Document:

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                                                                   Exhibit 10.58

                                PSNH FUNDING LLC,

                                    as Issuer

                                       and

                     PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

                                   as Servicer

                               SERVICING AGREEMENT

                           Dated as of April 25, 2001

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<S>     <C>                                                                                            <C>
Article 1       DEFINITIONS                                                                             1

         Section 1.01.     Definitions..................................................................1

         Section 1.02.     Other Definitional Provisions................................................5

Article 2       APPOINTMENT AND AUTHORIZATION...........................................................6

         Section 2.01.     Appointment of Servicer; Acceptance of Appointment...........................6

         Section 2.02.     Authorization................................................................6

         Section 2.03.     Dominion and Control Over the RRB Property...................................6

Article 3       BILLING SERVICES........................................................................7

         Section 3.01.     Duties of Servicer...........................................................7

         Section 3.02.     Servicing and Maintenance Standards..........................................8

         Section 3.03.     Certificate of Compliance....................................................8

         Section 3.04.     Annual Report by Independent Public Accountants..............................8

Article 4       SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES...................................9

         Section 4.01.     Periodic Adjustments.........................................................9

         Section 4.02.     Limitation of Liability.....................................................11

         Section 4.03.     Remittances.................................................................11

Article 5       THE RRB PROPERTY.......................................................................12

         Section 5.01.     Custody of RRB Property Records.............................................12

         Section 5.02.     Duties of Servicer as Custodian.............................................12

         Section 5.03.     Instructions; Authority to Act..............................................14

         Section 5.04.     Effective Period and Termination............................................14

         Section 5.05.     Monitoring of Third Party Suppliers.........................................14

Article 6       THE SERVICER...........................................................................14

         Section 6.01.     Representations and Warranties of Servicer..................................14

         Section 6.02.     Indemnities of Servicer.....................................................16

         Section 6.03.     Limitation on Liability of Servicer and Others..............................18

         Section 6.04.     Merger or Consolidation of, or Assumption of the Obligations of, Servicer...18

         Section 6.05.     Public Service Company of New Hampshire Not to Resign as Servicer...........19
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<S>     <C>                                                                                            <C>
         Section 6.06.     Servicing Compensation......................................................19

         Section 6.07.     Compliance with Applicable Law..............................................20

         Section 6.08.     Access to Certain Records and Information Regarding RRB Property............20

         Section 6.09.     Appointments................................................................20

         Section 6.10.     No Servicer Advances........................................................21

         Section 6.11.     Maintenance of Operations...................................................21

Article 7       DEFAULT    21

         Section 7.01.     Servicer Default............................................................21

         Section 7.02.     Appointment of Successor....................................................22

         Section 7.03.     Waiver of Past Defaults.....................................................23

         Section 7.04.     Notice of Servicer Default..................................................23

Article 8       MISCELLANEOUS PROVISIONS...............................................................23

         Section 8.01.     Amendment...................................................................23

         Section 8.02.     Maintenance of Accounts and Records.........................................24

         Section 8.03.     Notices.....................................................................25

         Section 8.04.     Assignment..................................................................27

         Section 8.05.     Limitations on Rights of Third Parties......................................27

         Section 8.06.     Severability................................................................27

         Section 8.07.     Separate Counterparts.......................................................27

         Section 8.08.     Headings....................................................................27

         Section 8.09.     Governing Law...............................................................28

         Section 8.10.     Assignment to Trustee.......................................................28

         Section 8.11.     Nonpetition Covenants.......................................................28
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         This SERVICING AGREEMENT, dated as of April 25, 2001, is between PSNH
Funding LLC, a Delaware limited liability company (together with any successor
thereto permitted under the Indenture, as hereinafter defined, the "Issuer"),
and Public Service Company of New Hampshire, a New Hampshire corporation.

                                    RECITALS

         WHEREAS, pursuant to the Statute and the Finance Order, the Seller and
the Issuer are concurrently entering into the Sale Agreement pursuant to which
the Seller is selling to the Issuer the RRB Property created pursuant to the
Statute and the Finance Order.

         WHEREAS, in connection with its ownership of the RRB Property and in
order to collect the RRB Charge, the Issuer desires to engage the Servicer to
carry out the functions described herein. The Servicer currently performs
similar functions for itself with respect to its own charges to its customers.
In addition, the Issuer desires to engage the Servicer to act on its behalf in
obtaining Periodic Adjustments from the NHPUC. The Servicer desires to perform
all of these activities on behalf of the Issuer.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                   Article 1

                                   DEFINITIONS

         Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:

         "Advice Letter" means any filing made with the NHPUC by the Servicer on
behalf of the Issuer to set or adjust the RRB Charge, including the Issuance
Advice Letter, a Routine Semiannual True-Up Letter, a Routine True-Up Letter or
a Non-Routine True-Up Letter.

         "Agreement" means this Servicing Agreement, together with all Exhibits,
Schedules and Annexes hereto, as the same may be amended and supplemented from
time to time.

         "Annual Accountant's Report" has the meaning set forth in Section 3.04.

         "Applicable TPS" means, with respect to each customer, the TPS, if any,
billing the RRB Charge to that customer.

         "Bills" means each of the regular monthly bills, summary bills and
other bills issued to customers or TPSs by Public Service Company of New
Hampshire on its own behalf and in its capacity as Servicer.

         "Certificate of Compliance" has the meaning set forth in Section 3.03.

         "Closing Date" means April 25 2001.

         "Expected Amortization Schedule" means Schedule 4.01(a) hereto.

         "Finance Order" means the order of the NHPUC, DE 99-099, issued on
September 8, 2000 (Order No. 23,550).

         "Indemnified Person" has the meaning assigned to such term in Section
6.02.

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         "Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due.

         "Indenture" means the Indenture dated as of the date hereof between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.

         "Issuer" has the meaning set forth in the preamble to this Agreement.

         "Issuance Advice Letter" means the initial Issuance Advice Letter,
dated April 23, 2001, filed with the NHPUC pursuant to the Finance Order.

         "Lien" means a security interest, lien, charge, pledge or encumbrance
of any kind.

         "Losses" has the meaning assigned to that term in Section 6.02(b).

         "Monthly Servicer Certificate" has the meaning assigned to that term in
Section 4.01(d)(2).

         "NHPUC" means the New Hampshire Public Utilities Commission and any
successor thereto.

         "NHPUC Regulations" means all regulations, rules, tariffs and laws
applicable to public utilities or TPSs, as the case may be, and promulgated by,
enforced by or otherwise within the jurisdiction of the NHPUC.

         "Non-Routine Periodic Adjustment" has the meaning set forth in Section
4.01(c)(1).

         "Non-Routine True-Up Letter" means a letter filed with the NHPUC in
accordance with the Finance Order with respect to any Non-Routine Periodic
Adjustment, pursuant to which the related Non-Routine Periodic Adjustment will
become effective within 60 days after filing of the Non-Routine True-Up Letter,
subject to the review and approval of the NHPUC.

         "Officer's Certificate" means a certificate of the Servicer signed by a
Responsible Officer.

         "Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to the party providing such opinion(s) of
counsel, which counsel shall be reasonably acceptable to the party receiving
such opinion(s) of counsel.

         "Periodic Adjustment" means each adjustment to the RRB Charge made
pursuant to the terms of the Finance Order and in accordance with Section 4.01
hereof.

         "Principal Balance" means, as of any Payment Date, the sum of the
outstanding

                                      -5-
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principal amount of the Bonds.

         "Projected Principal Balance" means, as of any Payment Date, the sum of
the projected outstanding principal amount of the Bonds for such Payment Date
set forth in the Expected Amortization Schedule.

         "Quarterly Servicer Certificate" has the meaning assigned to that term
in Section 4.01(d)(3).

         "Remittance" means each remittance pursuant to Section 4.03 of RRB
Charge Payments by the Servicer to the Trustee.

         "Remittance Date" means each Servicer Business Day on which a
Remittance is to be made by the Servicer pursuant to Section 4.03.

         "Remittance Period" means, in each year, each successive six-month
period commencing on April 25 and ending on October 24 and commencing on October
25 and ending on April 24; provided, however, that the initial Remittance Period
shall commence on the Closing Date and end on October 24, 2001.

         "Required Debt Service" means, for any Remittance Period, the total
dollar amount calculated by the Servicer in accordance with Section 4.01(b)(1)
as necessary to be remitted to the Collection Account during such Remittance
Period (after giving effect to (a) the allocation and distribution of amounts on
deposit in the Reserve Subaccount at the time of calculation and which are
available for payments on the Bonds, (b) any shortfalls in Required Debt Service
for any prior Remittance Period and (c) any Remittances based upon the RRB
Charge in effect in the prior Remittance Period that are expected to be realized
in such Remittance Period) in order to ensure that, as of the Payment Date
immediately following the end of such period, (i) all accrued and unpaid
interest on the Bonds then due shall have been paid in full, (ii) the Principal
Balance of the Bonds is equal to the Projected Principal Balance of the Bonds
for that Payment Date, (iii) the balance on deposit in the Interest Reserve
Subaccount equals the aggregate Required Interest Reserve Level, (iv) the
balance on deposit in the Capital Subaccount equals the aggregate Required
Capital Level, (v) the balance on deposit in the Overcollateralization
Subaccount equals the aggregate Required Overcollateralization Level and (vi)
all other fees, expenses and indemnities due and owing and required or allowed
to be paid under Section 8.02 of the Indenture as of such date shall have been
paid in full; provided, however, that, with respect to any Periodic Adjustment
occurring after the last Scheduled Maturity Date for any Bonds, the Required
Debt Service shall be calculated to ensure that sufficient amounts will be
collected to retire such Bonds in full as of the earlier of (x) the next Payment
Date and (y) the Final Maturity Date for such Bonds.

         "Responsible Officer" means the chief executive officer, the president,
the chairman or vice chairman of the board, the any vice president, the
treasurer, any assistant treasurer, the secretary, the clerk, any assistant
secretary, and assistant clerk, the controller or the finance manager of the
Servicer.

         "Retirement of the Bonds" means the day on which the final payment is
made to the Trustee in respect of the last outstanding Bond.

         "Routine Semiannual True-Up Letter" means a letter filed with the
NHPUC, substantially in the form of Exhibit B hereto, not later than 30 days
prior to April 25 and October 25 in each year, in respect of a semiannual
Periodic Adjustment. Absent

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manifest error in the Routine Semiannual True-Up Letter, the resulting upward or
downward adjustments to the RRB Charge will be effective on the ensuing April 25
or October 25.

         "Routine True-Up Letter" means a letter filed with the NHPUC,
substantially in the form of Exhibit B hereto, as frequently as monthly, in
respect of a Periodic Adjustment. Absent manifest error in the Routine True-Up
Letter, the resulting upward or downward adjustments to the RRB Charge will be
effective immediately upon the filing of such Routine True-Up Letter.

         "RRB Charge" means the portion (which may become all) of the Seller's
"stranded cost recovery charge" designated pursuant to the Finance Order and RSA
369-B:2, XIII as the RRB Charge, as the same may be adjusted from time to time
as provided in the Finance Order.

         "RRB Charge Collections" means the RRB Charge Payments remitted to the
Collection Account.

         "RRB Charge Payments" means the actual payments received by the
Servicer, directly or indirectly (including through a TPS), from or on behalf of
customers, multiplied by the percentage of such collections which is calculated
in accordance with Annex II hereto to have been received in respect of the RRB
Charge.

         "RRB Property" means the RRB Property that exists under Approval Nos.
20 to 22 of the Finance Order and is sold by the Seller to the Issuer under the
Sale Agreement.

         "RRB Property Records" has the meaning assigned to that term in Section
5.01.

         "Sale Agreement" means the Purchase and Sale Agreement dated as of the
date hereof between Public Service Company of New Hampshire, as Seller, and the
Issuer, as the same may be amended and supplemented from time to time.

         "Seller" means Public Service Company of New Hampshire, a New Hampshire
corporation, and its permitted successors and assigns under the Sale Agreement.

         "Servicer" means Public Service Company of New Hampshire, as the
servicer of the RRB Property, or each successor (in the same capacity) pursuant
to Section 6.04 or Section 7.02.

         "Servicer Business Day" means any Business Day on which the Servicer's
offices in the State of New Hampshire are open for business.

         "Servicer Default" means an event specified in Section 7.01.

         "Servicing Fee" has the meaning set forth in Section 6.06(a).

         "Statute" means RSA Chapter 369-B.

         "Termination Notice" has the meaning assigned to that term in Section
7.01.

         "TPS" means a third party supplier of energy who has entered into a TPS
Service Agreement with the Servicer.

         "TPS Service Agreement" means an agreement between a third party
supplier of energy and the Servicer pursuant to which such third party supplier
of energy bills and collects the RRB Charge to and from customers in accordance
with NHPUC Regulations, the Finance Order and the guidelines described in
Schedule A to Annex I.

         Section 1.02. Other Definitional Provisions.

            (a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture.

            (b) All terms defined in this Agreement shall have the defined
meanings

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when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

            (c) The words "hereof," "herein," "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule,
Exhibit and Annex references contained in this Agreement are references to
Sections, Schedules, Exhibits and Annexes in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."

            (d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter forms of such terms.

                                   Article 2

                          APPOINTMENT AND AUTHORIZATION

         Section 2.01. Appointment of Servicer; Acceptance of Appointment.
Subject to Section 6.05 and Article 7, the Issuer hereby appoints the Servicer,
and the Servicer hereby accepts such appointment, to perform the Servicer's
obligations pursuant to this Agreement on behalf of and for the benefit of the
Issuer or any assignee thereof in accordance with the terms of this Agreement
and applicable law. This appointment and the Servicer's acceptance thereof may
not be revoked except in accordance with the express terms of this Agreement.

         Section 2.02. Authorization. With respect to all or any portion of the
RRB Property, the Servicer shall be, and hereby is, authorized and empowered by
the Issuer to (a) execute and deliver, on behalf of itself and/or the Issuer, as
the case may be, any and all instruments, documents or notices, and (b) on
behalf of itself and/or the Issuer, as the case may be, make any filing and
participate in proceedings of any kind with any governmental authorities,
including with the NHPUC. The Issuer shall execute and/or furnish the Servicer
with such documents as have been prepared by the Servicer for execution by the
Issuer, and with such other documents as may be in the Issuer's possession, as
the Servicer may determine to be necessary or appropriate to enable it to carry
out its servicing and administrative duties hereunder. Upon the Servicer's
written request, the Issuer shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its duties hereunder.

