1999 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............................     11

Consolidated Statements of Income...................................     13

Consolidated Statements of Comprehensive Income.....................     13

Consolidated Balance Sheets.........................................   14-15

Consolidated Statements of Common Stockholder's Equity..............     16

Consolidated Statements of Cash Flows...............................     17

Notes to Consolidated Financial Statements..........................     18

Selected Consolidated Financial Data................................     41

Consolidated Quarterly Financial Data (Unaudited)...................     41

Consolidated Statistics (Unaudited).................................     42

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 financial improvement that began in 1998 continued throughout 1999 at
Western Massachusetts Electric Company (WMECO or the company), an operating
subsidiary of Northeast Utilities (NU) and part of the Northeast Utilities
system (NU system), despite a rate reduction in Massachusetts.  WMECO's
results benefited from the successful restart of the Millstone 2 nuclear
unit, the strong operating performance delivered by the Millstone 3 nuclear
unit, retail sales growth, and continued control over operation and maintenance
(O&M) expenses.  A rate reduction reduced the positive impacts of these items.

During 1999, WMECO resolved key industry restructuring issues by receiving
final approval of a restructuring plan in Massachusetts.  The auction of
substantially all of the fossil and hydroelectric generation assets owned by
WMECO and the auction of its respective interest in the output of the Millstone
units, moved WMECO along in its transition into a purely electric transmission
and distribution company, as contemplated by restructuring legislation in
Massachusetts.

WMECO earned $2.9 million in 1999, compared with a loss of $9.6 million in
1998 and a loss of $27.5 million in 1997.  The 1999 results included after-tax
write-offs associated with the settlement of nuclear related issues and
industry restructuring totaling $27.9 million.  During 1998, WMECO's results
included write-offs associated with the retirement of Millstone 1 totaling
$26.7 million.

In 1999, WMECO's revenues increased to $414.2 million, up 5.3 percent from
revenues of $393.3 million in 1998.  The growth was primarily due to a 3.6
percent increase in retail sales.  That growth was due to weather related
factors that included a hotter than normal summer.  The balance of that
increase was due to economic expansion in WMECO's service territory.  A retail
rate reduction offset some of the growth in revenues.  WMECO's rates were
reduced a total of 15 percent from its August 1997 rates, 11.8 percent
adjusted for inflation, between March 1998 and September 1999.

Aside from increased revenues, the primary reason for better operating
performance in 1999 was the return to service from extended outages of
Millstone 3 in July 1998 and Millstone 2 in May 1999.

WMECO's ability to continue improving financial performance in 2000 will
depend largely on continued sales growth and on successful control of O&M
expenses.  WMECO also hopes to complete in 2000 the majority of restructuring
work remaining, primarily the issuance of rate reduction bonds (securitization)
to lower stranded costs, and the auction of WMECO's ownership interests in the
Millstone units.

Mergers

In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU not only remaining a major provider of electric
transmission and distribution service, but also an unregulated marketer
of both electricity and natural gas.  NU management also concluded that
as a result of the changes occurring in the highly competitive electric
utility industry, increased size would be crucial to achieve its objective
of being a leading provider of energy products and services in the Northeast.

On October 13, 1999, NU announced an agreement to merge with Consolidated
Edison, Inc. (Con Edison), a financially stronger utility based in New York.
The merger will create the nation's largest electric distribution system
with more than 5 million customers and one of the 15 largest natural gas
distribution systems with 1.4 million customers.

NU and Con Edison filed with various state and federal regulatory bodies
in January 2000 to secure approval of the merger.  The two companies expect
these regulatory proceedings can be completed by the end of July 2000.

Also in 1999, NU management concluded that the NU system would be stronger
and customers could be better served if NU reentered the natural gas
distribution business that it had exited in 1989 and examined several potential
businesses in New England.  By adding gas to NU's energy mix, NU will be able
to broaden its services to its existing customers and NU will have additional
opportunities for long-term growth.  In June 1999, NU announced an agreement
to merge with Yankee Energy System, Inc. (Yankee).  The merger will return
to NU Connecticut's largest natural gas distribution system, as well as
several unregulated businesses involved in energy services, collections and
other areas.  The Yankee merger received Yankee shareholder approval in
October 1999, final Connecticut Department of Public Utility Control (DPUC)
approval in December 1999 and Securities and Exchange Commission (SEC)
approval in January 2000.  The merger closed on March 1, 2000.

Liquidity

Net cash flows provided by operations decreased to $2.1 million, compared
to $27.6 million in 1998 and $27.7 million in 1997.  The impacts of strong
sales growth, improved nuclear performance and continued control of O&M
expenses were offset by the termination of its accounts receivable financing
arrangement.

In July 1999, WMECO sold 290 megawatts (MW) of fossil and hydroelectric
generation assets with an affiliate of Con Edison.  Proceeds from the sale
were $48.5 million.

Proceeds from the generation asset sale are included in net cash flows
provided by investing activities.  Including construction expenditures
and investments in nuclear decommissioning trusts, net cash flows
provided by investing activities were $22.9 million in 1999, compared
with net cash flows used in investing activities of $34.8 million in
1998 and $36.7 million in 1997.

Positive operating cash flows and the proceeds from the generation asset
sale enabled  WMECO to reduce its outstanding debt.  As of December 31, 1999,
WMECO's total debt level, including capital lease obligations, was $452.7
million, compared with $474.3 million as of December 31, 1998, and $458.9
million as of December 31, 1997.

The net cash flows used in financing activities were $24.1 million in 1999,
compared to net cash flows provided by financing activities of $7.2 million
in 1998 and $9.1 million in 1997.  This included $102.4 million paid in 1999
to retire long-term debt and preferred stock, compared to $11.3 million in
1998 and $14.7 million in 1997.  There were no cash dividends on common shares
paid in 1999 and 1998 and $15 million in 1997.  Payments made for preferred
stock dividends were $3.3 million, $3 million and $3.1 million for 1999, 1998
and 1997, respectively.

WMECO's access to capital also benefited from the strong operating performance
at Millstone 2 and 3 and the announced merger with Con Edison.  During 1999,
WMECO's securities received several upgrades from three credit rating agencies.
WMECO's senior secured bonds achieved investment grade ratings for the first
time since early 1997.  At year end, all securities were under review for
possible upgrades, or on "credit watch" with positive implications by
Standard & Poor's, Moody's Investors Service and Fitch IBCA.

The rating agency upgrades benefited WMECO's efforts to broaden its credit
lines.  On November 19, 1999, WMECO and The Connecticut Light and Power
Company (CL&P) entered into a new 364-day revolving credit facility for $500
million, replacing the previous $313.75 million facility which was to expire
on November 21, 1999.  The revolving credit facility, which is secured by
second mortgages on Millstone 2 and 3, will be used to bridge gaps in working
capital and provide short-term liquidity.  WMECO may draw up to $200 million
under the facility.  Once WMECO receives the proceeds from securitization,
the $500 million facility will be reduced to $300 million, with a $100 million
limit for WMECO.  As of December 31, 1999, WMECO had $123 million outstanding
under this facility.

For further information regarding the WMECO and CL&P revolving credit
facility, see Note 3, "Short-Term Debt," to the consolidated financial
statements.

Previously, WMECO also had arranged financing through the sale of its accounts
receivable. WMECO terminated its $40 million accounts receivable credit
facility on June 30, 1999.

