 2001, NU's Board of Trustees requested that Con Edison
     provide reasonable assurance, in writing, that it intended to comply with
     the terms of the definitive merger agreement between the two companies.
     This included assurances that Con Edison would consummate the pending
     merger at the price set forth in the agreement promptly following the
     receipt of SEC approval.  The original request for assurance was to be
     received by March 2, 2001, however that date was later extended to
     March 5, 2001.  On March 5, 2001, Con Edison advised NU that it was not
     willing to close the merger on the agreed terms.  NU notified Con Edison
     that it was treating its refusal to proceed on the terms set forth in the
     merger agreement as a repudiation and breach of the merger agreement, and
     that NU would file suit to obtain the benefits of the transaction as
     negotiated for NU shareholders.  On March 6, 2001, Con Edison filed suit
     in the U.S. District Court for the Southern District of New York (Southern
     District), seeking declaratory judgment that NU failed to satisfy
     conditions precedent under the merger agreement.  On March 12, 2001,
     NU filed suit against Con Edison in the Southern District seeking damages
     in excess of $1 billion arising from Con Edison's breach of the merger
     agreement.


<TABLE>
Western Massachusetts Electric Company and Subsidiary
<CAPTION>
----------------------------------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA       2000         1999          1998          1997          1996
----------------------------------------------------------------------------------------------------------
                                                              (Thousands of Dollars)
<S>                                   <C>           <C>            <C>           <C>           <C>
Operating Revenues..................  $   513,678   $  414,231     $  393,322    $  426,447    $  421,337

Operating Income....................       54,096        41,741        19,854           251        33,190

Net Income/(Loss)...................       35,268         2,887        (9,579)      (27,460)       11,089

Cash Dividends on Common Stock......       12,002          -             -           15,004        16,494

Total Assets........................    1,047,818     1,253,604     1,287,682     1,179,128     1,191,915

Long-Term Debt (a)..................      199,425       290,279       389,314       396,649       349,442

Preferred Stock Not Subject
  to Mandatory Redemption)..........       20,000        20,000        20,000        20,000        20,000

Preferred Stock Subject to
  Mandatory Redemption (a)..........       16,500        18,000        19,500        21,000        21,000

Obligations Under Capital
  Leases (a)........................       26,921        29,972        34,093        32,887        32,234

----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
------------------------------------------------------------------------------------------------
                                                      Quarter Ended
------------------------------------------------------------------------------------------------
2000                           March 31        June 30        September 30         December 31
------------------------------------------------------------------------------------------------
                                                  (Thousands of Dollars)
<S>                            <C>             <C>              <C>                  <C>
Operating Revenues             $129,410        $120,090         $130,400             $133,778
                               ========        ========         ========             ========

Operating Income               $ 14,782        $  9,974         $ 13,940             $ 15,400
                               ========        ========         ========             ========

Net Income                     $ 11,053        $  2,956         $  9,638             $ 11,621
                               ========        ========         ========             ========
------------------------------------------------------------------------------------------------
1999
------------------------------------------------------------------------------------------------

Operating Revenues             $ 97,686        $108,829         $107,776             $ 99,940
                               ========        ========         ========             ========

Operating Income/(Loss)        $ 12,205        $  8,812         $ 22,821             $ (2,097)
                               ========        ========         ========             ========

Net Income/(Loss)              $  4,852        $  4,183         $ 11,368             $(17,516)
                               ========        ========         ========             ========
</TABLE>
(a) Includes portion due within one year.



Western Massachusets Electric Company and Subsidiary

-------------------------------------------------------------------------------
CONSOLIDATED STATISTICS (Unaudited)
-------------------------------------------------------------------------------

                                       Average
        Gross Electric                  Annual
         Utility Plant                 Use Per
          December 31,     kWh        Residential    Electric
        (Thousands of     Sales        Customer      Customers      Employees
           Dollars)     (Millions)      (kWh)       (Average)      December 31,
-------------------------------------------------------------------------------

2000    $1,535,514         7,278        7,371        198,372           406
1999     1,216,015         4,654        7,423        198,012           482
1998     1,256,046         4,091        6,979        196,339           533
1997     1,334,233         4,300        7,121        195,324           507
1996     1,303,361         4,626        7,335        194,705           497