         Section 2.03. Dominion and Control Over the RRB Property.
Notwithstanding any other provision herein, the Issuer shall have dominion and
control over the RRB Property, and the Servicer, in accordance with the terms
hereof, is acting solely as the servicing agent and custodian for the Issuer
with respect to the RRB Property and the RRB Property Records. The Servicer
shall not take any action that is not authorized by this Agreement or that shall
impair the rights of the Issuer or the Trustee in the RRB Property, in each case
unless such action is required by applicable law.

                                   Article 3

                                BILLING SERVICES

         Section 3.01. Duties of Servicer. The Servicer, as agent for the
Issuer, shall have

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the following duties:

         (a) Duties of Servicer Generally.

            (1) General Duties. The Servicer's duties in general shall include
management, servicing and administration of the RRB Property; obtaining meter
reads, calculating electricity usage (including usage by customers of any TPS),
billing, collection and posting of all payments in respect of the RRB Property;
responding to inquiries by customers, the NHPUC, or any federal, local or other
state governmental authorities with respect to the RRB Property; delivering
Bills to customers and TPSs, investigating and handling delinquencies,
processing and depositing collections and making periodic remittances;
furnishing periodic reports to the Issuer, the Trustee and the Rating Agencies;
and taking all necessary action in connection with Periodic Adjustments as set
forth herein. Certain of the duties set forth above may be performed by TPSs
pursuant to TPS Service Agreements. Without limiting the generality of this
Section 3.01(a)(1), in furtherance of the foregoing, the Servicer hereby agrees
that it shall also have, and shall comply with, the duties and responsibilities
relating to data acquisition, usage and bill calculation, billing, customer
service functions, collection, payment processing and remittance set forth in
Annex I hereto.

            (2) NHPUC Regulations Control. Notwithstanding anything to the
contrary in this Agreement, the duties of the Servicer set forth in this
Agreement shall be qualified in their entirety by any NHPUC Regulations as in
effect at the time such duties are to be performed.

         (b) Reporting Functions.

            (1) Notification of Laws and Regulations. The Servicer shall
promptly notify the Issuer, the Trustee and the Rating Agencies in writing of
any laws or NHPUC Regulations hereafter promulgated that have a material adverse
effect on the Servicer's ability to perform its duties under this Agreement.

            (2) Other Information. Upon the reasonable request of the Issuer,
the Trustee or any Rating Agency, the Servicer shall provide to such Issuer,
Trustee or the Rating Agencies, as the case may be, any public financial
information in respect of the Servicer, or any material information regarding
the RRB Property to the extent it is reasonably available to the Servicer, as
may be reasonably necessary and permitted by law for the Issuer, the Trustee ,
or the Rating Agencies to monitor the Servicer's performance hereunder.

            (3) Preparation of Reports to be Filed with the SEC. The Servicer
shall prepare or cause to be prepared any reports required to be filed by the
Issuer under the securities laws, including a copy of each Quarterly Servicer
Certificate described in Section 4.01(d)(3), the annual Certificate of
Compliance described in Section 3.03 and the Annual Accountant's Report
described in Section 3.04.

         Section 3.02. Servicing and Maintenance Standards. On behalf of the
Issuer, the Servicer shall (a) manage, service, administer and make collections
in respect of the RRB Property with reasonable care and in accordance with
applicable law, including all applicable NHPUC Regulations and guidelines, using
the same degree of care and diligence that the Servicer exercises with respect
to similar assets for its own account and, if applicable, for others; (b) follow
customary standards, policies and procedures for the industry in performing its
duties as Servicer; (c) use all reasonable efforts, consistent

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with its customary servicing procedures, to bill and collect the RRB Charge; (d)
file all filings under the applicable Uniform Commercial Code or the Statute
necessary or desirable to maintain the perfected ownership interest and security
interest of the Issuer and the Trustee in the RRB Property; and (e) comply in
all material respects with all laws and regulations applicable to and binding on
it relating to the RRB Property. The Servicer shall follow such customary and
usual practices and procedures as it shall deem necessary or advisable in its
servicing of all or any portion of the RRB Property, which, in the Servicer's
judgment, may include the taking of legal action, at the Issuer's expense.

         Section 3.03. Certificate of Compliance. The Servicer shall deliver to
the Issuer, the Trustee and the Rating Agencies on or before March 31 of each
year, commencing March 31, 2002 to and including the March 31 succeeding the
Retirement of the Bonds, an Officer's Certificate substantially in the form of
Exhibit A hereto (a "Certificate of Compliance"), stating that: (i) a review of
the activities of the Servicer during the twelve months ended the preceding
December 31 (or, in the case of the first Certificate of Compliance to be
delivered on or before March 31, 2002, the period of time from the date of this
Agreement until December 31, 2001) and of its performance under this Agreement
has been made under such Responsible Officer's supervision, and (ii) to such
Responsible Officer's knowledge, based on such review, the Servicer has
fulfilled all of its obligations in all material respects under this Agreement
throughout such twelve months (or, in the case of the Certificate of Compliance
to be delivered on or before March 31, 2002, the period of time from the date of
this Agreement until December 31, 2001), or, if there has been a default in the
fulfillment of any such material obligation, specifying each such material
default known to such Responsible Officer and the nature and status thereof.

         Section 3.04. Annual Report by Independent Public Accountants.

            (a) The Servicer, at the Issuer's expense, shall cause a firm of
independent certified public accountants (which may provide other services to
the Servicer) to prepare, and the Servicer shall deliver to the Issuer, the
Trustee and the Rating Agencies, a report addressed to the Servicer (the "Annual
Accountant's Report"), which may be included as part of the Servicer's customary
auditing activities, for the information and use of the Issuer, the Trustee and
the Rating Agencies, on or before March 31 each year, beginning March 31, 2002
to and including the March 31 succeeding the Retirement of the Bonds, to the
effect that such firm has performed certain procedures, agreed between the
Servicer and such accountants, in connection with the Servicer's compliance with
its obligations under this Agreement during the preceding twelve months ended
December 31 (or, in the case of the first Annual Accountant's Report to be
delivered on or before March 31, 2002, the period of time from the date of this
Agreement until December 31, 2001), identifying the results of such procedures
and including any exceptions noted.

            (b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.

                                   Article 4

                    SERVICES RELATED TO PERIODIC ADJUSTMENTS;
                                   REMITTANCES

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<PAGE>

         Section 4.01. Periodic Adjustments. From time to time, until the
Retirement of the Bonds, the Servicer shall identify the need for Periodic
Adjustments and shall take all reasonable action to obtain and implement such
Periodic Adjustments, all in accordance with the following:

         (a) Expected Amortization Schedule. The Expected Amortization Schedule
is attached hereto as Schedule 4.01(a).

         (b) Routine Periodic Adjustments and Semiannual Filings.

         (1) Routine Semiannual Periodic Adjustments and Filings. For the
purpose of preparing a Routine Semiannual True-Up Letter, the Servicer shall:
(A) update the assumptions underlying the calculation of the RRB Charge,
including energy usage volume, the rate of charge-offs and estimated expenses
and fees of the Issuer to the extent not fixed, for the Remittance Period
beginning on April 25 or October 25 (whichever is next to occur) of each year;
(B) determine the Required Debt Service for such Remittance Period based upon
such updated assumptions; and (C) determine the RRB Charge to be charged during
such Remittance Period based upon such Required Debt Service. The Servicer shall
file a Routine Semiannual True-Up Letter with the NHPUC no later than 30 days
prior to April 25 and October 25 of each year.

         (2) Routine Periodic Adjustments. The Servicer shall file a Routine
True-Up Letter at least 15 days before the end of any calendar month, at each
such time as the Servicer may reasonably determine is necessary to meet the
Required Debt Service for the then current Remittance Period.

         (3) The Servicer shall take all reasonable actions and make all
reasonable efforts to secure any Periodic Adjustments.

         (c) Non-Routine Periodic Adjustments.

         (1) Whenever the Servicer determines that the existing model for
calculating the RRB Charge should be amended or revised, subject to the consent
of the Issuer under the conditions set forth in Section 3.18 of the Indenture,
the Servicer shall file a Non-Routine True-Up Letter with the NHPUC designating
the adjustments to such model and any corresponding adjustments to the RRB
Charge (collectively, a "Non-Routine Periodic Adjustment"), subject to the
review and approval of the NHPUC pursuant to the Finance Order.

         (2) The Servicer shall take all reasonable actions and make all
reasonable efforts to secure any Non-Routine Periodic Adjustments.

         (3) The Servicer shall implement any resulting adjustments to the model
and any resulting revised RRB Charge as of the effective date of the Non-Routine
True-Up Letter.

         (d) Reports.

         (1) Notification of Advice Letter Filings and Periodic Adjustments.
Whenever the Servicer files an Advice Letter with the NHPUC, the Servicer shall
send a copy of such filing to the Issuer, the Trustee and the Rating Agencies
concurrently therewith. If any Periodic Adjustment requested in any such Advice
Letter filing does not become effective on the applicable date as provided by
the Finance Order, the Servicer shall notify the Issuer, the Trustee and the
Rating Agencies by the end of the second Servicer Business Day after such
applicable date.

         (2) Monthly Servicer Certificate. So long as any Bonds are

                                      -11-
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outstanding, not later than fifteen (15) days after the end of each month after
the Bonds are issued (excluding April, 2001), or if such day is not a Servicer
Business Day, the next succeeding Servicer Business Day, the Servicer shall
deliver a written report substantially in the form of Exhibit C hereto (the
"Monthly Servicer Certificate") to the Issuer, the Trustee and the Rating
Agencies.

         (3) Quarterly Servicer Certificate. So long as any Bonds are
outstanding, not later than 11:00 a.m. (New York City time) on the Servicer
Business Day immediately preceding each Payment Date, the Servicer shall deliver
a written report substantially in the form of Exhibit D hereto (the "Quarterly
Servicer Certificate") to the Issuer, the Trustee and the Rating Agencies.

         (4) TPS Reports. The Servicer shall provide to the Rating Agencies,
upon request, any publicly available reports filed by the Servicer with the
NHPUC (or otherwise made publicly available by the Servicer) relating to TPSs
and any other non-confidential and non-proprietary information relating to TPSs
reasonably requested by the Rating Agencies.

         (e) Uniformity of RRB Charge. The Servicer shall not take any action to
implement any Periodic Adjustment that would cause the RRB Charge to vary among
customer classes unless the Rating Agency Condition shall have been satisfied.

         Section 4.02. Limitation of Liability.

         (a) The Issuer and the Servicer expressly agree and acknowledge that:

         (1) In connection with any Periodic Adjustment, the Servicer is acting
solely in its capacity as the servicing agent hereunder.

         (2) Neither the Servicer nor the Issuer shall be responsible in any
manner for, and shall have no liability whatsoever as a result of, any action,
decision, ruling or other determination made or not made, or any delay (other
than any delay resulting from the Servicer's failure to file for Periodic
Adjustments or Non-Routine Periodic Adjustments required by Section 4.01 in a
timely and correct manner or other material breach by the Servicer of its duties
under this Agreement that materially and adversely affects any Periodic
Adjustments or Non-Routine Periodic Adjustments), by the NHPUC (or, in
connection with any Non-Routine Periodic Adjustment, by the Rating Agencies) in
any way related to the RRB Property or in connection with any Periodic
Adjustment or Non-Routine Periodic Adjustment, the subject of any filings under
Section 4.01, any proposed Periodic Adjustment or Non-Routine Periodic
Adjustment, or the approval of the RRB Charge and the adjustments thereto.

         (3) The Servicer shall have no liability whatsoever relating to the
calculation of the RRB Charge and the adjustments thereto (including any
Non-Routine Periodic Adjustment), including as a result of any inaccuracy of any
of the assumptions made in such calculation regarding expected energy usage
volume, the rate of charge-offs, estimated expenses and fees of the Issuer, so
long as the Servicer has not acted in a negligent manner in connection
therewith, nor shall the Servicer have any liability whatsoever as a result of
any Person, including the Bondholders, not receiving any payment, amount or
return anticipated or expected in respect of any Bond generally, except only to
the extent that the Servicer is liable under Section 6.02 of this Agreement.

         (b) Notwithstanding the foregoing, this Section 4.02 shall not relieve
the Servicer of any liability under Section 6.02 for any misrepresentation by
the Servicer

                                      -12-
<PAGE>

under Section 6.01 or for any breach by the Servicer of its obligations under
this Agreement.

         Section 4.03. Remittances.

         (a) Pursuant to the remittance methodology more fully described in
Annex II hereto, starting with collections that are received on the first
Servicer Business Day that is at least 45 days after the first day on which
Public Service Company of New Hampshire imposes the RRB Charge, the Servicer
will remit to the Trustee on each Servicer Business Day, within two Servicer
Business Days after receipt, by wire transfer of immediately available funds to
the General Subaccount of the Collection Account, an amount equal to the RRB
Charge Payments (as calculated in accordance with Annex II hereto) received on
such Servicer Business Day and on any prior day that was not a Servicer Business
Day for which a Remittance has not previously been made. Prior to or
simultaneous with each Remittance to the General Subaccount of the Collection
Account pursuant to this Section, the Servicer shall provide written notice to
the Trustee of each such Remittance (including the exact dollar amount to be
remitted).

         (b) The Servicer may elect to make Remittances less frequently than on
a daily basis, and shall be permitted to do so, but in any event shall make
Remittances within one calendar month of collection thereof, provided that the
Servicer shall send written notice of such election to the Issuer and the
Trustee, together with (i) an Officer's Certificate stating that no Servicer
Default has occurred and is continuing under this Servicing Agreement, (ii)
evidence that the Rating Agency Condition has been satisfied, (iii) evidence of
the delivery by the Servicer to the Issuer or the Trustee, as applicable, of any
credit enhancement which may be required by the Rating Agencies in connection
therewith in form and substance satisfactory to the Issuer and the Trustee, as
applicable, the cost of which credit enhancement shall be borne solely by the
Servicer, and (iv) an executed copy of any appropriate amendment hereto or to
the Indenture or any other Basic Agreement as reasonably requested by the
Servicer, the Issuer or the Trustee in connection therewith.