During 2000, WMECO hopes to receive regulatory approval to begin the process
of securitizing its approved stranded costs. Securitization involves issuing
rate reduction bonds with interest rates lower than the company's weighted
average cost of capital.  Proceeds from securitization will be used to
significantly reduce the capitalization of WMECO and buydown its remaining
purchased-power contract with a nonutility generator.

Restructuring

During 1999, Massachusetts made significant progress in resolving industry
restructuring issues.  Restructuring orders issued in Massachusetts allowed
WMECO to determine the impacts of discontinuing Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types
of Regulation," for the generation portion of WMECO's business.  The
transmission and distribution portion of that business will continue to be
cost-of-service regulated.  In addition, the restructuring orders provided
for a transition charge which allows for the recovery of WMECO's generation-
related regulatory assets and prudently incurred stranded costs.

Massachusetts enacted electric utility restructuring legislation in
November 1997. Based on an interim order approving WMECO's restructuring
plan filed in December 1997, WMECO's customers were able to choose an
alternative retail electricity supplier beginning on March 1, 1998.  In 1999,
the Massachusetts Department of Telecommunications and Energy (DTE) issued
its final decision on WMECO's restructuring plan.  In that decision, the DTE
permitted WMECO to recover its generation-related regulatory asset balances
and its nuclear decommissioning costs.  However, the DTE disallowed any return
on Millstone 2 and 3 starting March 1, 1998, until they returned to service
and on Millstone 1 for its remaining life.  The pretax impact of these
disallowances was $41 million.  The DTE also approved one-year contracts
with the winning bidders of the standard offer and default service supply
auction.  For further information regarding commitments and contingencies
related to the Massachusetts restructuring order, see Note 11A, "Commitments
and Contingencies - Restructuring," to the consolidated financial statements.

Generation Asset Divestitures
The Massachusetts restructuring laws required WMECO to divest of its generation
assets and utilize substantially all of the net gains from any sales to offset
stranded costs.  During 1999, WMECO sold its fossil and certain hydroelectric
generation assets resulting in a net gain of $22.4 million.  A corresponding
amount of regulatory assets was amortized.  Also during 1999, WMECO signed
agreements to transfer certain hydroelectric generation assets to Northeast
Generation Company, an unregulated affiliate of NU.  This transaction closed
on March 14, 2000.  In September 1999, NU announced that the Millstone nuclear
generation assets of its subsidiaries, WMECO and CL&P, will be put up for
auction as soon as practical. For further information regarding commitments
and contingencies related to the generation asset divestitures, see Note 11A,
"Commitments and Contingencies - Restructuring," to the consolidated financial
statements.

Nuclear Generation

Millstone Nuclear Units
Millstone 3 received the appropriate Nuclear Regulatory Commission (NRC)
approvals and resumed operation in July 1998.  Millstone 2 received similar
NRC approvals and resumed operation in May 1999. Millstone 3 and 2 achieved
annual capacity factors of 81.7 percent and 57.9 percent in 1999, respectively.
After a 60-day refueling and maintenance outage, Millstone 3 returned to
service on June 29, 1999, and has achieved a 98.1 percent capacity factor
through December 31, 1999.  Since returning to service in May 1999, Millstone 2
has achieved a 90.3 percent capacity factor through December 31, 1999.
NU's total share of O&M expenses associated with Millstone 3 and 2 totaled
$261.8 million in 1999, as compared to $323.2 million in 1998 and $406 million
in 1997.  Millstone 1 is currently in decommissioning status.

An auction of WMECO's ownership interests in the Millstone units is expected
in 2000 with a closing in 2001.  Based on regulatory decisions received in
1999, management expects to recover all of its nuclear stranded costs through
the net gains from generation asset sales and from retail customers.

Yankee Companies
On June 1, 1999, the Federal Energy Regulatory Commission accepted the offer
of settlement which was filed on January 15, 1999, by the Maine Yankee Atomic
Power Company (MYAPC).  The significant aspects of the settlement allowed MYAPC
to collect $33.1 million annually to pay for decommissioning and spent fuel,
approved its return on equity of 6.5 percent, permitted full recovery of
MYAPC's unamortized investment, including fuel, and set an incentive budget
for decommissioning at $436.3 million.

On October 15, 1999, the Vermont Yankee Nuclear Power Corporation (VYNPC)
agreed to sell its unit for $22 million to an unaffiliated company.  Among
other commitments, the acquiring company agreed to assume the decommissioning
cost of the unit after it is taken out of service, and the VYNPC owners have
agreed to fund the uncollected decommissioning cost to a negotiated amount at
the time of the closing of the sale.  VYNPC's owners have also agreed either
to enter into a new purchased-power agreement with the acquiring company or
to buy out such future power payment obligations by making a fixed payment to
them.  WMECO has elected the buyout option.  The VYNPC owners' obligations
to close and pay such amounts are conditioned upon their receipt of
satisfactory regulatory approval of the transaction, including provision for
adequate recovery of these payments.

Nuclear Decommissioning
The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry regarding the recognition,
measurement and classification of decommissioning costs for nuclear
units in their financial statements.

Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived
assets, including the decommissioning of nuclear units.  If current
accounting practices for nuclear decommissioning change, the annual provision
for decommissioning could increase relative to 1999, and the estimated cost
for decommissioning could be recorded as a liability with recognition of an
increase in the cost of the related nuclear unit.  However, management does
not believe that such a change will have a material impact on WMECO's financial
statements due to the current and future ability to recover decommissioning
costs through rates.

Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent 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.
Adequate storage capacity exists to accommodate all spent nuclear fuel at
Millstone 1.  The facilities for Millstone 2 are expected to provide adequate
storage to accommodate a full-core discharge from the reactor until 2005 with
the implementation of currently planned modifications.  Fuel consolidation,
which has been licensed for Millstone 2, could provide adequate storage
capacity for its projected life.  The facilities for Millstone 3 are expected
to provide adequate storage for its projected life with the addition of new
storage racks.  Meeting spent fuel storage requirements beyond these periods
could require new and separate storage facilities.  For further information
regarding spent nuclear fuel disposal costs, see Note 11D, "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 11C, "Commitments and Contingencies - Environmental Matters," to the
consolidated financial statements.

Other Commitments and Contingencies
WMECO is subject to other commitments and contingencies primarily relating to
nuclear litigation, nuclear insurance contingencies, its construction program,
long-term contractual arrangements, and the New England Power Pool generation
pricing.  For further information regarding these commitments and
contingencies, see Note 11, "Commitments and Contingencies," to the
consolidated financial statements.

Year 2000 Issues
The transition into the year 2000 was a success for the NU system and WMECO.
Its mission to provide safe, reliable energy to its customers and to ensure
continued operability of critical business functions was not affected by any
year 2000 related issues.

The projected total cost of the year 2000 program is estimated at $21 million
for the NU system.  The total cost to date was funded through operating cash
flows.  The NU system has incurred and expensed $20 million related to year
2000 readiness efforts.

Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. 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)

                              1999 over/(under) 1998    1998 over/(under) 1997
                              ----------------------    ----------------------
                                Amount     Percent       Amount     Percent
                                ------     -------       ------     -------
Operating Revenues               $21          5%          $(33)       (8)%

Operating Expenses:
Fuel, purchased and
  net interchange power           21         16            (40)      (24)
Other operation and
  maintenance                    (25)       (14)           (31)      (15)
Depreciation                     (13)       (32)             1         3
Amortization of regulatory
  assets, net                     20         (a)            (1)       (6)
  Federal and state
    income taxes                   9         (a)            16        99
Taxes other than income taxes      1          5              -         -
Gain on sale of utility plant    (22)         -              -         -
Operating income                  22         (a)            20        (a)

Equity in earnings
  regional nuclear
  generating companies           (1)        (76)             -         -
Nuclear unrecoverable costs     (18)          -              -         -
Other, net                       (2)        (90)            (1)      (72)
Interest charges, net            (4)        (12)             2         8
Net Income                       12          (a)            18        65

(a) Percentage greater than 100.


Operating Revenues
Operating revenues increased by $21 million or 5 percent in 1999, 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).

Operating revenues decreased in 1998, primarily due to a 10 percent retail
rate decrease in 1998, partially offset by higher retail sales.  Retail
kilowatt-hour sales were 1.3 percent higher than 1997.

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

Fuel, purchased and net interchange power expense decreased in 1998, primarily
due to lower replacement power costs as a result of the return to service of
Millstone 3 and lower capacity charges from the Connecticut Yankee Atomic Power
Company and MYAPC ($10 million).

Other Operation and Maintenance
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).

Other O&M expenses decreased in 1998, primarily due to lower costs at the
Millstone units.

Depreciation
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.

The change in depreciation in 1998 was not significant.

Amortization of Regulatory Assets, Net
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).

The change in amortization of regulatory assets, net in 1998 was not
significant.

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

Federal and state income taxes increased in 1998, primarily due to higher
book taxable income.

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 Unrecoverable Costs
Nuclear unrecoverable 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).

Interest Charges
Interest charges decreased in 1999, primarily due to lower interest on long-
term debt outstanding.

The change in interest charges in 1998 was not significant.


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, 1999 and
1998, 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, 1999.  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 generally accepted auditing
standards.  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, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with generally accepted
accounting principles.

                                  /s/ ARTHUR ANDERSEN LLP
                                      ARTHUR ANDERSEN LLP



Hartford, Connecticut
January 25, 2000




WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,                   1999      1998       1997
------------------------------------------------------------------------------
                                                     (Thousands of Dollars)

<S>                                             <C>       <C>        <C>
Operating Revenues............................. $414,231  $393,322   $426,447
                                                --------- ---------  ---------
Operating Expenses:
  Operation -
     Fuel, purchased and net interchange power.  151,714   130,401    170,867
     Other.....................................  101,842   117,663    123,508
  Maintenance..................................   47,586    56,622     81,466
  Depreciation.................................   27,771    40,901     39,753
  Amortization of regulatory assets, net.......   26,488     6,016      6,428
  Federal and state income taxes...............   18,849     2,109    (15,142)
  Taxes other than income taxes................   20,677    19,756     19,316
  Gain on sale of utility plant................  (22,437)     -          -
                                                --------- ---------  ---------
        Total operating expenses...............  372,490   373,468    426,196
                                                --------- ---------  ---------
Operating Income...............................   41,741    19,854        251
                                                --------- ---------  ---------

Other (Loss)/Income:
  Equity in earnings of regional nuclear
    generating companies.......................      407     1,699      1,524
  Nuclear unrecoverable costs..................  (18,035)     -          -
  Other, net...................................   (3,618)   (1,905)    (1,106)
  Income taxes.................................    9,906     2,198      1,026
                                                --------- ---------  ---------
        Other (loss)/income, net...............  (11,340)    1,992      1,444
                                                --------- ---------  ---------
        Income before interest charges.........   30,401    21,846      1,695
                                                --------- ---------  ---------

Interest Charges:
  Interest on long-term debt...................   24,255    28,027     26,046
  Other interest...............................    3,259     3,398      3,109
                                                --------- ---------  ---------
        Interest charges, net..................   27,514    31,425     29,155
                                                --------- ---------  ---------

Net Income/(Loss).............................. $  2,887  $ (9,579)  $(27,460)
                                                ========= =========  =========


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net Income/(Loss).............................. $  2,887  $ (9,579)  $(27,460)
                                                --------- ---------  ---------
Other comprehensive income, net of tax:
Unrealized gains on securities.................       10       183       -
Minimum pension liability adjustments..........     -          (33)      -
                                                --------- ---------  ---------
   Other comprehensive income, net of tax......       10       150       -
                                                --------- ---------  ---------
Comprehensive Income/(Loss).................... $  2,897  $ (9,429)  $(27,460)
                                                ========= =========  =========
</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,                                                  1999          1998
---------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)

<S>                                                         <C>            <C>
ASSETS
------
Utility Plant, at original cost:
  Electric................................................  $  1,175,954   $ 1,221,257

     Less: Accumulated provision for depreciation.........       813,978       517,401
                                                            -------------  ------------
                                                                 361,976       703,856
  Construction work in progress...........................        21,181        14,858
  Nuclear fuel, net.......................................        18,880        19,931
                                                            -------------  ------------
      Total net utility plant.............................       402,037       738,645
                                                            -------------  ------------

Other Property and Investments:
  Nuclear decommissioning trusts, at market...............       144,567       125,598
  Investments in regional nuclear generating
   companies, at equity...................................        14,723        15,440
  Other, at cost..........................................         6,232         7,322
                                                            -------------  ------------
                                                                 165,522       148,360
                                                            -------------  ------------
Current Assets:
  Cash....................................................           950           106
  Investments in securitizable assets.....................          -           21,865
  Receivables, less the accumulated provision for
   uncollectible accounts of $1,640 in 1999
   and $50 in 1998.......................................         31,692           862
  Accounts receivable from affiliated companies...........         3,918         4,188
  Taxes receivable........................................         1,912        14,255
  Accrued utility revenues................................        13,485           -
  Fuel, materials, and supplies, at average cost..........         3,097         5,053
  Prepayments and other...................................        30,119        25,920
                                                            -------------  ------------
                                                                  85,173        72,249
                                                            -------------  ------------

Deferred Charges:
  Regulatory assets.......................................       594,800       322,435
  Unamortized debt expense................................         1,926         2,298
  Other...................................................         4,146         3,695
                                                            -------------  ------------
                                                                 600,872       328,428
                                                            -------------  ------------

      Total Assets........................................  $  1,253,604   $ 1,287,682
                                                            =============  ============
</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,                                                  1999          1998
---------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)

<S>                                                         <C>            <C>
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
  Common stock, $25 par value - 1,072,471 shares
   authorized and outstanding in 1999 and 1998............  $     26,812   $    26,812
  Capital surplus, paid in................................       171,691       151,431
  Retained earnings.......................................        38,712        46,003
  Accumulated other comprehensive income..................           160           150
                                                            -------------  ------------
           Total common stockholder's equity..............       237,375       224,396
  Preferred stock not subject to mandatory redemption.....        20,000        20,000
  Preferred stock subject to mandatory redemption.........        16,500        18,000
  Long-term debt..........................................       290,279       349,314
                                                            -------------  ------------
           Total capitalization...........................       564,154       611,710
                                                            -------------  ------------
Obligations Under Capital Leases..........................         8,106        12,129
                                                            -------------  ------------
Current Liabilities:
  Notes payable to banks..................................       123,000        20,000
  Notes payable to affiliated company.....................         9,400        30,900
  Long-term debt and preferred stock - current portion....         1,500        41,500
  Obligations under capital leases - current portion......        21,866        21,964
  Accounts payable........................................        12,974        17,952
  Accounts payable to affiliated companies................         3,208        12,866
  Accrued taxes...........................................           589         1,264
  Accrued interest........................................         6,046         8,030
  Other...................................................        14,384         6,831
                                                            -------------  ------------
                                                                 192,967       161,307
                                                            -------------  ------------