         (c) The Servicer agrees and acknowledges that it will remit RRB Charge
Payments in accordance with this Section 4.03 without any surcharge, fee,
offset, charge or other deduction except for late fees permitted by Section
6.06.

                                   Article 5

                                THE RRB PROPERTY

         Section 5.01. Custody of RRB Property Records. To assure uniform
quality in servicing the RRB Property and to reduce administrative costs, the
Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as the agent of the Issuer and the Trustee as custodian
of any and all documents and records that the Servicer shall keep on file, in
accordance with its customary procedures, relating to the RRB Property,
including copies of the Finance Order and Advice Letters relating thereto and
all documents filed with the NHPUC in connection with any Periodic Adjustment or
Non-Routine Periodic Adjustment and computational records relating thereto
(collectively, the "RRB Property Records"), which are hereby constructively
delivered to the Trustee, as pledgee of the Issuer with respect to all RRB
Property.

         Section 5.02. Duties of Servicer as Custodian.

                                      -13-
<PAGE>

         (a) Safekeeping. The Servicer shall hold the RRB Property Records on
behalf of the Issuer and the Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to the RRB Property Records on
behalf of the Issuer and the Trustee as shall enable the Issuer to comply with
this Agreement and the Indenture. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of care and diligence
that the Servicer exercises with respect to comparable assets that the Servicer
services for itself or, if applicable, for others. The Servicer shall promptly
report to the Issuer and the Trustee any failure on its part to hold the RRB
Property Records and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer or the Trustee of the RRB Property Records. The Servicer's
duties to hold the RRB Property Records on behalf of the Issuer set forth in
this Section 5.02, to the extent such RRB Property Records have not been
previously transferred to a successor Servicer pursuant to Article 7, shall
terminate one year and one day after the earlier of the date on which (i) the
Servicer is succeeded by a successor Servicer in accordance with Article 7 and
(ii) no Bonds are outstanding.

         (b) Maintenance of and Access to Records. The Servicer shall maintain
at all times records and accounts that permit the Servicer to identify RRB
Charges billed. The Servicer shall maintain the RRB Property Records in
Manchester, New Hampshire, Berlin, Connecticut or at such other office in the
United States as shall be specified to the Issuer and the Trustee by written
notice at least 30 days prior to any change in location. The Servicer shall make
available for inspection to the Issuer, the Trustee, the NHPUC or their
respective duly authorized representatives, attorneys or auditors the RRB
Property Records at such times during normal business hours as the Issuer, the
Trustee or the NHPUC shall reasonably request and which do not unreasonably
interfere with the Servicer's normal operations. Nothing in this Section 5.02(b)
shall affect the obligation of the Servicer to observe any applicable law
(including any NHPUC Regulations) prohibiting disclosure of information
regarding the customers, and the failure of the Servicer to provide access to
such information as a result of such obligation shall not constitute a breach of
this Section 5.02(b).

         (c) Release of Documents. Upon instruction from the Trustee in
accordance with the Indenture, the Servicer shall release any RRB Property
Records to the Trustee, the Trustee's agent or the Trustee's designee, as the
case may be, at such place or places as the Trustee may designate, as soon as
practicable.

         (d) Defending RRB Property Against Claims. The Servicer shall institute
any action or proceeding necessary to compel performance by the NHPUC or the
State of New Hampshire of any of their obligations or duties under the Statute,
the Finance Order or any Advice Letter, and the Servicer agrees to take such
legal or administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary to block or overturn any attempts to
cause a repeal of, modification of or supplement to the Statute or the Finance
Order or the rights of holders of RRB Property by executive action, legislative
enactment or constitutional amendment or (if such means become available in the
future) referendum or initiative petition that would be adverse to Bondholders,
the

                                      -14-
<PAGE>

Issuer or the Trustee. The costs of any such action shall be payable from RRB
Charge Collections as an Operating Expense in accordance with the priorities set
forth in Section 8.02(d) of the Indenture. The Servicer's obligations pursuant
to this Section 5.02 shall survive and continue notwithstanding the fact that
the payment of Operating Expenses pursuant to Section 8.02(d) of the Indenture
may be delayed, it being understood that the Servicer may be required to advance
its own funds to satisfy its obligations hereunder. If the Servicer must incur
costs to satisfy its obligations hereunder and is required hereunder to advance
its own funds with respect to such costs but is unable to do so, the Servicer
shall, in accordance with the provisions of Section 8.02(j) of the Indenture,
make written request to the Trustee to pay such costs from amounts on deposit in
the Servicer Advance Subaccount. Amounts so paid by the Trustee from amounts on
deposit in the Servicer Advance Subaccount in accordance with the provisions of
Section 8.02(j) of the Indenture shall remain payable as Operating Expenses
advanced by the Servicer in accordance with this Section 5.02(d) and Section
8.02(j) of the Indenture.

         Section 5.03. Instructions; Authority to Act. For so long as any Bonds
remain outstanding, the Servicer shall be deemed to have received proper
instructions with respect to the RRB Property Records upon its receipt of
written instructions signed by a Responsible Officer (as defined in the
Indenture) of the Trustee.

         Section 5.04. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section
5.04. If any Servicer shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of any Servicer shall
have been terminated under Section 7.01, the appointment of such Servicer as
custodian shall terminate upon appointment of a successor Servicer, subject to
the approval of the NHPUC, and acceptance by such successor Servicer of such
appointment.

         Section 5.05. Monitoring of Third Party Suppliers. From time to time,
until the Retirement of the Bonds, the Servicer shall, using the same degree of
care and diligence that it exercises with respect to payments owed to it for its
own account, implement such procedures and policies as are necessary to properly
enforce the obligations of each TPS to remit RRB Charges, in accordance with the
terms and provisions of the Finance Order, the TPS Service Agreement and
Schedule A to Annex I hereto.

                                   Article 6

                                  THE SERVICER

         Section 6.01. Representations and Warranties of Servicer. The Servicer
makes the following representations and warranties, as of the Closing Date, on
which the Issuer is deemed to have relied in entering into this Agreement
relating to the servicing of the RRB Property.

         (a) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the State
of New Hampshire, with the requisite corporate power and authority to own its
properties as such properties are currently owned and to conduct its business as
such business is now conducted by it, and has the requisite corporate power and
authority to service the RRB Property and to hold the RRB Property Records as
custodian.

                                      -15-
<PAGE>

         (b) Due Qualification. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the RRB Property as
required by this Agreement) shall require such qualifications, licenses or
approvals (except where the failure to so qualify or obtain such licenses and
approvals would not be reasonably likely to have a material adverse effect on
the Servicer's business, operations, assets, revenues or properties or adversely
affect the servicing of the RRB Property).

         (c) Power and Authority. The Servicer has the requisite corporate power
and authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer.

         (d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable against it in accordance with its
terms, subject to applicable insolvency, reorganization, moratorium, fraudulent
transfer and other laws relating to or affecting creditors' rights generally
from time to time in effect and to general principles of equity (including
concepts of materiality, reasonableness, good faith and fair dealing),
regardless of whether considered in a proceeding in equity or at law.

         (e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not: (i) conflict with
or result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under the articles of
organization or by-laws of the Servicer, or any material indenture, agreement or
other instrument to which the Servicer is a party or by which it is bound; (ii)
result in the creation or imposition of any Lien upon any of the Servicer's
properties pursuant to the terms of any such indenture, agreement or other
instrument; nor violate any existing law or any existing order, rule or
regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties, so as to adversely
affect the Servicer, the Issuer or the Bondholders.

         (f) No Proceedings. There are no proceedings pending and, to the
Servicer's knowledge, there are no proceedings threatened and, to the Servicer's
knowledge, there are no investigations pending or threatened, before any court,
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties
involving or relating to the Servicer or the Issuer or, to the Servicer's
knowledge, any other Person: (i) asserting the invalidity of this Agreement;
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement; or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement.

         (g) Approvals. No approval, authorization, consent, order or other
action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the execution and delivery by the Servicer of this Agreement,
the performance by the Servicer of the

                                      -16-
<PAGE>

transactions contemplated hereby or the fulfillment by the Servicer of the terms
hereof, except those that have been obtained or made and those that the Servicer
is required to make in the future pursuant to Article 3 or Article 4 and
post-closing filings in connection therewith.

         Section 6.02. Indemnities of Servicer.

         (a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer and as
expressly provided under this Section 6.02.

         (b) The Servicer shall indemnify the Issuer and the Bondholders (each
an "Indemnified Person" for purposes of Sections 6.02 (b) and (d)) for, and
defend and hold harmless each such Person from and against, any and all
liabilities, obligations, losses, damages, payments, claims, costs or expenses
of any kind whatsoever (collectively, "Losses") that may be imposed on, incurred
by or asserted against any such Person as a result of (i) the Servicer's willful
misconduct or negligence in the performance of its duties or observance of its
covenants under this Agreement (including the Servicer's willful misconduct or
negligence relating to the maintenance and custody by the Servicer, as
custodian, of the RRB Property Records) or (ii) the Servicer's breach in any
material respect of any of its representations or warranties in this Agreement;
provided, however, that the Servicer shall not be liable for any Losses
resulting from the willful misconduct or gross negligence of any such
Indemnified Person; and, provided, further, that the Bondholders shall be
entitled to enforce their rights and remedies against the Servicer under this
Section 6.02(b) solely through a cause of action brought for their benefit by
the Trustee; and, provided, further, that the Servicer shall not be liable for
any Losses, regardless of when incurred, after the Bonds have been paid in full,
except as provided in Section 6.02(c).

         (c) The Servicer shall indemnify and hold harmless the Trustee, the
State of New Hampshire, the Treasurer of the State of New Hampshire, agencies of
the State of New Hampshire and any of their respective affiliates, officials,
officers, directors, employees, consultants, counsel and agents (each an
"Indemnified Person" for purposes of Section 6.02(c) and (d)) for, and defend
and hold harmless each such Person from and against, any and all Losses imposed
on, incurred by or asserted against any of such Indemnified Persons as a result
of: (i) the Servicer's willful misconduct or negligence in the performance of
its duties or observance of its covenants under this Agreement (including the
Servicer's willful misconduct or negligence relating to the maintenance and
custody by the Servicer, as custodian, of the RRB Property Records) or (ii) the
Servicer's breach in any material respect of any of its representations or
warranties in this Agreement; provided, however, that the Servicer shall not be
liable for any Losses resulting from the willful misconduct or gross negligence
of such Indemnified Person or resulting from a breach of a representation or
warranty made by such Indemnified Person in any of the Basic Documents that
gives rise to the Servicer's breach.

         (d) The Servicer shall not be required to indemnify an Indemnified
Person for any amount paid or payable by such Indemnified Person pursuant to
Section 6.02(b) or Section 6.02(c) in the settlement of any action, proceeding
or investigation without the written consent of the Servicer, which consent
shall not be unreasonably withheld. Promptly after receipt by an Indemnified
Person of notice of its involvement in any

                                      -17-
<PAGE>

action, proceeding or investigation, such Indemnified Person shall, if a claim
for indemnification in respect thereof is to be made against the Servicer under
Section 6.02(b) or Section 6.02(c), notify the Servicer in writing of such
involvement. Failure by an Indemnified Person to so notify the Servicer shall
relieve the Servicer from the obligation to indemnify and hold harmless such
Indemnified Person under Section 6.02(b) or Section 6.02(c), as applicable, only
to the extent that the Servicer suffers actual prejudice as a result of such
failure. With respect to any action, proceeding or investigation brought by a
third party for which indemnification may be sought under Section 6.02(b) or
Section 6.02(c), the Servicer shall be entitled to assume the defense of any
such action, proceeding or investigation. Upon assumption by the Servicer of the
defense of any such action, proceeding or investigation, the Indemnified Person
shall have the right to participate in such action or proceeding and to retain
its own counsel. The Servicer shall be entitled to appoint counsel of the
Servicer's choice at the Servicer's expense to represent the Indemnified Person
in any action, proceeding or investigation for which a claim of indemnification
is made against the Servicer under Section 6.02(b) or Section 6.02(c) (in which
case the Servicer shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the Indemnified Person except as set forth
below); provided, however, that such counsel shall be reasonably satisfactory to
the Indemnified Person. Notwithstanding the Servicer's election to appoint
counsel to represent the Indemnified Person in an action, proceeding or
investigation, the Indemnified Person shall have the right to employ separate
counsel (including local counsel), and the Servicer shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the Servicer to represent the Indemnified Person would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the Indemnified Person and the
Servicer and the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it that are different from or additional to
those available to the Servicer, (iii) the Servicer shall not have employed
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person within a reasonable time after notice of the institution of
such action or (iv) the Servicer shall authorize the Indemnified Person to
employ separate counsel at the expense of the Servicer. Notwithstanding the
foregoing, the Servicer shall not be obligated to pay for the fees, costs and
expenses of more than one separate counsel for the Indemnified Persons (in
addition to local counsel). The Servicer will not, without the prior written
consent of the Indemnified Person, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought under Section
6.02(b) or Section 6.02(c), as applicable, (whether or not the Indemnified
Person is an actual or potential party to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of the
Indemnified Person from all liability arising out of such claim, action, suit or
proceeding.

         (e) Indemnification under Section 6.02(b) and Section 6.02(c) shall
survive the resignation or removal of the Trustee and the termination of this
Agreement and shall include reasonable fees and out-of-pocket expenses of
investigation and litigation (including reasonable attorneys' fees and
expenses), except as otherwise

                                      -18-
<PAGE>

provided in this Agreement.

         (f) For purposes of Section 6.02(b) and Section 6.02(c), in the event
of the termination of the rights and obligations of Public Service Company of
New Hampshire (or any successor thereto pursuant to Section 6.04) as Servicer
pursuant to Section 7.01, or a resignation by such Servicer pursuant to this
Agreement, such Servicer shall be deemed to be the Servicer pending appointment
of a successor Servicer pursuant to Section 7.02.

         Section 6.03. Limitation on Liability of Servicer and Others. Except as
otherwise provided under this Agreement, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer shall be liable to the
Issuer or any other Person for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
director, officer, employee or agent of the Servicer against any liability that
would otherwise be imposed by reason of willful misconduct or negligence in the
performance of duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on the advice
of counsel reasonably acceptable to the Trustee or on any document of any kind,
prima facie properly executed and submitted by any Person, respecting any
matters arising under this Agreement. Except as provided in this Agreement, the
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action relating to the RRB Property.

         Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer under this
Agreement without further act on the part of any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no Servicer Default and no event which, after notice or lapse of
time, or both, would become a Servicer Default shall have occurred and be
continuing, (ii) the Servicer shall have delivered to the Issuer and the Trustee
an Officers' Certificate stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent provided for in this Agreement relating to such transaction
have been complied with, (iii) the Servicer shall have delivered to the Issuer
and the Trustee an Opinion of Counsel stating that, in the opinion of such
counsel (A) such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent provided
for in this Agreement relating to such transaction have been complied with and
(B) either (1) all filings to be made by the Servicer, including filings with
the NHPUC pursuant to the Statute and filings under the applicable Uniform
Commercial Code, have been executed and filed that are necessary to preserve and
protect fully the interests of the Issuer and the Trustee in the RRB Property
and reciting the details of such filings or (2) no such action shall be
necessary to preserve and protect such interests and (iv) the Rating Agencies
shall have received prior written notice of such transaction. When any Person
acquires the properties and assets of the

                                      -19-
<PAGE>

Servicer substantially as a whole and becomes the successor to the Servicer in
accordance with the terms of this Section 6.04, then upon satisfaction of all of
the other conditions of this Section 6.04, the Servicer shall automatically and
without further notice be released from all its obligations hereunder.

         Section 6.05. Public Service Company of New Hampshire Not to Resign as
Servicer. Subject to the provisions of Section 6.04, Public Service Company of
New Hampshire shall not resign from the obligations and duties hereby imposed on
it as Servicer under this Agreement except upon either (a) a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law or (b) satisfaction of the following: (i) the
Rating Agency Condition shall have been satisfied (except that with respect to
Moody's it shall be sufficient to provide ten days prior notice) and (ii) the
NHPUC shall have approved such resignation. Notice of any such determination
permitting the resignation of Public Service Company of New Hampshire shall be
communicated to the Issuer, the Trustee and the Rating Agencies at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination that the performance of Public Service Company of New Hampshire's
duties under this Agreement shall no longer be permissible under applicable law
shall be evidenced by an Opinion of Counsel to such effect delivered by Public
Service Company of New Hampshire to the Issuer and the Trustee concurrently with
or promptly after such notice. No such resignation shall become effective until
a successor Servicer shall have assumed the responsibilities and obligations of
Public Service Company of New Hampshire in accordance with Section 7.02.

         Section 6.06. Servicing Compensation.

         (a) In consideration for its services hereunder, until the Retirement
of the Bonds, the Servicer shall receive an annual fee (the "Servicing Fee") in
an amount equal to (i) one-quarter of one percent (0.25%) of the outstanding
principal balance of the Bonds for so long as the Servicer is Public Service
Company of New Hampshire or any successor Servicer that bills the RRB Charge
concurrently with other charges for services or (ii) up to one and one-half
percent (1.5%) of the outstanding principal balance of the Bonds for so long as
the Servicer is a successor Servicer that bills the RRB Charge separately to
customers (which amount shall be determined by a separate agreement between the
Issuer and the Servicer). The Servicing Fee shall be payable in quarterly
installments on each Payment Date. The Servicer also shall be entitled to retain
as additional compensation (i) any interest earnings on RRB Charge Payments
received by the Servicer and invested by the Servicer pursuant to Section 6(c)
of Annex I hereto prior to remittance to the Collection Account and (ii) all
late payment charges, if any, collected from customers or TPSs.

         (b) The Servicing Fee set forth in Section 6.06(a) and expenses
provided for in Section 6.06(c) shall be paid to the Servicer by the Trustee, on
each Payment Date in accordance with the priorities set forth in Section 8.02(d)
of the Indenture, by wire transfer of immediately available funds from the
Collection Account to an account designated by the Servicer. Any portion of the
Servicing Fee not paid on such date shall be added to the Servicing Fee payable
on the subsequent Payment Date.

         (c) The Issuer shall pay all expenses incurred by the Servicer in

                                      -20-
<PAGE>

connection with its activities hereunder (including any reasonable fees to and
disbursements by accountants, counsel, or any other Person, any taxes imposed on
the Servicer (other than taxes based on the Servicer's net income) and any
expenses incurred in connection with reports to Bondholders, subject to the
priorities set forth in Section 8.02(d) of the Indenture).

         Section 6.07. Compliance with Applicable Law. The Servicer covenants
and agrees, in servicing the RRB Property, to comply in all material respects
with all laws applicable to, and binding upon, the Servicer and relating to such
RRB Property the noncompliance with which would have a material adverse effect
on the value of the RRB Property; provided, however, that the foregoing is not
intended to, and shall not, impose any liability on the Servicer for
noncompliance with any law that the Servicer is contesting in good faith in
accordance with its customary standards and procedures.

         Section 6.08. Access to Certain Records and Information Regarding RRB
Property. The Servicer shall provide to the Bondholders, the Issuer and the
Trustee access to the RRB Property Records in such cases where the Bondholders,
the Issuer or the Trustee shall be required by applicable law to be provided
access to such records. Access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the respective offices of
the Servicer. Nothing in this Section shall affect the obligation of the
Servicer to observe any applicable law (including any NHPUC Regulation)
prohibiting disclosure of information regarding the customers, and the failure
of the Servicer to provide access to such information as a result of such
obligation shall not constitute a breach of this Section.

         Section 6.09. Appointments.

         (a) The Servicer may at any time appoint any Person to perform all or
any portion of its obligations as Servicer hereunder; provided, however, that
the Rating Agency Condition shall have been satisfied in connection therewith
(except that with respect to Moody's it shall be sufficient to provide ten days
prior notice); and, provided, further, that the Servicer shall remain obligated
and be liable under this Agreement for the servicing and administering of the
RRB Property in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such Person and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the RRB Property; and, provided, further,
however, that nothing herein (including the Rating Agency Condition) shall
preclude the execution by the Servicer of a TPS Service Agreement with any TPS
pursuant to applicable NHPUC Regulations. The fees and expenses of any such
Person shall be as agreed between the Servicer and such Person from time to time
and none of the Issuer, the Trustee, the Bondholders or any other Person shall
have any responsibility therefor or right or claim thereto. Any such appointment
shall not constitute a Servicer resignation under Section 6.05.

         (b) The Servicer has no employees. Therefore, in carrying out the
foregoing duties or any of its other obligations under this Agreement, the
Servicer may enter into transactions with or otherwise deal with any of its
Affiliates to obtain the services of employees of such Affiliates as is its
current practice; provided, however, that the terms of any such transactions or
dealings shall be no less favorable to the Issuer than would be available from
unaffiliated parties or that would be available if the Servicer

                                      -21-
<PAGE>

were to hire its own employees to perform such services.

         Section 6.10. No Servicer Advances. The Servicer shall not make any
advances of interest on or principal of the Bonds.

         Section 6.11. Maintenance of Operations. The Servicer agrees to
continue to operate its distribution system to provide service to its customers
so long as it is acting as the Servicer under this Agreement.

                                   Article 7

                                     DEFAULT

         Section 7.01. Servicer Default. If any one of the following events
(each a "Servicer Default") shall occur and be continuing:

         (a) any failure by the Servicer to remit to the Collection Account on
behalf of the Issuer any required Remittance that shall continue unremedied for
a period of five (5) Business Days after written notice of such failure is
received by the Servicer from the Issuer or the Trustee; or

         (b) any failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, which failure shall (a) materially and
adversely affect the rights of the Bondholders and (ii) continue unremedied for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (A) to the Servicer by
the Issuer or (B) to the Servicer by the Trustee or by the Holders of Bonds
evidencing not less than 25 percent of the Outstanding Amount of the Bonds; or

         (c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect in any material respect when made,
which has a material adverse effect on the Bondholders and which material
adverse effect continues unremedied for a period of 60 days after written notice
of such failure is received by the Servicer from the Issuer or the Trustee; or

         (d) an Insolvency Event occurs with respect to the Servicer; then, and
in each and every case, so long as the Servicer Default shall not have been
remedied, either the Trustee, or the Holders of Bonds evidencing not less than
25 percent of the Outstanding Amount of the Bonds, by notice then given in
writing to the Servicer (and to the Trustee if given by the Bondholders) (a
"Termination Notice") may terminate all the rights and obligations (other than
the obligations set forth in Section 6.02) of the Servicer under this Agreement.
In addition, upon a Servicer Default described in Section 7.01(a), each of the
following shall be entitled to apply to the NHPUC for sequestration and payment
of revenues arising with respect to the RRB Property in accordance with RSA
369-B:7, VI and VIII: (1) the Bondholders or the Trustee; (2) the Issuer or its
assignees; or (3) pledgees or transferees of the RRB Property. On or after the
receipt by the Servicer of a Termination Notice, and subject to the approval of
the NHPUC, all authority and power of the Servicer under this Agreement, whether
with respect to the Bonds, the RRB Property, the RRB Charge or otherwise, shall,
without further action, pass to and be vested in such successor Servicer as may
be appointed under Section 7.02; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things

                                      -22-
<PAGE>

necessary or appropriate to effect the purposes of such Termination Notice,
whether to complete the transfer of the RRB Property Records and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer, the Issuer and the Trustee in effecting the termination of
the responsibilities and rights of the predecessor Servicer under this
Agreement, including the transfer to the successor Servicer for administration
by it of all cash amounts that shall at the time be held by the predecessor
Servicer for remittance, or shall thereafter be received by it with respect to
the RRB Property or the RRB Charge. In case a successor Servicer is appointed as
a result of a Servicer Default, all reasonable costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with
transferring the RRB Property Records to the successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this Section
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. All other reasonable costs and
expenses incurred in transferring servicing responsibilities to a successor
servicer shall constitute Operating Expenses of the Issuer.

         Section 7.02. Appointment of Successor.

         (a) Upon the Servicer's receipt of a Termination Notice pursuant to
Section 7.01 or the Servicer's resignation or removal in accordance with the
terms of this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, and shall be entitled to receive the
requisite portion of the Servicing Fee and reimbursement of expenses as provided
herein, until a successor Servicer shall have assumed in writing the obligations
of the Servicer hereunder as described below. In the event of the Servicer's
termination hereunder, the Issuer shall appoint, subject to the approval of the
NHPUC, a successor Servicer with the Trustee's prior written consent thereto
(which consent shall not be unreasonably withheld), and the successor Servicer
shall accept its appointment by a written assumption in form reasonably
acceptable to the Issuer and the Trustee. If within 30 days after the delivery
of the Termination Notice, the Issuer shall not have obtained such a new
Servicer, the Trustee may appoint (subject to the approval of the NHPUC) or
petition the NHPUC or a court of competent jurisdiction to appoint a successor
Servicer under this Agreement. A Person shall qualify as a successor Servicer
only if (i) such Person is permitted under NHPUC Regulations to perform the
duties of the Servicer, (ii) the Rating Agency Condition shall have been
satisfied and (iii) such Person assumes in writing the obligations of the
Servicer hereunder or enters into a servicing agreement with the Issuer having
substantially the same provisions as this Agreement.

         (b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.

         Section 7.03. Waiver of Past Defaults. The Holders of Bonds evidencing
not less than a majority of the Outstanding Amount of the Bonds may, on behalf
of all Bondholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required Remittances to the Collection Account in accordance with
this Agreement. Upon any

                                      -23-
<PAGE>

such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.

         Section 7.04. Notice of Servicer Default. The Servicer shall deliver to
the Issuer, the Trustee and the Rating Agencies, promptly after any of its
Responsible Officers having obtained actual knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 7.01(a) or Section 7.01(b).

                                   Article 8

                            MISCELLANEOUS PROVISIONS

         Section 8.01. Amendment.

         (a) This Agreement may be amended in writing by the Servicer and the
Issuer with ten Business Days' prior written notice given to the Rating Agencies
and the prior written consent of the Trustee (which consent shall not be
unreasonably withheld), but without the consent of any of the Bondholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement or
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Bondholders; provided, however, that such action shall
not, as evidenced by an Officer's Certificate delivered to the Issuer and the
Trustee, adversely affect in any material respect the interests of any
Bondholder.

         (b) This Agreement may also be amended in writing from time to time by
the Servicer and the Issuer with ten Business Days' prior written notice given
to the Rating Agencies and the prior written consent of the Trustee (which
consent shall not be unreasonably withheld) and the prior written consent of the
Holders of Bonds evidencing not less than a majority of the Outstanding Amount
of the Bonds, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Bondholders; provided, however, that any amendment
of the provisions of Section 4.01 or Section 4.03 shall satisfy the Rating
Agency Condition.

         (c) If the written consent of Bondholders is required in connection
with an amendment hereof, approval by Bondholders of the substance of any
proposed amendment or consent shall constitute sufficient consent of the
Bondholders pursuant to this Section, and it shall not be necessary that
Bondholders approve of the particular form of any amendment or consent.

         (d) Promptly after the execution thereof, the Issuer shall provide each
of the Rating Agencies with a copy of any amendment to this Agreement.

         (e) Prior to its consent to any amendment to this Agreement, the
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.

         Section 8.02. Maintenance of Accounts and Records.

                                      -24-
<PAGE>

         (a) The Servicer shall maintain accounts and records as to the RRB
Property accurately and in accordance with its standard accounting procedures.

         (b) The Servicer shall permit the Issuer and the Trustee and its agents
at any time during normal business hours, upon reasonable notice to the Servicer
and to the extent it does not unreasonably interfere with the Servicer's normal
operations, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding the RRB Property and the RRB Charge. Nothing in
this Section 8.02(b) shall affect the obligation of the Servicer to observe any
applicable law (including any NHPUC Regulation) prohibiting disclosure of
information regarding the customers, and the failure of the Servicer to provide
access to such information as a result of such obligation shall not constitute a
breach of this Section 8.02(b).