Deferred Credits and Other Long-term Liabilities:
  Accumulated deferred income taxes.......................       242,942       248,985
  Accumulated deferred investment tax credits.............        19,765        21,895
  Decommissioning obligation - Millstone 1................       136,130       131,500
  Deferred contractual obligations........................        63,701        74,534
  Other...................................................        25,839        25,622
                                                            -------------  ------------
                                                                 488,377       502,536
                                                            -------------  ------------

           Total Capitalization and Liabilities...........  $  1,253,604   $ 1,287,682
                                                            =============  ============
</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, 1997...............  $26,812    $150,911    $104,212    $       -        $281,935

    Net loss for 1997....................                          (27,460)                     (27,460)
    Cash dividends on preferred
      stock..............................                           (3,140)                      (3,140)
    Cash dividends on common stock.......                          (15,004)                     (15,004)
    Capital stock expenses, net..........                  260                                      260
                                           --------   ---------   ---------    -------------   ---------
Balance at December 31, 1997.............   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
                                           ========   =========   =========    =============   =========


(a)  No dividend restrictions except for appropriated retained earnings for hydro reserves
     which were established in 1978 of $0.9 million.
</TABLE>
The accompanying notes are an integral part of these financial statements.



WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                For the Years Ended December 31,
--------------------------------------------------------------------------------------------------
(Thousands of Dollars)                                             1999        1998        1997
--------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>         <C>
Operating Activities:
  Net income/(loss)........................................... $    2,887  $   (9,579) $  (27,460)
  Adjustments to reconcile to net cash
   provided by operating activities:
    Depreciation..............................................     27,771      40,901      39,753
    Deferred income taxes and investment tax credits, net.....     (6,544)      7,405      (1,256)
    Amortization of regulatory assets, net....................     26,488       6,016       6,428
    Nuclear unrecoverable costs...............................     18,035         -           -
    Allocation of ESOP benefits...............................     (6,880)        -           -
    Gain on sale of utility plant.............................    (22,437)        -           -
    Other (uses)/sources of cash..............................    (13,517)        636         796
  Changes in working capital:
    Receivables and accrued utility revenues..................    (44,045)      1,622      49,415
    Fuel, materials and supplies..............................      1,956         807        (543)
    Accounts payable..........................................    (14,636)    (20,962)      4,826
    Investments in securitizable assets.......................     21,865       3,415     (25,280)
    Accrued taxes.............................................       (675)        742      (2,137)
    Other working capital (excludes cash).....................     11,789      (3,441)    (16,882)
                                                               ----------- ----------- -----------
Net cash flows provided by operating activities...............      2,057      27,562      27,660
                                                               ----------- ----------- -----------
Financing Activities:
  Issuance of long-term debt..................................       -            -        60,000
  Net increase/(decrease) in short-term debt..................     81,500      21,550     (18,050)
  Reacquisitions and retirements of long-term debt............   (100,850)     (9,800)    (14,700)
  Reacquisitions and retirements of preferred stock...........     (1,500)     (1,500)        -
  Cash dividends on preferred stock...........................     (3,298)     (3,026)     (3,140)
  Cash dividends on common stock..............................       -            -       (15,004)
                                                               ----------- ----------- -----------
Net cash flows (used in)/provided by financing activities.....    (24,148)      7,224       9,106
                                                               ----------- ----------- -----------
Investing Activities:
  Investment in plant:
    Electric utility plant....................................    (30,192)    (19,895)    (26,249)
    Nuclear fuel..............................................     (5,817)     (1,801)         (8)
                                                               ----------- ----------- -----------
    Net cash flows used for investments in plant..............    (36,009)    (21,696)    (26,257)

  Investment in nuclear decommissioning trusts................    (11,387)    (12,918)     (9,645)
  Other investment activities, net............................      1,807        (171)       (826)
  Net proceeds from the sale of utility plant.................     48,524         -           -
  Capital contributions from Northeast Utilities..............     20,000         -           -
                                                               ----------- ----------- -----------
Net cash flows provided by/(used in) investing activities.....     22,935     (34,785)    (36,728)
                                                               ----------- ----------- -----------
Net increase in cash for the period...........................        844           1          38
Cash - beginning of period....................................        106         105          67
                                                               ----------- ----------- -----------
Cash - end of period.......................................... $      950  $      106  $      105
                                                               =========== =========== ===========
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
  Interest, net of amounts capitalized........................ $   30,958  $   22,902  $   28,711
                                                               =========== =========== ===========
  Income taxes................................................ $   (6,296) $   (2,624) $   (1,121)
                                                               =========== =========== ===========
Increase in obligations:
  Niantic Bay Fuel Trust...................................... $    1,112  $    2,375  $      660
                                                               =========== =========== ===========
</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 20 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 (Seabrook) nuclear unit 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.

       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/or applicable state regulatory commissions.

       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.  In addition, WMECO had previously established a special
       purpose subsidiary whose business consisted of the purchase and resale
       of receivables.  This business was terminated on June 30, 1999.

       On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison)
       announced that they have agreed to a merger to combine the two
       companies.  For further information, see Note 15, "Merger Agreement
       with Con Edison."

    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 generally
       accepted accounting principles 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.

    C. New Accounting Standards
       The Financial Accounting Standards Board (FASB) has issued Statement of
       Financial Accounting Standards (SFAS) No. 133, "Accounting for
       Derivative Instruments and Hedging Activities."  SFAS No. 133
       establishes accounting and reporting standards for derivative
       instruments and hedging activities.  This statement will require
       derivative instruments to be recognized as assets or liabilities at
       fair value.

       In June 1999, the FASB delayed the adoption date of SFAS No. 133 to
       January 1, 2001.

       There may be an impact on earnings upon adoption of SFAS No. 133 which
       management has not estimated at this time.

    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, 1999 and 1998, which
       are accounted for on the equity basis 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, 1999 and 1998, is
       $14.7 million and $15.4 million, respectively.  Each Yankee Company owns
       a single nuclear generating unit.  However, VYNPC is the only unit
       still in operation at December 31, 1999.

       Millstone:  WMECO has a 19 percent joint ownership in both Millstone 1,
       a 660 megawatt (MW) nuclear unit 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.  NU expects to auction
       all three units as a single package in 2000, with a closing in 2001.
       Appropriate regulatory approvals will be required to complete the
       auction.

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

       ------------------------------------------------------------------------
       At December 31,                                 1999         1998
       ------------------------------------------------------------------------
                                                     (Millions of Dollars)
       Plant-in-service
       Millstone 2...............................     $180.4       $177.5
       Millstone 3...............................      380.5        379.2
       Accumulated provision for depreciation
       Millstone 2...............................     $166.7       $ 70.4
       Millstone 3...............................      358.7        121.1
       ------------------------------------------------------------------------

    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 2.3 percent in 1999,
       2.9 percent in 1998 and 3.2 percent in 1997.