         Section 8.03. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States mail, courier
service, facsimile transmission or electronic mail (confirmed by telephone,
United States mail or courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of communication,
and any such notice, direction, consent or waiver shall be effective when
delivered, or if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid:

         (a) if to the Servicer, to

                   Public Service Company of New Hampshire
                   1000 Elm Street
                   Manchester, NH  03105
                   Facsimile:       (860) 665-5457
                   Telephone:       (860) 665-3258
                   E-Mail: shoopra@nu.com (email)

                   with a copy to:

                   Public Service Company of New Hampshire
                   c/o Northeast Utilities Service Company

                   if by U.S. Mail:

                   P.O. Box 270
                   Hartford, CT  06141-0270

                   if by courier:

                   107 Selden Street
                   Berlin, CT  06037

                   Attention:  Assistant Treasurer - Finance
                   Facsimile:       (860) 665-5457

                                      -25-
<PAGE>

                   Telephone:       (860) 665-3258
                   E-Mail: shoopra@nu.com

         (b) if to the Issuer, to

                   PSNH Funding LLc
                   c/o Public Service Company of New Hampshire
                   1000 Elm Street
                   Manchester, NH 03105
                   Facsimile:       (860) 665-5457
                   Telephone:       (860) 665-3258
                   E-Mail: shoopra@nu.com (email)

                   with a copy to:

                   Public Service Company of New Hampshire
                   c/o Northeast Utilities Service Company

                   if by U.S. Mail:

                   P.O. Box 270
                   Hartford, CT  06141-0270

                   if by courier:

                   107 Selden Street
                   Berlin, CT  06037

                   Attention:  Assistant Treasurer - Finance
                   Facsimile:       (860) 665-5457
                   Telephone:       (860) 665-3258
                   E-Mail: shoopra@nu.com

         (c) if to the Trustee, to

                   The Bank of New York
                   101 Barclay Street
                   Floor 12 East
                   New York, NY 10286
                   Attention: ABS Unit
                   Facsimile:       (212) 815-5563
                   Telephone:       (212) 815-5368

         (d) if to Moody's, to

                   Moody's Investors Service, Inc.
                   99 Church Street
                   New York, NY 10007
                   Attention:  ABS Monitoring Department
                   Facsimile:       (212) 553-0573
                   Telephone:       (212) 553-3686

                                      -26-
<PAGE>

         (e) if to S&P, to

                   Standard & Poor's
                   55 Water Street, 41st Floor
                   New York, NY 10041

                   Attention:  Asset Backed Surveillance Department
                   Facsimile:       (212) 438-2664
                   Telephone:       (212) 438-2000

         (f) if to Fitch, to

                   Fitch, Inc.
                   One State Street Plaza
                   New York, NY 10004
                   Attention:  ABS Surveillance
                   Facsimile:       (212) 514-9879
                   Telephone:       (212) 908-0500
                   E-mail:          surv@fitchratings.com

         (g) as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

         Section 8.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.04 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Servicer.

         Section 8.05. Limitations on Rights of Third Parties. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer, the
Bondholders, the Trustee, the State of New Hampshire, the Treasurer of the State
of New Hampshire, agencies of the State of New Hampshire and the other Persons
expressly referred to herein and such Persons shall have the right to enforce
the relevant provisions of this Agreement, except that the Bondholders shall be
entitled to enforce their rights against the Servicer under this Agreement
solely through a cause of action brought for their benefit by the Trustee.
Nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
RRB Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.

         Section 8.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 8.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

         Section 8.08. Headings. The headings of the various Articles and
Sections

                                      -27-
<PAGE>

herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

         Section 8.09. Governing Law. This Agreement shall be construed in
accordance with the substantive laws of the State of New Hampshire, without
giving effect to its conflict of law or other principles that would cause the
application of the laws of another jurisdiction, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.

         Section 8.10. Assignment to Trustee. The Servicer hereby acknowledges
and consents to the collateral assignment or pledge of, or grant of a security
interest in, any or all of the Issuer's rights and obligations hereunder to the
Trustee for the benefit of the holders of the Bonds.

         Section 8.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the NHPUC's right
to order the sequestration and payment of revenues arising with respect to the
RRB Property notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the debtor, pledgor or transferor of the RRB
Property pursuant to RSA 369-B:7, VI and RSA 369-B:7, VIII, the Servicer shall
not, prior to the date which is one year and one day after the termination of
the Indenture with respect to the Issuer, petition or otherwise invoke or cause
the Issuer to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Issuer, or ordering
the winding up or liquidation of the affairs of the Issuer.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -28-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.

                              PSNH FUNDING LLC,
                              Issuer

                              By: /s/ Randy A. Shoop
                                 -----------------------------------------------
                                  Name:   Randy A. Shoop
                                  Title:  President

                              PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
                              Servicer

                              By: /s/ Randy A. Shoop
                                 -----------------------------------------------
                                  Name:   Randy A. Shoop
                                  Title:  Assistant Treasurer - Finance

                                     S-29-
<PAGE>

                                    EXHIBIT A

                            CERTIFICATE OF COMPLIANCE

         The undersigned hereby certifies that he/she is the duly elected and
acting [________] of Public Service Company of New Hampshire, as servicer (the
"Servicer") under the Servicing Agreement, dated as of April 25, 2001 (the
"Servicing Agreement"), between the Servicer and PSNH Funding LLC (the
"Issuer"), and further certifies on behalf of the Servicer that:

         1.   A review of the activities of the Servicer and of its
performance under the Servicing Agreement during the __________ months ended
December 31, 20[_] has been made under the supervision of the undersigned
pursuant to Section 3.03 of the Servicing Agreement; and

         2.   To the undersigned's knowledge, based on such review, the
Servicer has fulfilled all of its material obligations in all material respects
under the Servicing Agreement throughout the __________ months ended December
31, 20[_], except as listed on Annex A hereto.

         Executed as of this _______ day of ___________, 20__ .

                                   PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
                                   Servicer

                                   By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                      -30-
<PAGE>

                              ANNEX A TO EXHIBIT A

                            LIST OF SERVICER DEFAULTS

Nature of Default                                            Status
-----------------                                            ------

                                     -A-31-
<PAGE>

                                    EXHIBIT B

                         FORM OF ROUTINE TRUE-UP LETTER

                                     [date]

ADVICE

NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION (THE "COMMISSION")

SUBJECT: Periodic RRB Charge True-Up Mechanism Advice Filing

Pursuant to the order of the Commission, DE 99-099 , issued on September 8, 2000
(Order No. 23,550) (the "FINANCE ORDER"), Public Service Company of New
Hampshire ("PSNH"), as servicer of the RRBs or any successor Servicer and on
behalf of the RRB trustee as assignee of the special purpose entity (the "SPE"),
shall apply for adjustment to the RRB Charge not later than 30 days prior to
each semiannual anniversary of the RRB transaction closing and at such
additional intervals, if necessary, as may be provided for in the Finance Order.
Any capitalized terms not defined herein shall have the meanings ascribed
thereto in the Finance Order.

PURPOSE

This filing establishes the revised RRB Charge to be assessed and collected from
retail users of PSNH's distribution system within PSNH's service territory,
whether or not energy is purchased from PSNH or third party supplier, and
whether or not such distribution system is being operated by PSNH or a successor
distribution company. The RRB Charge is a usage-based component of the stranded
cost recovery charge on each retail user's monthly bill until the Total RRB
Payment Requirements are discharged in full. In the Finance Order, the
Commission authorized PSNH to file Routine True-Up Letters not later than 30
days prior to each semiannual anniversary of the RRB transaction closing and at
such additional intervals, if necessary, as may be provided for in the Finance
Order. The purpose of such filings and resulting adjusted RRB Charges is to
ensure the timely recovery of revenues sufficient to provide for the payment of
an amount equal to the sum of the Periodic RRB Payment Requirements for the
upcoming period, which may include indemnity obligations of the SPE in the RRB
transaction documents for SPE officers and directors, trustee fees and other
liabilities of the SPE.

Using the methodology approved by the Commission in the Finance Order, this
filing modifies the variables used in the RRB Charge calculation and provides
the resulting modified RRB Charge. Table I shows the revised assumptions for
each of the variables used in calculating the RRB Charge for customers. The
assumptions underlying the current RRB Charges were filed in an Issuance Advice
Letter, dated ______________.

Table I below shows the current assumptions for each of the variables used in
the RRB Charge calculation.

                                     -B-32-
<PAGE>

                                     TABLE I

                           INPUT VALUES FOR RRB CHARGE

Forecasted retail kWh sales for the period:
     January:________________________
     February:________________________
     March:________________________
     April:________________________
     May:________________________
     June:________________________
     July:________________________
     August:________________________
     September:________________________
     October:________________________
     November:________________________
     December:________________________
Percent of billed amounts expected to be charged-off:________
Weighted average days sales outstanding:_____

     (calculated as follows)

     Percent of billed amounts collected in current month:_____
     Percent of billed amounts collected in second month after billing:_____
     Percent of billed amounts collected in third month after billing:_____
     Percent of billed amounts collected in fourth month after billing:_____
     Percent of billed amounts collected in fifth month after billing:_____

Forecasted ongoing interest and transaction expenses (including any already
accrued but unpaid for the period):_____

Current Interest Reserve Subaccount balance:______
Scheduled Interest Reserve Subaccount balance at the end of the period:______
Current Overcollateralization Subaccount balance:______
Scheduled Overcollateralization Subaccount balance at the end of the period:____
Current Capital Subaccount balance:______
Initial Capital Subaccount balance:______
Current RRB outstanding balance:_____
Scheduled RRB outstanding balance at the end of the period:______
Current Reserve Subaccount balance:______

The adjusted RRB Charge calculated for retail users is as
follows:_____(cent)/kWh

                                     -B-33-
<PAGE>

EFFECTIVE DATE

In accordance with the Finance Order, Routine True-Up Letters for semiannual RRB
Charge adjustments shall be filed not later than 30 days prior to each
semiannual anniversary of the RRB transaction closing, with the resulting upward
or downward adjustments to the RRB Charge to be effective - absent manifest
error in the Routine True-Up Letters - on the ensuing semiannual anniversary. In
accordance with the Finance Order, Routine True-Up Letters may also be filed as
frequently as monthly, with the resulting upward or downward adjustments to the
RRB Charge to be effective - absent manifest error in the Routine True-Up
Letters - immediately upon the filing of the on the Routine True-Up Letters. No
approval by the Commission is required. Therefore, these RRB Charges shall be
effective as of ___________.

NOTICE

Copies of this filing are being furnished to the parties on the attached service
list. Notice to the public is hereby given by filing and keeping this filing
open for public inspection at PSNH's corporate headquarters.

Enclosures

                                     -B-34-
<PAGE>

                                    EXHIBIT C

                      FORM OF MONTHLY SERVICER CERTIFICATE

         Pursuant to Section 4.01(d)(2) of the Servicing Agreement, dated as of
April 25, 2001 (the "Agreement"), between Public Service Company of New
Hampshire, as servicer (the "Servicer"), and PSNH Funding LLC, the Servicer does
hereby certify as follows:

         Capitalized terms used herein have their respective meanings as set
forth in the Agreement.

For the Monthly Period:_____________

1.       BILLINGS:

a)       Monthly kWh Consumption:
b)       Applicable RRB Charge:
c)       Total RRB Charge Amount Billed this Month:
d)       Cumulative RRB Charge Amount Billed this Remittance Period:

2.       REMITTANCES:

a)       Total Amount Remitted this Month:
b)       Cumulative Amount Remitted this Remittance Period:
c)       "RRB %" (calculated in accordance with Annex II to the Agreement) for
         this Remittance Period:

3.       DRAWS ON SUBACCOUNTS:

a)       Reserve Subaccount Draw Amount this Month:
b)       Cumulative Reserve Subaccount Draw Amount this Remittance Period (net
         of funding):
c)       Overcollateralization Subaccount Draw Amount this Month:
d)       Cumulative Overcollateralization Subaccount Draw Amount this Remittance
         Period (net of funding):
e)       Capital Subaccount Draw Amount this Month:
f)       Cumulative Capital Subaccount Draw Amount this Remittance Period (net
         of funding):
g)       Interest Reserve Subaccount Draw Amount this Month:
h)       Cumulative Interest Reserve Subaccount Draw Amount this Remittance
         Period (net of funding):
i)       Servicer Advance Subaccount Draw Amount this Month:
j)       Cumulative Servicer Advance Subaccount Draw Amount this Remittance
         Period:

                                     -C-35-
<PAGE>

         Executed as of this _____________ day of ___________.

                                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
                                    Servicer

                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:

                                     -C-36-
<PAGE>

                                    EXHIBIT D

                     FORM OF QUARTERLY SERVICER CERTIFICATE

         Pursuant to Section 4.01(d)(3) of the Servicing Agreement, dated as of
April 25, 2001 (the "Agreement"), between Public Service Company of New
Hampshire, as servicer (the "Servicer"), and PSNH Funding LLC, the Servicer does
hereby certify, for the current Payment Date (__________, __ 20[ ]) (the
"Current Payment Date"), as follows:

         Capitalized terms used herein have their respective meanings as set
forth in the Agreement. References herein to certain sections and subsections
are references to the respective sections of the Agreement.

1.      RRB CHARGE COLLECTIONS AND AGGREGATE AMOUNTS AVAILABLE FOR THE CURRENT
        PAYMENT DATE:

        i.       Amount Remitted [Month] [Year]
        ii.      Amount Remitted [Month] [Year]
        iii.     Amount Remitted [Month] [Year]
        iv.      Amount Remitted [Month] [Year]
        v.       Amount Remitted [Month] [Year]
        vi.      Amount Remitted [Month] [Year]
        vii.     Amount Remitted [Month] [Year]
        viii.    Amount Remitted [Month] [Year]
        IX.      TOTAL AMOUNT REMITTED FOR THIS PERIOD (SUM OF I. THROUGH
                 VIII. ABOVE):
        x.       Net Earnings on Collection Account:
        xi.      Expenses Paid to Date:
        XII.     GENERAL SUBACCOUNT BALANCE (SUM OF IX. AND X. ABOVE MINUS XI.):
        xiii.    Reserve Subaccount Balance
        xiv.     Overcollateralization Subaccount Balance
        xv.      Capital Subaccount Balance
        xvi.     Interest Reserve Subaccount Balance
        xvii.    Servicer Advance Subaccount Balance
        XVIII.   COLLECTION ACCOUNT BALANCE (SUM OF XII. THROUGH XVII. ABOVE):

2.      OUTSTANDING PRINCIPAL BALANCE AS OF PRIOR PAYMENT DATE BY TRANCHE:

        i.       Class A-1 Principal Balance Outstanding Bond:
        ii.      Class A-2 Principal Balance Outstanding Bond:
        iii.     Class A-3 Principal Balance Outstanding Bond:
        IV.      TOTAL BOND PRINCIPAL BALANCE:

3.      REQUIRED FUNDING/PAYMENTS AS OF CURRENT PAYMENT DATE

                                     -D-37-
<PAGE>

     A)       PROJECTED PRINCIPAL BALANCES AND PAYMENTS

                                         Projected              Quarterly
                                     Principal Balance        Principal Due
                                     -----------------        -------------

          i.    Class A-1 Bond
          ii.   Class A-2 Bond
          iii.  Class A-3 Bond
          IV.   TOTAL PROJECTED
                PRINCIPAL
                AMOUNT:

     B)       REQUIRED INTEREST PAYMENTS

                                      Bond            Days in          Interest
                                   Interest Rate   Applicable Period     Due
                                   -------------   -----------------     ---
          i.    Class A-1 Bond
          ii.   Class A-2 Bond
          iii.  Class A-3 Bond

          IV.   TOTAL REQUIRED
                INTEREST AMOUNT:

     C)       PROJECTED SUBACCOUNT PAYMENTS AND LEVELS

                                                           Projected     Funding
                                              Subaccount     Level      Required
                                              ----------     -----      --------

          i.    Interest Reserve Subaccount:
          ii.   Capital Subaccount:
          iii.  Overcollateralization
                Subaccount:
          iv.   Servicer Advance Subaccount:                               N/A
          V.    TOTAL SUBACCOUNT PAYMENTS AND
                LEVELS:

4.   ALLOCATION OF REMITTANCES AS OF CURRENT PAYMENT DATE PURSUANT TO
     SECTION 8.02(D) OF INDENTURE:

     A)       QUARTERLY EXPENSES

          Net Expense Amount (Payable on Current Payment Date)
          i.    Trustee Fees and Expenses:
          ii.   Quarterly Servicing Fee:
          iii.  Quarterly Administration Fee:
          iv.   Operating Expenses (subject to $100,000 cap):

                                     -D-38-
<PAGE>

           V.    TOTAL EXPENSES:

     B)    QUARTERLY INTEREST

                                           Per $1000 of          Aggregate
                                             Original        Principal Amount
                                             --------        ----------------

           i.    Class A-1 Bond
           ii.   Class A-2 Bond
           iii.  Class A-3 Bond

           IV.   TOTAL QUARTERLY INTEREST:

     C)    QUARTERLY PRINCIPAL

                                           Per $1000 of          Aggregate
                                             Original        Principal Amount
                                             --------        ----------------

           i.    Class A-1 Bond
           ii.   Class A-2 Bond
           iii.  Class A-3 Bond

           IV.   TOTAL QUARTERLY PRINCIPAL:

     D)    OTHER PAYMENTS

           i.     Operating Expenses (in excess of $100,000):
           ii.    Funding of Interest Reserve Subaccount (to
                  required level):
           iii.   Funding of Capital Subaccount (to required
                  amount):
           iv.    Funding of Overcollateralization
                  Subaccount (to required level):
           v.     Deposits to Reserve Subaccount:
           vi.    Interest earnings on Capital Subaccount
                  Released to Issuer:
           vii.   Interest earnings on Servicer Advance
                  Subaccount Released to Issuer:
           viii.  Operating Expenses Paid From Servicer
                  Advance Subaccount at Request of Servicer:

     E)    AGGREGATE PAYMENTS PURSUANT TO SECTION 8.02(D)(I) OF INDENTURE

                                     -D-39-
<PAGE>

           i.    To Trustee:
           ii.   To other Persons indemnified under
                 Indenture or Fee and Indemnity Agreement:

5.    OUTSTANDING PRINCIPAL BALANCE AND COLLECTION ACCOUNT BALANCE AS OF
      CURRENT PAYMENT DATE (AFTER GIVING EFFECT TO PAYMENTS TO BE MADE ON
      SUCH DISTRIBUTION DATE):

     A)    PRINCIPAL BALANCE OUTSTANDING:
           i.    Class A-1 Principal Balance Outstanding Bond:
           ii.   Class A-2 Principal Balance Outstanding Bond:
           iii.  Class A-3 Principal Balance Outstanding Bond:
           IV.   TOTAL BOND PRINCIPAL BALANCE:
     B)    COLLECTION ACCOUNT BALANCES OUTSTANDING:

           i.    Interest Reserve Subaccount:
           ii.   Capital Subaccount:
           iii.  Overcollateralization Subaccount:
           iv.   Reserve Subaccount:
           v.    Servicer Advance Subaccount
           VI.   TOTAL SUBACCOUNT AMOUNT:

6.    SUBACCOUNT DRAWS AS OF CURRENT PAYMENT DATE (IF APPLICABLE, PURSUANT TO
      SECTION 8.02(E) OR 8.02(J) OF INDENTURE):

           i.    Interest Reserve Subaccount:
           ii.   Capital Subaccount:
           iii.  Overcollateralization Subaccount:
           iv.   Reserve Subaccount:
           v.    Servicer Advance Subaccount:
           VI.   TOTAL SUBACCOUNT DRAWS:

7.   SHORTFALLS IN INTEREST AND PRINCIPAL PAYMENTS AS OF CURRENT PAYMENT
     DATE (IF APPLICABLE):

     A)    QUARTERLY INTEREST SHORTFALL

           i.    Class A-1 Bond

                                     -D-40-
<PAGE>

           ii.   Class A-2 Bond

           iii.  Class A-3 Bond

           IV.   TOTAL QUARTERLY INTEREST SHORTFALL:

     B)    QUARTERLY PRINCIPAL SHORTFALL

           i.    Class A-1 Bond

           ii.   Class A-2 Bond

           iii.  Class A-3 Bond

           IV.   TOTAL QUARTERLY PRINCIPAL SHORTFALL:

8.   SHORTFALLS IN REQUIRED SUBACCOUNT LEVELS AS OF CURRENT DISTRIBUTION
     DATE:

           i.    Interest Reserve Subaccount

           ii.   Capital Subaccount

           iii.  Overcollateralization Subaccount:

           IV.   TOTAL SUBACCOUNT SHORTFALLS:

         IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Quarterly Servicer Certificate this ___ day of ____, ____.

                                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
                                    Servicer

                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:

                                     -D-41-
<PAGE>

                                SCHEDULE 4.01(a)

                         EXPECTED AMORTIZATION SCHEDULE

                          OUTSTANDING PRINCIPAL AMOUNT

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                         Class                Class                   Class
Payment Date              A-1                  A-2                     A-3
------------              ---                  ---                     ---
<S>                   <C>                 <C>                     <C>
  Closing             $75,211,483         $214,649,395            $235,139,122
  11/1/01              57,592,606          214,649,395             235,139,122
   2/1/02              43,797,063          214,649,395             235,139,122
   5/1/02              28,368,117          214,649,395             235,139,122
   8/1/02              20,697,824          214,649,395             235,139,122
  11/1/02              14,392,034          214,649,395             235,139,122
   2/1/03               7,780,415          214,649,395             235,139,122
   5/1/03                 (0)              214,649,395             235,139,122
   8/1/03                  0               206,917,868             235,139,122
  11/1/03                  0               197,869,570             235,139,122
   2/1/04                  0               189,598,432             235,139,122
   5/1/04                  0               180,590,351             235,139,122
   8/1/04                  0               172,246,415             235,139,122
  11/1/04                  0               162,796,874             235,139,122
   2/1/05                  0               154,148,908             235,139,122
   5/1/05                  0               144,473,833             235,139,122
   8/1/05                  0               135,568,653             235,139,122
  11/1/05                  0               125,605,470             235,139,122
   2/1/06                  0               116,266,274             235,139,122
   5/1/06                  0               106,175,553             235,139,122
   8/1/06                  0                96,723,253             235,139,122
  11/1/06                  0                86,167,370             235,139,122
   2/1/07                  0                76,211,779             235,139,122
   5/1/07                  0                65,563,711             235,139,122
   8/1/07                  0                55,515,784             235,139,122
  11/1/07                  0                44,346,853             235,139,122
   2/1/08                  0                33,748,007             235,139,122
   5/1/08                  0                22,498,547             235,139,122
   8/1/08                  0                11,818,671             235,139,122
  11/1/08                  0                    0                  235,139,122
   2/1/09                  0                    0                  223,861,093
   5/1/09                  0                    0                  211,970,981
   8/1/09                  0                    0                  200,623,964
  11/1/09                  0                    0                  188,113,319
   2/1/10                  0                    0                  176,150,999
   5/1/10                  0                    0                  163,545,614
   8/1/10                  0                    0                  151,478,734
  11/1/10                  0                    0                  138,246,734
--------------------------------------------------------------------------------
</TABLE>

                             - Schedule 4.01(a)-42
<PAGE>

<TABLE>
<S>                       <C>                  <C>                <C>
   2/1/11                  0                    0                  125,549,313
   5/1/11                  0                    0                  112,194,918
   8/1/11                  0                    0                   99,366,197
  11/1/11                  0                    0                   85,367,758
   2/1/12                  0                    0                   71,905,110
   5/1/12                  0                    0                   57,742,177
   8/1/12                  0                    0                   44,103,087
  11/1/12                  0                    0                   29,294,415
   2/1/13                  0                    0                   14,974,162
   5/1/13                  0                    0                       0
--------------------------------------------------------------------------------
</TABLE>

                              - Schedule 4.01(a)-43

<PAGE>

                                     ANNEX I

                              SERVICING PROCEDURES

         The Servicer agrees to comply with the following servicing procedures:

         SECTION 1. DEFINITIONS

         (a) Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Agreement.

         (b) Whenever used in this Annex I, the following words and phrases
shall have the following meanings:

         "Billed RRB Charges" means the dollar amounts billed to customers or
the Applicable TPS in respect of the RRB Charge, whether billed to customers or
the Applicable TPS by the Servicer or to customers by a TPS pursuant to a TPS
Service Agreement.

         "Servicer Policies and Practices" means, with respect to the Servicer's
duties under this Annex I, the policies and practices of the Servicer applicable
to such duties that the Servicer follows with respect to comparable assets that
it services for itself or others, as in effect from time to time and in
accordance with NHPUC Regulations. The Servicer shall provide ten days' prior
written notice to the Rating Agencies of any amendment to the Servicer Policies
and Practices that would adversely affect in any material respect the
Bondholders.

         SECTION 2. DATA ACQUISITION

         (a) Installation and Maintenance of Meters. Except to the extent that a
TPS is responsible for such services pursuant to a TPS Service Agreement, the
Servicer shall cause to be installed, replaced and maintained meters in
accordance with the Servicer Policies and Practices.

         (b) Meter Reading. In accordance with the Servicer Policies and
Practices, the Servicer shall obtain usage measurements for each customer;
provided, however, that the Servicer may determine any customer's usage on the
basis of estimates in accordance with applicable NHPUC Regulations; and,
provided, further, that the Servicer may obtain usage measurements from the
Applicable TPS for customers receiving meter reading services from such TPS if
the applicable TPS Service Agreement so provides.

         (c) Cost of Metering. The Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section 2, including
the costs of installing, replacing and maintaining meters, nor shall the Issuer
be entitled to any credit against the Servicing Fee for any cost savings
realized by the Servicer or any TPS as a

                                  -Annex I-44-

<PAGE>

result of new metering and/or billing technologies.

         SECTION 3. USAGE AND BILL CALCULATION

         The Servicer shall obtain a calculation of each customer's usage (which
may be based on data obtained from such customer's meter read or on usage
estimates determined in accordance with applicable NHPUC Regulations) in
accordance with the Servicer Policies and Practices and shall determine
therefrom Billed RRB Charges; provided, however, that in the case of customers
served by a TPS pursuant to a TPS Service Agreement, the Servicer may obtain
usage measurements from the Applicable TPS for customers receiving meter reading
services from such TPS if the applicable TPS Service Agreement so provides and
shall determine therefrom Billed RRB Charges.

         SECTION 4. BILLING

         (a) The Servicer shall implement the RRB Charge as of the Closing Date
and shall thereafter bill each customer or the Applicable TPS for each
customer's Billed RRB Charges in accordance with the provisions of this Section
4.

         (b) Frequency of Bills; Billing Practices. In accordance with the
Servicer Policies and Practices, the Servicer shall generate and issue a Bill to
each customer, or, in the case of a customer who is being billed by a TPS, to
the Applicable TPS with respect to such customer's Billed RRB Charges. In the
event that the Servicer makes any material modification to the Servicer Policies
and Practices, it shall notify the Issuer, the Trustee and the Rating Agencies
as soon as practicable, and in no event later than 60 Servicer Business Days
after such modification goes into effect; provided, however, that the Servicer
may not make any modification that will materially adversely affect the
Bondholders.

         (c) Format.

         (i) Each Bill to a customer shall contain a stranded cost recovery
charge that shall include the RRB Charge owed by such customer for the
applicable billing period.

         (ii) Each Bill in which the stranded cost recovery charge is listed as
a line item shall contain a statement (as a footnote) to the effect that all or
a portion of the stranded cost recovery charge is owned by the Issuer and not
the Seller.

         (iii) The Servicer shall conform to such requirements in respect of the
format, structure and text of Bills delivered to customers and TPSs as
applicable NHPUC Regulations shall from time to time prescribe. To the extent
that Bill format, structure and text are not prescribed by applicable law or by
applicable NHPUC Regulations, the Servicer shall, subject to clauses (i) and
(ii) of this subsection (c), determine the format, structure and text of all
Bills in accordance with its reasonable business judgment, the Servicer Policies
and Practices and historical practice.