       At December 31, 1999 and 1998, the accumulated provision for
       depreciation included $3.2 million accrued for the cost of removal, net
       of salvage, for nonnuclear generation property.

       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, the company recorded a charge to accumulated depreciation for
       the nuclear plant in excess of fair market value 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 appropriate regulatory commission.  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 generally accepted accounting principles
       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.

       Based on a current evaluation of the various factors and conditions that
       are expected to impact future cost recovery, management continues to
       believe it is probable that WMECO will recover its investments in long-
       lived assets, including regulatory assets.  In addition, all material
       regulatory assets are earning a return.  The components of WMECO's
       regulatory assets are as follows:

       ------------------------------------------------------------------------
       At December 31,                                 1999         1998
       ------------------------------------------------------------------------
                                                     (Millions of Dollars)
       Recoverable nuclear costs.................     $428.9       $133.7
       Income taxes, net.........................       49.0         57.1
       Unrecovered contractual obligations.......       63.7         74.5
       Recoverable energy costs, net.............       16.3         19.0
       Other.....................................       36.9         38.1
                                                      ------       ------
                                                      $594.8       $322.4
                                                      ======       ======
       ------------------------------------------------------------------------

       The restructuring orders in Massachusetts provide for the transmission
       and distribution business to continue to be cost-of-service based and
       also provide for a transition charge which recovers stranded costs,
       including the nuclear regulatory assets established below.

       As a result of discontinuing the application of SFAS No. 71 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, 1999, the unamortized balance of $316.1 million is
       classified as recoverable nuclear costs.  Also included in that
       regulatory asset component for 1999 is $112.8 million, which includes
       Millstone 1 recoverable nuclear costs relating to the recoverable
       portion of the undepreciated plant and related assets ($43.8 million)
       and the decommissioning and closure obligation ($69 million).

    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,                                 1999         1998
       ------------------------------------------------------------------------
                                                     (Millions of Dollars)
       Accelerated depreciation and
         other plant-related differences.........     $213.4       $228.0

       Regulatory assets - income tax gross up...       19.0         29.3

       Other.....................................       10.5         (8.3)
                                                      ------       ------
                                                      $242.9       $249.0
                                                      ======       ======

       ------------------------------------------------------------------------

    I. 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, 1999 and 1998, WMECO's total D&D Assessment deferrals were
       $9.6 million and $10.5 million, respectively.

    J. 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 balance sheet.

2.  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 preparations for decommissioning the unit began.  Current
    decommissioning studies conclude that complete and immediate dismantlement
    as soon as practical after retirement continues to be the most viable and
    economic method of decommissioning a unit.  These studies are reviewed and
    updated periodically to reflect changes in decommissioning requirements,
    costs, technology, and inflation.  Changes in requirements or technology,
    the timing of funding or dismantling or adoption of a decommissioning
    method other than immediate dismantlement would change decommissioning
    cost estimates and the amounts required to be recovered.  WMECO attempts
    to recover sufficient amounts through its allowed rates to cover its
    expected decommissioning costs.

    WMECO's ownership share of the estimated cost of decommissioning Millstone
    2 and 3, in year end 1999 dollars, is $78.5 million and $75.8 million.
    Nuclear decommissioning costs are accrued over the expected service lives
    of the units and are included in depreciation expense.  Nuclear
    decommissioning expenses for these units amounted to $3.7 million in 1999,
    1998 and 1997, respectively.  Nuclear decommissioning, as a cost of
    removal, is included in the accumulated provision for depreciation.

    A Post-Shutdown Decommissioning Activities Report for Millstone 1
    was filed with the Nuclear Regulatory Commission in June 1999 which
    outlines decommissioning activities, and costs, and supports the obligation
    recorded by the company.  Nuclear decommissioning expenses for Millstone 1
    were $2.9 million in 1999 and $2.5 million in 1998 and 1997, respectively.

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

    As of December 31, 1999 and 1998, WMECO collected a total of $39.3 million
    and $35.5 million, respectively, through rates toward the future
    decommissioning costs of their shares of Millstone 2 and 3, all of
    which has been transferred to external decommissioning trusts.  Earnings
    on the decommissioning trusts increase the decommissioning trust balances
    and the accumulated reserves for depreciation.  Unrealized gains and losses
    associated with the decommissioning trusts and financing funds also impact
    the balance of the trusts and the accumulated reserve for depreciation.
    The fair values of the amounts in the external decommissioning trusts
    were $77.4 million and $66.9 million at December 31, 1999 and 1998,
    respectively.

    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 1999 dollars, of decommissioning this unit
    is $10.7 million.  On October 15, 1999, VYNPC agreed to sell the unit for
    $22 million to an unaffiliated company.  Among other commitments, the
    acquiring company agreed to assume the decommissioning cost of the unit
    after it is taken out of service, and the VYNPC owners have agreed to fund
    the uncollected decommissioning cost to a negotiated amount at the
    time of the closing of the sale.

    As of December 31, 1999 and 1998, WMECO's remaining estimated obligation,
    including decommissioning for the units owned by CYAPC, YAEC and MYAPC,
    which have been shut down was $63.7 million and $74.5 million,
    respectively.

3.  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
    the respective state regulators.  SEC authorization allowed WMECO, as of
    January 1, 1999, 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, 1999, WMECO's charter permits WMECO to incur $132
    million of unsecured debt.

    Credit Agreement: On November 19, 1999, WMECO and CL&P entered into a new
    364-day revolving credit facility for $500 million, replacing the previous
    $313.75 million facility which was to expire on November 21, 1999.  The
    revolving credit facility will be used to bridge gaps in working capital
    and provide short-term liquidity.  WMECO may draw up to $200 million under
    the facility, which is secured by second mortgages on Millstone 2 and 3.
    Unless extended, the new credit facility will expire on November 17, 2000.
    At December 31, 1999 and 1998, there were $123 million and $20 million,
    respectively, in borrowings under these facilities.

    Under the credit agreement discussed above, WMECO may borrow at fixed or
    variable rates plus an applicable margin based upon the company's most
    senior secured debt as rated by the lower of Standard & Poor's or Moody's
    Investors Service.  The weighted average interest rate on the WMECO's notes
    payable to banks outstanding on December 31, 1999 and 1998, was 7.70
    percent and 6.53 percent, respectively.

    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.

    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, 1999 and
    1998, WMECO had $9.4 million and $30.9 million, respectively, of borrowings
    outstanding from the Pool. The interest rate on borrowings from the Pool at
    December 31, 1999 and 1998, was 4.9 percent and 5.8 percent, respectively.
    Maturities of short-term debt obligations were for periods of three months
    or less.

4.  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, 1999 and 1998, the present value of WMECO's capital lease
    obligation to the NBFT was $29.8 million and $33.9 million, respectively.
    In connection with the planned nuclear divestiture, WMECO anticipates that
    its portion of the NBFT capital lease will be terminated and WMECO's
    portion of the NBFT's obligation under the $180 million Series G
    Intermediate Term Note agreement will be assigned to WMECO.

    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 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 $2.6
    million in 1999, $4.1 million in 1998 and $1.8 million in 1997.  Interest
    included in capital lease rental payments was $3.1 million in 1999, $2.8
    million in 1998 and $1.8 million in 1997.  Operating lease rental payments
    charged to expense were $4.8 million in 1999, $5.8 million in 1998 and
    $6 million in 1997.