                                  -Annex I-45-

<PAGE>

         (d) Delivery. Except as provided in the next sentence, the Servicer
shall deliver all Bills to customers (i) by United States mail in such class or
classes as are consistent with the Servicer Policies and Practices or (ii) by
any other means, whether electronic or otherwise, that the Servicer may from
time to time use in accordance with the Servicer Policies and Practices. In the
case of customers that have elected to be billed by a TPS, the Servicer shall
deliver all Bills to the Applicable TPSs by such means as are mutually agreed
upon by the Servicer and the Applicable TPS in the TPS Service Agreement and
which are consistent with NHPUC Regulations. The Servicer or a TPS, as
applicable, shall pay from its own funds all costs of issuance and delivery of
all Bills that it renders, including printing and postage costs as the same may
increase or decrease from time to time.

         SECTION 5. CUSTOMER SERVICE FUNCTIONS

         The Servicer or a TPS to the extent provided in the applicable TPS
Service Agreement shall handle all customer inquiries and other customer service
matters according to the Servicer Policies and Practices.

         SECTION 6. COLLECTIONS; PAYMENT PROCESSING; REMITTANCE

         (a) Collection Efforts, Policies, Procedures.

         (i) The Servicer shall collect Billed RRB Charges from customers and
TPSs as and when the same become due in accordance with such collection
procedures as it follows with respect to comparable assets that it services for
itself or others, including the following:

         (A) The Servicer shall prepare and deliver overdue notices to customers
and TPSs in accordance with applicable NHPUC Regulations and the Servicer
Policies and Practices.

         (B) The Servicer shall deliver past-due and shut-off notices in
accordance with applicable NHPUC Regulations and the Servicer Policies and
Practices.

         (C) The Servicer shall adhere to and carry out disconnection policies
and termination of billing by a TPS pursuant to a TPS Service Agreement in
accordance with RSA 369-B:4, IV, the Finance Order, applicable NHPUC Regulations
and the Servicer Policies and Practices.

         (D) The Servicer may employ the assistance of collection agents in
accordance with applicable NHPUC Regulations and the Servicer Policies and
Practices.

         (E) The Servicer shall apply customer and TPS deposits to the payment
of delinquent accounts in accordance with applicable NHPUC Regulations and the
Servicer Polices and Practices.

         (ii) The Servicer shall not waive any late payment charge or any other

                                  -Annex I-46-

<PAGE>

fee or charge relating to delinquent payments, if any, or waive, vary or modify
any terms of payment of any amounts payable by a customer, in each case unless
such waiver or action: (A) would be in accordance with the Servicer Policies and
Practices, (B) would not materially adversely affect the Bondholders, and (B)
would comply in all material respects with applicable law.

         (iii) The Servicer shall accept payment from customers in respect of
Billed RRB Charges in such forms and methods and at such times and places in
accordance with the Servicer Policies and Practices. The Servicer shall accept
payment from TPSs in respect of Billed RRB Charges in such forms and methods and
at such times and places as the Servicer and each TPS shall mutually agree in
accordance with the applicable TPS Service Agreement and applicable NHPUC
Regulations.

         (b) Payment Processing, Allocation, Priority of Payments. The Servicer
shall post all payments received to customer or TPS accounts as promptly as
practicable, and, in any event, substantially all payments shall be posted no
later than one Servicer Business Day after receipt.

         (c) Investment of RRB Charge Payments Received. Prior to remittance on
the applicable Remittance Date, the Servicer may invest RRB Charge Payments at
its own risk and for its own benefit, and such investments and funds shall not
be required to be segregated from the other investments and funds of the
Servicer. The Servicer shall be entitled to retain as additional compensation
any interest earnings on RRB Charge Payments invested by it.

         (d) Calculation of RRB Charge Payments; Remittances. In accordance with
Section 4.03(a) of the Agreement, the Servicer shall remit to the Trustee for
deposit in the Collection Account an amount equal to the RRB Charge Payments
calculated in accordance with the methodology described in Annex II attached to
the Agreement.

         (e) Remittances.

         (i) The Issuer shall cause to be established the Collection Account in
the name of the Trustee in accordance with Section 8.02 of the Indenture.

         (ii) The Servicer shall make or cause to be made Remittances to the
Collection Account in accordance with Section 4.03 of the Agreement.

         (iii) Any change of account or change of institution affecting the
Collection Account shall not take effect until the Issuer has provided at least
fifteen (15) Servicer Business Days written notice thereof to the Servicer.

         SECTION 7. TPSs

         In the event a TPS performs services pursuant to a TPS Service
Agreement, the Servicer shall comply with the procedures set forth in Schedule A
to this Annex I.

                                  -Annex I-47-

<PAGE>

                                   SCHEDULE A

                                   TO ANNEX I

               Additional Servicing Procedures Applicable to TPSs

1.       Establishing TPS Relationship

         In addition to any actions required by the NHPUC or by applicable law,
for each TPS that is responsible for collecting Billed RRB Charges, the Servicer
shall take the following steps:

         (a)      Maintain adequate records of the payment arrangement
                  applicable to such TPS;
         (b)      Maintain copies of all customer requests to convert to billing
                  by a TPS;
         (c)      Verify with the NHPUC that each TPS is licensed to supply
                  electricity in New Hampshire;
         (d)      Obtain information from the TPS including, but not limited to:
                  name, contact, address, telephone facsimile transmission
                  number and internet address;
         (e)      Maintain and update records of customers to permit prompt
                  reversion to dual-billing;

         (f)      Maintain estimates of one month's maximum RRB Charge Payments
                  for each TPS required to post a bond, letter of credit or cash
                  deposit pursuant to the applicable TPS Service Agreement; and
         (g)      Comply with credit conditions set out in the Finance Order and
                  applicable TPS Service Agreement.

2.       Monitoring TPS Obligations

         (a)      The Servicer shall require each TPS to pay all undisputed and
                  all disputed Billed RRB Charges or make a financial
                  arrangement for such payment according to the applicable TPS
                  Service Agreement; and
         (b)      For all TPSs subject to any remittance option where such TPS
                  is liable for all amounts billed in respect of customers
                  served thereby regardless of the amounts received therefrom,
                  the Servicer shall monitor payment compliance and take all
                  actions permitted by the NHPUC and the Finance Order in the
                  event of a default in payment.

3.       Enforcing TPS Obligations

         The Servicer shall promptly take all actions specified by the Finance
Order with respect to amounts not remitted to the Servicer in accordance with
the payment terms specified by the Finance Order, in addition to any other
remedies available at law.

                                  -Annex I-48-

<PAGE>

                                    ANNEX II

                             REMITTANCE METHODOLOGY

                                  -Annex I-49-<PAGE>

                                                                   Exhibit 10.59

                           PURCHASE AND SALE AGREEMENT

                                     between

                               PSNH FUNDING LLC 2

                                     Issuer

                                       and

                     PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

                                     Seller

                          Dated as of January 30, 2002

<PAGE>

         This PURCHASE AND SALE AGREEMENT, dated as of January 30, 2002, is
between PSNH Funding LLC 2, a Delaware limited liability company (the "Issuer"),
and Public Service Company of New Hampshire, a New Hampshire corporation
(together with its successors in interest to the extent permitted hereunder, the
"Seller").

                                    RECITALS

         WHEREAS, the Issuer desires to purchase the RRB Property (as defined
herein) created pursuant to the Statute and the Finance Order (each as defined
herein); and

         WHEREAS, the Seller is willing to sell the RRB Property to the Issuer.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:

         "Administration Agreement" means the Administration Agreement dated as
of the date hereof between Public Service Company of New Hampshire, as
Administrator, and the Issuer, as amended and supplemented from time to time.

         "Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

         "Agreement" means this Purchase and Sale Agreement, as amended and
supplemented from time to time.

         "Authorized Officer" means an officer of the Seller listed on the list
of Authorized Officers delivered by the Seller to the Trustee on the date of
issuance of the Bonds (as such list may be modified or supplemented by the
Seller from time to time).

         "Back-Up Security Interest" has the meaning specified in Section 2.01.

         "Basic Documents" means, collectively, this Agreement, the Indenture,
the Servicing Agreement, the Administration Agreement, the Underwriting
Agreement and the Fee and Indemnity Agreement.

         "Bondholder" or "Holder" means the Person in whose name a Bond is
registered on the Register.

         "Bonds" means the PSNH Funding LLC 2 Bonds issued under the Indenture.

         "Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in New York, New York,
Hartford, Connecticut, Manchester, New Hampshire or Wilmington, Delaware are
authorized or obligated by law, regulation or executive order to remain closed.

         "Capital Subaccount" has the meaning specified in Section 8.02(a) of
the Indenture.

                                      -2-

<PAGE>

         "Closing Date" means January 30, 2002.

         "Collection Account" has the meaning specified in Section 8.02(a) of
the Indenture.

         "Corporate Trust Office" has the meaning specified in Section 1.01(a)
of the Indenture.

         "Date of Breach" means, with respect to the repurchase obligation
specified in Section 5.01(b), the date of a breach of a representation or
warranty that triggers such repurchase obligation.

         "Fee and Indemnity Agreement" means the Fee and Indemnity Agreement
dated as of the date hereof between the Issuer and the Trustee, as amended and
supplemented from time to time.

         "Finance Order" means the order of the NHPUC, DE 01-089, issued on
December 6, 2001 (Order No. 23,859).

         "Fitch" means Fitch, Inc. or its successor.

         "Indemnified Person" has the meaning specified in Section 5.01(c),
Section 5.01(d), Section 5.01(e) or in Section 5.01(h), for the purposes set
forth therein.

         "Indenture" means the Indenture dated as of the date hereof between the
Issuer and the Trustee, as amended and supplemented from time to time.

         "Independent" has the meaning specified in Section 1.01(a) of the
Indenture.

         "Interest Reserve Subaccount" has the meaning specified in Section
8.02(a) of the Indenture.

         "Issuance Advice Letter" means the initial Issuance Advice Letter,
dated January 25, 2002, filed with the NHPUC by the Seller pursuant to the
Finance Order.

         "Issuance Date" has the meaning specified in Section 2.01(c)(i) of the
Indenture.

         "Issuer" has the meaning set forth in the preamble of this Agreement.

         "Lien" means a security interest, lien, charge, pledge or encumbrance
of any kind.

         "Losses" has the meaning specified in Section 5.01(e).

         "Moody's" means Moody's Investors Service, Inc. or its successor.

         "NHPUC" means the New Hampshire Public Utilities Commission and any
successor thereto.

         "NHPUC Regulations" has the meaning specified in Section 1.01 of the
Servicing Agreement.

         "Officer's Certificate" means a certificate signed by the chairman of
the board, the chief executive officer, the president, the vice chairman of the
board, any vice president, the treasurer, any assistant treasurer, the
secretary, any assistant secretary, the controller or the finance manager of the
Seller.

         "Operating Expense" has the meaning specified in Section 1.01(a) of the
Indenture.

         "Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to the party providing such opinion of counsel,
which counsel shall be reasonably acceptable to the party receiving such opinion
of counsel.

         "Outstanding Amount" has the meaning specified in Section 1.01(a) of
the Indenture.

         "Overcollateralization Subaccount" has the meaning specified in Section
8.02(a)

                                      -3-

<PAGE>

of the Indenture.

         "Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.

         "Prospectus" means the prospectus dated January 16, 2002 offering the
Bonds.

         "Rating Agencies" means, collectively, S&P, Moody's and Fitch.

         "Register" has the meaning specified in Section 2.05 of the Indenture.

         "Repurchase Date" means the date that is five Business Days after the
date that is (i) if the terms of Section 5.01(b)(i)(A) and Section
5.01(b)(i)(B)(2) are applicable, two Business Days after the Date of Breach if
the Seller fails to make the deposit required by Section 5.01(b)(i)(B)(2) or 90
days after the Date of Breach if the Seller makes the deposit required by
Section 5.01(b)(i)(B)(2); (ii) if the terms of Section 5.01(b)(ii) are
applicable, 90 days after the Date of Breach; and (iii) if the terms of Section
5.01(b)(i)(A) and Section 5.01(b)(i)(B)(1) are applicable, 90 days after the
Date of Breach.

         "Repurchase Price" has the meaning specified in Section 5.01(b)(i).

         "Required Capital Level" has the meaning specified in Section 1.01(a)
of the Indenture.

         "Required Interest Reserve Level" has the meaning specified in Section
1.01(a) of the Indenture.

         "Required Overcollateralization Level" has the meaning specified in
Section 1.01(a) of the Indenture.

         "RRB Charge" means the portion (which may become all) of the Seller's
"stranded cost recovery charge" designated pursuant to the Finance Order and RSA
369-B:2, XIII as the RRB Charge, as the same may be adjusted from time to time
as provided in the Finance Order.

         "RRB Charge Collections" has the meaning specified in Section 1.01 of
the Servicing Agreement.

         "RRB Property" means the RRB Property that exists under Approval Nos.
20 to 22 of the Finance Order.

         "RSA" means New Hampshire Revised Statutes Annotated.

         "Seller" has the meaning set forth in the preamble of this Agreement.

         "Servicer Default" means an event specified in Section 7.01 of the
Servicing Agreement.

         "Servicing Agreement" means the Servicing Agreement dated as of the
date hereof between Public Service Company of New Hampshire, as Servicer, and
the Issuer, as amended and supplemented from time to time.

         "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc. or its successor.

         "State Treasurer" means the Treasurer of the State of New Hampshire.

         "Statute" means RSA Chapter 369-B.

         "Trustee" means the Person acting as trustee under the Indenture.

         "Underwriting Agreement" means the Underwriting Agreement dated as of
January 16, 2002 among Public Service Company of New Hampshire, the Issuer and
the

                                      -4-

<PAGE>

underwriters named therein.

         Section 1.02. Other Definitional Provisions.

                  (a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.

                  (b) The words "hereof," "herein," "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section, Schedule
and Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; and
the term "including" shall mean "including without limitation".