    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, 1999, are:

    ---------------------------------------------------------------------------
    Year                                Capital Leases       Operating Leases
    ---------------------------------------------------------------------------

    2000..............................      $ 0.05                $ 4.3
    2001..............................        0.05                  3.9
    2002..............................        0.05                  3.7
    2003..............................        0.05                  3.4
    2004..............................         -                    3.1
    After 2004........................         -                   15.1
                                            ------                -----
    Future minimum lease payments.....        0.20                $33.5
                                                                  =====
    Present value of future nuclear
      fuel lease payments.............       29.80
                                            ------
    Present value of future
      minimum lease payments..........      $30.00
                                            ======
    ---------------------------------------------------------------------------

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


    ---------------------------------------------------------------------------
                             December 31,      Shares
                                1999        Outstanding       December 31,
                             Redemption     December 31,   ------------------
    Description                 Price           1999       1999          1998
    ---------------------------------------------------------------------------
                                                          (Millions of Dollars)

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

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

    ---------------------------------------------------------------------------
                             December 31,      Shares
                                1999        Outstanding       December 31,
                             Redemption     December 31,   ------------------
    Description                 Price           1999       1999          1998
    ---------------------------------------------------------------------------
                                                          (Millions of Dollars)

    7.60% Series of 1987       $25.38         720,000      $18.0         $19.5

    Less preferred stock
      to be redeemed
      within one year                          60,000        1.5           1.5
                                                           -----         -----
                                                           $16.5         $18.0
                                                           =====         =====
    ---------------------------------------------------------------------------

    The 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 2000 through
    2004.  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 would be prohibited from redeeming or purchasing
    less than all of the outstanding preferred stock.

7.  LONG-TERM DEBT
    Details of long-term debt outstanding are:

    ---------------------------------------------------------------------------
    At December 31,                                 1999         1998
    ---------------------------------------------------------------------------
                                                   (Millions of Dollars)
    First Mortgage Bonds:
    6 1/4% Series X, due 1999....................  $   -         $ 40.0
    6 7/8% Series W, due 2000....................      -           60.0
    7 3/8% Series B, due 2001....................    60.0          60.0
    7 3/4% Series V, due 2002....................    84.2          85.0
    7 3/4% Series Y, due 2024....................    50.0          50.0
                                                   ------        ------
                                                    194.2         295.0
    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........................    43.0          41.4
    Less amounts due within one year.............      -           40.0
    Unamortized premium and discount, net........    (0.7)         (0.9)
                                                   ------        ------
    Long-term debt, net..........................  $290.3        $349.3
                                                   ======        ======
    ---------------------------------------------------------------------------

    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, 1999, are $60 million and $84.2 million in
    2001 and 2002, respectively.  There are no long-term debt maturities or
    cash sinking fund requirements for 2000, 2003 and 2004.

    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.

    On October 1, 1998, the variable interest rate on WMECO's $53.8 million
    principal amount pollution control notes, 1993 Series A, due 2028, was
    fixed at a rate of 5.85 percent per annum.

8.  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,             1999       1998       1997
    ---------------------------------------------------------------------------
                                                   (Millions of Dollars)
    Current income taxes:
      Federal...............................     $13.5     $(7.4)     $(14.3)
      State.................................       2.0      (0.1)       (0.6)
                                                 -----     -----      ------
        Total current.......................      15.5      (7.5)      (14.9)
                                                 -----     -----      ------
    Deferred income taxes, net:
      Federal...............................      (3.5)      6.5          -
      State.................................      (0.9)      2.4         0.2
                                                 -----     -----      ------
        Total deferred......................      (4.4)      8.9         0.2
                                                 -----     -----      ------
    Investment tax credits, net.............      (2.2)     (1.5)       (1.5)
                                                 -----     -----      ------
    Total income tax expense/(credit).......     $ 8.9     $(0.1)     $(16.2)
                                                 =====     =====      ======
    ---------------------------------------------------------------------------

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

    ---------------------------------------------------------------------------
    For the Years Ended December 31,             1999       1998       1997
    ---------------------------------------------------------------------------
                                                   (Millions of Dollars)

    Income taxes charged to
      operating expenses....................     $18.8     $ 2.1      $(15.2)
    Other income taxes......................      (9.9)     (2.2)       (1.0)
                                                 -----     -----      ------
    Total income tax expense/(credit).......     $ 8.9     $(0.1)     $(16.2)
                                                 =====     =====      ======
    ---------------------------------------------------------------------------

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

    ---------------------------------------------------------------------------
    For the Years Ended December 31,             1999       1998       1997
    ---------------------------------------------------------------------------
                                                   (Millions of Dollars)
    Depreciation, leased nuclear fuel,
      settlement credits, and
      disposal costs........................     $(2.3)    $ 5.8      $ 1.4
    Regulatory deferral.....................      (1.4)      1.3         -
    Regulatory disallowance.................      (4.2)       -          -
    Pension accruals........................       4.2       1.0        1.0
    Other...................................      (0.7)      0.8       (2.2)
                                                 -----     -----      -----
    Deferred income taxes, net..............     $(4.4)    $ 8.9      $ 0.2
                                                 =====     =====      =====
    ---------------------------------------------------------------------------

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

    ---------------------------------------------------------------------------
    For the Years Ended December 31,             1999       1998       1997
    ---------------------------------------------------------------------------
                                                   (Millions of Dollars)

    Expected federal income tax.............     $4.1      $(3.4)     $(15.3)
    Tax effect of differences:
      Depreciation..........................      1.8        2.2         0.1
      Amortization of regulatory assets.....      4.6        0.9         1.9
      Investment tax credit amortization....     (2.2)      (1.5)       (1.5)
      State income taxes, net of
        federal benefit.....................      0.7        1.5        (0.3)
      Adjustment for prior years' taxes.....       -        (0.4)       (0.3)
      Dividends received deduction..........     (0.4)      (0.7)       (0.4)
      Other, net............................      0.3        1.3        (0.4)
                                                 ----      -----      ------
    Total income tax expense/(credit).......     $8.9      $(0.1)     $(16.2)
                                                 ====      =====      ======
    ---------------------------------------------------------------------------

9.  EMPLOYEE BENEFITS

    A. 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 $10.8 million
       in 1999, $7.4 million in 1998 and $5.7 million in 1997.

       Currently, WMECO annually funds an amount at least equal to that which
       will satisfy the requirements of the Employee Retirement Income Security
       Act and Internal Revenue Code (the 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 future 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 under the Code.

       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' funded
       status:

-------------------------------------------------------------------------------
                                                At December 31,
-------------------------------------------------------------------------------
                                 Pension Benefits     Postretirement Benefits
(Millions of Dollars)            1999        1998        1999          1998
-------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
  at beginning of year......... $(118.7)   $(109.5)     $(30.1)       $(27.8)
Service cost...................    (2.4)      (2.2)       (0.5)         (0.5)
Interest cost..................    (8.5)      (7.9)       (2.1)         (2.1)
Plan amendment.................    (7.3)        -           -             -
Transfers......................     0.2       (3.0)         -             -
Actuarial gain/(loss)..........    10.2       (3.8)        0.4          (2.4)
Benefits paid..................     7.8        7.7         2.6           2.7
Settlements....................     0.6         -          0.2            -
-------------------------------------------------------------------------------
Benefit obligation
  at end of year............... $(118.1)   $(118.7)     $(29.5)       $(30.1)
-------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
  at beginning of year......... $ 201.6    $ 181.0      $ 14.6        $ 12.8
Actual return on plan assets...    29.9       25.3         1.7           1.6
Employer contribution..........      -          -          2.9           2.9
Benefits paid..................    (7.8)      (7.7)       (2.6)         (2.7)
Transfers......................     0.2        3.0          -             -
-------------------------------------------------------------------------------
Fair value of plan assets
  at end of year............... $ 223.9    $ 201.6      $ 16.6        $ 14.6
-------------------------------------------------------------------------------
Funded status at December 31... $ 105.8    $  82.9      $(12.9)       $(15.5)
Unrecognized transition
  (asset)/obligation...........    (1.2)      (1.5)       21.2          23.0
Unrecognized prior
  service cost.................     7.6        1.1          -             -
Unrecognized net gain..........   (85.7)     (66.6)       (8.2)         (7.5)
-------------------------------------------------------------------------------
Prepaid benefit cost........... $  26.5    $  15.9      $  0.1        $   -
-------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------
                                                At December 31,
-------------------------------------------------------------------------------
                                 Pension Benefits     Postretirement Benefits
                                 1999        1998        1999          1998
-------------------------------------------------------------------------------
Discount rate.................   7.75%       7.00%       7.75%         7.00%
Compensation/progression rate.   4.75        4.25        4.75          4.25
Health care cost
  trend rate(a)...............    N/A         N/A        5.57          5.22
-------------------------------------------------------------------------------

      (a) The annual per capita cost of covered health care benefits was
          assumed to decrease to 4.90 percent by 2001.

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

-------------------------------------------------------------------------------
                                       For the Years Ended December 31,
-------------------------------------------------------------------------------
                                 Pension Benefits      Postretirement Benefits
(Millions of Dollars)         1999     1998    1997    1999    1998    1997
-------------------------------------------------------------------------------
Service cost............... $  2.4   $  2.2   $ 1.9   $ 0.5   $ 0.5   $ 0.4
Interest cost..............    8.5      7.9     7.9     2.1     2.1     2.0
Expected return on
  plan assets..............  (16.9)   (14.8)  (12.9)   (1.0)   (0.9)   (0.7)
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      0.1     0.1      -       -       -
Amortization of
  actuarial gain...........   (3.4)    (2.6)   (2.0)     -       -       -
Other amortization, net....     -        -       -     (0.3)   (0.4)   (0.5)
Settlements................   (1.8)      -     (0.5)     -       -       -
-------------------------------------------------------------------------------
Net periodic benefit
 (credit)/cost............. $(10.8)  $ (7.4)  $(5.7)  $ 2.9   $ 2.9   $ 2.8
-------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------
                                       For the Years Ended December 31,
-------------------------------------------------------------------------------
                                 Pension Benefits      Postretirement Benefits
                              1999     1998    1997    1999    1998    1997
-------------------------------------------------------------------------------
Discount rate..............   7.00%    7.25%   7.75%   7.00%   7.25%   7.75%
Expected long-term
  rate of return...........   9.50     9.50    9.25     N/A     N/A     N/A
Compensation/
  progression rate.........   4.25     4.25    4.75    4.25    4.25    4.75
Long-term rate of return -
  Health assets,
  net of tax...............    N/A      N/A     N/A    7.50    7.75    7.50
 Life assets...............    N/A      N/A     N/A    9.50    9.50    9.25
-------------------------------------------------------------------------------

       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..................         $1.8                $(1.7)
-------------------------------------------------------------------------------

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

    B. Employee Stock Ownership Plan
       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.  WMECO charged retained earnings for this payment,
       as compensation expense had already been recorded in the respective
       years at the fair market value of the shares allocated.

10. SALE OF CUSTOMER RECEIVABLES
    On June 30, 1999, WMECO terminated its $40 million accounts receivable
    program with its respective sponsor.  At December 31, 1998, WMECO had sold
    accounts receivable of $20 million to a third-party purchaser.

11. COMMITMENTS AND CONTINGENCIES

    A. Restructuring
       In 1999, restructuring orders required WMECO to discontinue the
       application of SFAS No. 71 for the generation portion of its business.
       In these restructuring orders, WMECO was allowed to recover the majority
       of its stranded costs through a transition charge over the 12-year
       transition period beginning March 1, 1998.  The decision instructed
       WMECO to work with the Massachusetts attorney general regarding the
       recovery of nuclear capital additions made after July 1, 1991.  The
       decisions also concluded that the company's deferred fuel balance should
       be included as part of the company's outstanding generating unit
       performance proceedings and not as part of the transition charge.
       Management believes that these costs are recoverable and that there
       will not be an impact on the results of operations.

       In September 1999, NU announced that the Millstone nuclear generation
       assets of WMECO will be put up for auction as soon as practical.  The
       auction is expected to begin in early 2000, provided all regulatory
       approvals have been met, with a successful bidder chosen by mid 2000
       and a closing in 2001.  No NU system company will participate as a
       bidder in the auction process.  Management expects to recover all of
       WMECO's nuclear stranded costs through the net proceeds of generation
       asset sales and billing through a transition charge to retail customers.

    B. Nuclear Litigation
       The non-NU joint owners of Millstone 3 have filed demands for
       arbitration with WMECO and CL&P as well as lawsuits in Massachusetts
       Superior Court against NU and its current and former trustees related
       to the companies' operation of Millstone 3.  During 1999, NU and these
       subsidiaries agreed in principle to settle with certain of the joint
       owners, who own 58 percent of the non-NU ownership of Millstone 3.
       The settlements provide for the payment to the claimants of $36.4
       million and certain contingent payments.

       Arbitration and litigation claims remain outstanding for the
       remaining joint owners who have not agreed to settle.  Management
       cannot estimate the potential outcome of the arbitration and litigation
       for the nonsettled joint owners, therefore, no liability has been
       established at December 31, 1999.

    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 and WMECO have active environmental auditing and training
       programs and believe they are in compliance with the current laws and
       regulations.

       However, the normal course of operations may necessarily 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 financial statements.

       Based upon currently available information for the estimated remediation
       costs at December 31, 1999 and 1998, the liability recorded by WMECO for
       its estimated environmental remediation costs amounted to $4.2 million
       and $1.9 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.  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.
       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, 1999 and 1998, fees due to the DOE for the disposal
       of WMECO's Prior Period Fuel were $43 million and $41.4 million,
       respectively, including interest costs of $27.4 million and $25.5
       million, respectively.

    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
       $1.6 million, $0.9 million and $2 million, respectively.  In addition,
       insurance has been purchased by the NU system in the aggregate 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 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.

    F. Construction Program
       WMECO currently forecasts construction expenditures of $112.6 million
       for the years 2000-2004, including $24.2 million for 2000.  WMECO
       estimates that nuclear fuel requirements, including nuclear fuel
       financed through the NBFT, will be $30.8 million for the years 2000-
       2003, including $10.7 million for 2000.

    G. Long-Term Contractual Arrangements
       Yankee Companies: The NU system companies relied on VYNPC for 1.5
       percent of their capacity under long-term contracts.  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 and recovered through WMECO's rates.  WMECO's cost of purchases
       under contracts with VYNPC amounted to $4.7 million in 1999, $4.4
       million in 1998 and $3.9 million in 1997.  VYNPC has agreed to sell 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.  For
       the years ended December 31, 1999 and 1998, 13 percent and for the
       year ended December 31, 1997, 14 percent, of NU's system electricity
       requirements were met by NUGs.  WMECO's total cost of purchases under
       these arrangements amounted to $28.2 million in 1999, $29.9 million in
       1998 and $31.2 million in 1997.  The company is in the process of
       renegotiating the terms of these contracts through either a contract
       buydown or buyout.  The company 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 or buydowns are as follows:

       ------------------------------------------------------------------------
                                 2000     2001     2002     2003     2004
       ------------------------------------------------------------------------
                                           (Millions of Dollars)

       VYNPC.................  $  4.7    $ 4.8    $ 4.8    $ 4.8    $ 4.6
       NUGs..................    28.8     29.5     30.4     31.2     31.9
       Hydro-Quebec..........     3.6      3.5      3.4      3.3      3.2
       ------------------------------------------------------------------------

    H. New England Power Pool (NEPOOL) Generation Pricing
       Disputes with respect to interpretation and implementation of the NEPOOL
       market rules have arisen with respect to various competitive product
       markets.  In certain cases, WMECO stands to gain as a result of
       resolution of such disputes.  In other cases, WMECO could incur
       additional costs as the result of resolution of the disputes.  The
       various disputes are in various stages of resolution through
       alternative dispute resolution and regulatory review.  It is too early
       to tell the level of potential gain or loss that may result upon
       resolution of these issues.


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

       Supplemental Executive Retirement Plan (SERP) Investments:  WMECO's
       portion of the investments held for the benefit of the SERP are
       recorded at fair market value.  These investments having a cost basis
       of $0.1 million held for benefit of the SERP were recorded at their
       fair market values at December 31, 1999 and 1998, of $0.4 million.

       Nuclear decommissioning trusts: WMECO's portion of the investments held
       in the NU system companies' nuclear decommissioning trusts were marked-
       to-market by $35.4 million as of December 31, 1999, and $27.8 million as
       of December 31, 1998, with corresponding offsets to the accumulated
       provision for depreciation.  The amounts adjusted in 1999 and 1998
       represent cumulative net unrealized gains.  The cumulative gross
       unrealized holding losses were immaterial for both 1999 and 1998.

       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, 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
       ------------------------------------------------------------------------

       ------------------------------------------------------------------------
                                                    At December 31, 1998
       ------------------------------------------------------------------------
                                                  Carrying           Fair
       (Millions of Dollars)                       Amount            Value
       ------------------------------------------------------------------------
       Preferred stock not subject
         to mandatory redemption.................   $ 20.0          $ 19.8

       Preferred stock subject to
         mandatory redemption....................     19.5            19.8

       Long-term debt -
         First mortgage bonds....................    295.0           297.2

       Other long-term debt......................     95.2            95.4
       ------------------------------------------------------------------------

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

    ---------------------------------------------------------------------------
                                                      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
    ---------------------------------------------------------------------------

    ---------------------------------------------------------------------------
                                                      Current
                                       December 31,   Period     December 31,
                                          1997        Change         1998
    ---------------------------------------------------------------------------
    (Thousands of Dollars)
    ---------------------------------------------------------------------------
    Unrealized gains on securities....    $ -          $183          $183
    Minimum pension liability
     adjustments......................      -           (33)          (33)
    ---------------------------------------------------------------------------
    Accumulated other
      comprehensive income............    $ -          $150          $150
    --------------------------------------------------------------------------

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

    ---------------------------------------------------------------------------
    (Thousands of Dollars)                    1999         1998         1997
    ---------------------------------------------------------------------------
    Unrealized gains on securities.......     $(7)        $(117)        $ -
    Minimum pension liability
      adjustments........................       -            21           -
    ---------------------------------------------------------------------------
    Other comprehensive income...........     $(7)        $ (96)        $ -
    ---------------------------------------------------------------------------

14. 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 unregulated energy services.  WMECO is included in the
    regulated utilities segment of the NU system and has no other reportable
    segments.

15. MERGER AGREEMENT WITH CON EDISON
    On October 13, 1999, NU and Con Edison announced that they have agreed to
    a merger to combine the two companies.  The shareholders of NU will receive
    $25 per share in a combination of cash and Con Edison common stock.

    NU shareholders also have the right to receive an additional $1 per share
    if a definitive agreement to sell its interests (other than that now held
    by PSNH) in Millstone 2 and 3 is entered into and recommended by the
    Utility Operations and Management Unit of the DPUC on or prior to the later
    of December 31, 2000, or the closing of the merger.  Further, the value of
    the amount of cash or common stock to be received by NU shareholders is
    subject to increase by an amount of $0.0034 per share per day for each day
    that the transaction does not close after August 5, 2000.

    Upon completion of the merger, NU will become a wholly owned subsidiary of
    Con Edison.  The purchase is subject to the approval of the shareholders of
    both companies and several regulatory agencies.  The companies anticipate
    that these regulatory procedures can be completed by July 2000.

<TABLE>
<CAPTION>
Western Massachusetts Electric Company and Subsidiary
-----------------------------------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA          1999         1998        1997         1996          1995
-----------------------------------------------------------------------------------------------------------
                                                               (Thousands of Dollars)
<S>                                      <C>          <C>          <C>           <C>           <C>
Operating Revenues.....................  $  414,231   $  393,322   $  426,447    $  421,337    $  420,434

Operating Income.......................      41,741       19,854          251        33,190        63,064

Net Income/(Loss)......................       2,887       (9,579)     (27,460)       11,089        39,133

Cash Dividends on Common Stock.........        -            -          15,004        16,494        30,223

Total Assets...........................   1,253,604    1,287,682    1,179,128     1,191,915     1,142,346

Long-Term Debt (a).....................     290,279      389,314      396,649       349,442       347,470

Preferred Stock Not Subject to
  Mandatory Redemption.................      20,000       20,000       20,000        20,000        53,500

Preferred Stock Subject to
  Mandatory Redemption (a).............      18,000       19,500       21,000        21,000        24,000

Obligations Under Capital Leases (a)...      29,972       34,093       32,887        32,234        36,011

-----------------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
-----------------------------------------------------------------------------------------------------------
                                                                 Quarter Ended
-----------------------------------------------------------------------------------------------------------
1999                                        March 31     June 30             September 30     December 31
-----------------------------------------------------------------------------------------------------------
                                                             (Thousands of Dollars)

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)
                                            ========     ========              ========        ========
-----------------------------------------------------------------------------------------------------------
1998
-----------------------------------------------------------------------------------------------------------

Operating Revenues.....................     $107,189     $ 90,649              $ 93,839        $101,645
                                            ========     ========              ========        ========
Operating Income.......................     $  7,838     $  6,614              $  4,301        $  1,101
                                            ========     ========              ========        ========
Net Income/(Loss)......................     $  1,367     $   (738)             $ (3,546)       $ (6,662)
                                            ========     ========              ========        ========
(a) Includes portion due within one year.
</TABLE>


Western Massachusetts 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,
-------------------------------------------------------------------------------
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
1995     1,285,269         4,846        7,105 (a)    193,964          533

(a) Effective January 1, 1996, the amounts shown reflect billed and unbilled
    sales.  The 1995 amounts have been restated to reflect this change.