                  (c) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms.

                                    ARTICLE 2

                           CONVEYANCE OF RRB PROPERTY

         Section 2.01. Conveyance of RRB Property. In consideration of the
Issuer's delivery to or upon the order of the Seller of $49,385,134, the Seller
does hereby irrevocably sell, transfer, assign, set over and otherwise convey to
the Issuer, WITHOUT RECOURSE OR WARRANTY, except as specifically set forth
herein, all right, title and interest of the Seller in and to the RRB Property
(such sale, transfer, assignment, setting over and conveyance of the RRB
Property includes, to the fullest extent permitted by the Statute, the
assignment of all revenues, collections, claims, payments, money or proceeds of
or arising from the RRB Charge pursuant to the Finance Order) and copies of all
books and records related thereto. Such sale, transfer, assignment, setting over
and conveyance is hereby expressly stated to be a sale and, pursuant to RSA
369-B:6, V, shall be treated as an absolute transfer of all of the Seller's
right, title and interest in (as in a true sale), and not as a pledge or other
financing of, the RRB Property. If such sale, transfer, assignment, setting over
and conveyance is held by any court of competent jurisdiction not to be a true
sale as provided in RSA 369-B:6, V, then such sale, transfer, assignment,
setting over and conveyance shall be treated as the creation of a security
interest in the RRB Property and, without prejudice to its position that it has
absolutely transferred all of its rights in the RRB Property to the Issuer, the
Seller hereby grants to the Issuer a security interest in the RRB Property
(including, to the fullest extent permitted by the Statute, all revenues,
collections, claims, payments, money or proceeds of or arising from the RRB
Charge pursuant to the Finance Order) to secure a payment obligation incurred by
the Seller in respect of the amount paid by the Issuer to the Seller pursuant to
this Agreement (the "Back-Up Security Interest"). Such sale, transfer,
assignment, setting over and conveyance of the RRB Property includes the right
to use the Seller's computer software system to access and create copies of all
books and records related to the RRB Property.

                                    ARTICLE 3

                    REPRESENTATIONS AND WARRANTIES OF SELLER

                                      -5-

<PAGE>

         Subject to Section 3.09 hereof, the Seller makes the following
representations and warranties, as of the Closing Date, on which the Issuer has
relied in acquiring the RRB Property.

         Section 3.01. Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under the laws
of the State of New Hampshire, with the requisite corporate power and authority
to own its properties as such properties are currently owned and to conduct its
business as such business is now conducted by it, and has the requisite
corporate power and authority to own the RRB Property.

         Section 3.02. Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications, licenses or approvals (except where the failure to so qualify or
obtain such licenses and approvals would not be reasonably likely to have a
material adverse effect on the Seller's business, operations, assets, revenues
or properties).

         Section 3.03. Power and Authority. The Seller has the requisite
corporate power and authority to execute and deliver this Agreement and to carry
out its terms; and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of the
Seller.

         Section 3.04. Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against it in accordance
with its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other laws relating to or affecting creditors' or
secured parties' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.

         Section 3.05. No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not:
(i) conflict with or result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a default under, the
articles of organization or by-laws of the Seller, or any material indenture,
agreement or other instrument to which the Seller is a party or by which it is
bound; (ii) result in the creation or imposition of any Lien upon any of the
Seller's properties pursuant to the terms of any such indenture, agreement or
other instrument (other than any Lien that may be granted under the Basic
Documents or any Lien created pursuant to RSA 369-B:7, VIII); or (iii) violate
any existing law or any existing order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or its properties.

         Section 3.06. No Proceedings. There are no proceedings pending and, to
the Seller's knowledge, there are no proceedings threatened and, to the Seller's
knowledge, there are no investigations pending or threatened, before any court,
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties involving
or relating to the Seller or the Issuer

                                      -6-

<PAGE>

or, to the Seller's knowledge, any other Person: (i) asserting the invalidity of
this Agreement, any of the other Basic Documents, the Bonds, the Statute or the
Finance Order, (ii) seeking to prevent the issuance of the Bonds or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement, any of the other
Basic Documents or the Bonds or (iv) seeking to adversely affect the federal or
state income tax classification of the Bonds as debt.

         Section 3.07. Approvals. No approval, authorization, consent, order or
other action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the execution and delivery by the Seller of this Agreement, the
performance by the Seller of the transactions contemplated hereby or the
fulfillment by the Seller of the terms hereof, except those that have been
obtained or made and those that the Seller, in its capacity as Servicer under
the Servicing Agreement, is required to make in the future pursuant to the
Servicing Agreement and post closing filings required in connection therewith.

         Section 3.08. The RRB Property.

                  (a) Title. It is the intention of the parties hereto that the
transfer and assignment herein contemplated constitute a sale of the RRB
Property from the Seller to the Issuer and that no interest in, or title to, the
RRB Property shall be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy law. No
portion of the RRB Property has been sold, transferred, assigned or pledged by
the Seller to any Person other than the Issuer. On the Closing Date, immediately
upon the sale hereunder, the Seller has transferred, sold and conveyed the RRB
Property to the Issuer, free and clear of all Liens (including the Lien of the
Seller's first mortgage indenture but excluding any Lien created pursuant to RSA
369-B:7, VIII and any Lien that may be granted under the Basic Documents), and
pursuant to RSA 369-B:6, V such transfer shall be treated as an absolute
transfer of all of the Seller's right, title and interest (as in a true sale),
and not as a pledge or other financing of, the RRB Property.

                  (b) Transfer Filings. On the Closing Date, immediately upon
the sale hereunder, the RRB Property has been validly transferred and sold to
the Issuer, the Issuer shall own all such RRB Property free and clear of all
Liens (including the Lien of the Seller's first mortgage indenture but excluding
any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may be granted
under the Basic Documents) and all filings to be made by the Seller (including
filings with the NHPUC under the Statute) necessary in any jurisdiction to give
the Issuer a valid first priority perfected ownership interest and to grant to
the Trustee a first priority perfected security interest (subject to any Lien
created pursuant to RSA 369-B:7, VIII and any Lien that may be granted under the
Basic Documents) in the RRB Property have been made. No further action is
required to maintain the Issuer's first priority perfected ownership interest or
the Trustee's first priority perfected security interest (subject to any Lien
created pursuant to RSA 369-B:7, VIII and any Lien that may be granted under the
Basic Documents). Filings have also been made to the extent required by
applicable law in any jurisdiction

                                      -7-

<PAGE>

to perfect the Back-Up Security Interest granted by the Seller to the Issuer
(subject to any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may
be granted under the Basic Documents).

                  (c) Finance Order and Issuance Advice Letter; Other Approvals.
On the Closing Date, under the laws of the State of New Hampshire and the United
States in effect on the Closing Date, (i) the Finance Order pursuant to which
the RRB Property has been created is in full force and effect; (ii) the
Bondholders are entitled to the protections of the Statute and, accordingly, the
Finance Order is not revocable by the Commission; (iii) the State of New
Hampshire may neither limit nor alter the RRB Charge, RRB Property, the Finance
Order and all rights thereunder, in a manner that would substantially impair the
rights of Bondholders, absent a demonstration that an impairment is
narrowly-tailored and is necessary to advance an important public interest, such
as responding to a "great public calamity," until the Bonds, together with
accrued interest, are fully met and discharged; provided that the State of New
Hampshire is not precluded from such limitation or alteration if and when
adequate provision is made by law for the protection of the Issuer, the
Bondholders and the Trustee; (iv) except for periodic adjustments to the RRB
Charge required under the Statute, the NHPUC does not have authority, either by
rescinding, altering or amending the Finance Order or otherwise, to revalue or
revise for ratemaking purposes the stranded costs or the costs of providing,
recovering, financing or refinancing the stranded costs, to determine that the
RRB Charge is unjust or unreasonable or in any way to reduce or impair the value
of RRB Property either directly or indirectly by taking the RRB Charge into
account when setting other rates for the Seller; nor are the amount of revenues
arising with respect thereto subject to reduction, impairment, postponement or
termination; (v) the process by which the Finance Order was adopted and
approved, and the Finance Order and Issuance Advice Letter themselves, comply
with all applicable laws, rules and regulations; (vi) the Issuance Advice Letter
has been filed in accordance with the Finance Order; (vii) no other approval,
authorization, consent, order or other action of, or filing with, any court,
Federal or state regulatory body, administrative agency or other governmental
instrumentality is required in connection with the creation or sale of the RRB
Property, except those that have been obtained or made and post closing filings
required in connection therewith and those that the Seller, in its capacity as
Servicer under the Servicing Agreement, is required to make in the future
pursuant to the Servicing Agreement; and (viii) the State of New Hampshire, in
the exercise of its executive or legislative powers, may not repeal or amend the
Statute or the Finance Order, or take any action in contravention of the pledge
by the State of New Hampshire in RSA 369-B:6, II, without paying just
compensation to the Bondholders, as determined by a court of competent
jurisdiction, if this action would constitute a permanent appropriation of a
substantial property interest of Bondholders in the RRB Property and deprive the
Bondholders of their reasonable expectations arising from their investments in
the Bonds.

                  (d) Assumptions. On the Closing Date, based upon the
information available to the Seller on the Closing Date, the assumptions used in
calculating the initial RRB Charge are reasonable and are made in good faith.
Notwithstanding the foregoing, the Seller makes no representation or warranty
that the assumptions used in calculating

                                      -8-

<PAGE>

such RRB Charge will in fact be realized.

                  (e) Creation of RRB Property. Upon the effectiveness of the
Finance Order and the Issuance Advice Letter: (i) all of the RRB Property
constitutes an existing property right; (ii) the RRB Property includes the
right, title and interest in and to all revenues, collections, claims, payments,
money, or proceeds of or arising from the RRB Charge, as adjusted from time to
time pursuant to the Finance Order, and all rights to obtain adjustments to the
RRB Charge pursuant to the Finance Order; and (iii) subject to the cap on the
Seller's "stranded cost recovery charge" set forth in the Statute and the
Finance Order, the owner of the RRB Property is legally entitled to collect
payments in respect of the RRB Charge in the aggregate sufficient to pay the
interest on and principal of the Bonds, to pay the fees and expenses of
servicing the Bonds, to replenish the Capital Subaccount to the Required Capital
Level and to fund the Overcollateralization Subaccount to the Required
Overcollateralization Level, to fund the Interest Reserve Subaccount to the
Required Interest Reserve Level and to enforce all other material rights
conferred in the Finance Order and the Statute until the earlier of the eighth
anniversary of the issuance of the Bonds and the date on which the Bonds are
paid in full. Notwithstanding the foregoing, the Seller makes no representation
or warranty that any amounts actually collected in respect of the RRB Charge
will in fact be sufficient to meet payment obligations with respect to the Bonds
(other than as provided in the Finance Order with respect to other components of
the "stranded cost recovery charge" (as defined in the Statute)).

                  (f) Prospectus. As of the date hereof, the information
describing the Seller under the caption "The Seller and Servicer" in the
Prospectus is correct in all material respects.

         Section 3.09. Limitations on Representations and Warranties.
Notwithstanding any other provisions of this Agreement, the Seller will not be
in breach of any representation or warranty as a result of a change in law by
means of a legislative enactment or constitutional amendment or (if such means
become available in the future) referendum or initiative petition.
Notwithstanding anything to the contrary in this Agreement, the Seller makes no
representation or warranty that any amounts actually collected in respect of the
RRB Charge will in fact be sufficient to meet payment obligations with respect
to the Bonds or that the assumptions used in calculating the RRB Charge will in
fact be realized nor shall the Seller be obligated to reduce, or accept a
reduction of, any rates or charges to which it would otherwise be entitled in
respect of services rendered or to be rendered to customers in order to permit
the payment of the RRB Charge (other than as provided in the Finance Order with
respect to other components of the "stranded cost recovery charge" (as defined
in the Statute)).

                                    ARTICLE 4

                             COVENANTS OF THE SELLER

         Section 4.01. Corporate Existence. So long as any of the Bonds are
outstanding, the Seller (a) will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction of its
organization and (b) will obtain and preserve its qualification to do business,
in each case to the extent that in each such

                                      -9-

<PAGE>

jurisdiction such existence or qualification is or shall be necessary to protect
the validity and enforceability of this Agreement, the other Basic Documents to
which the Seller is a party and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the transactions
contemplated hereby.

         Section 4.02. No Liens. Except for the conveyances hereunder or any
Lien under RSA 369-B:7, VIII, the Seller will not sell, pledge, assign or
transfer, or grant, create, or incur any Lien on, any of the RRB Property, or
any interest therein, and the Seller shall defend the right, title and interest
of the Issuer and the Trustee in, to and under the RRB Property against all
claims of third parties claiming through or under the Seller. Public Service
Company of New Hampshire, in its capacity as Seller, will not at any time assert
any Lien against, or with respect to, any of the RRB Property.

         Section 4.03. Delivery of Collections. If the Seller receives any
payments in respect of the RRB Charge or the proceeds thereof when it is not
acting as the Servicer, the Seller agrees to pay to the Servicer all payments
received by it in respect thereof as soon as practicable after receipt thereof
by it.

         Section 4.04. Notice of Liens. The Seller shall notify the Issuer and
the Trustee promptly after becoming aware of any Lien on any of the RRB
Property, other than the conveyances hereunder, any Lien under the Basic
Documents or any Lien under RSA 369-B:7, VIII.

         Section 4.05. Compliance with Law. The Seller hereby agrees to comply
with its organizational and governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality applicable to
it, except to the extent that failure to so comply would not adversely affect
the Issuer's or the Trustee's interests in the RRB Property or under any of the
other Basic Documents to which the Seller is party or the Seller's performance
of its obligations hereunder or under any of the other Basic Documents to which
it is party.

         Section 4.06. Covenants Related to Bonds and RRB Property.

                  (a) So long as any of the Bonds are outstanding, the Seller
shall treat the Bonds as debt of the Issuer and not of the Seller, except for
financial accounting or tax reporting purposes.

                  (b) So long as any of the Bonds are outstanding, the Seller
shall indicate in its financial statements that it is not the owner of the RRB
Property and that the assets of the Issuer are not available to pay creditors of
the Seller or any of its Affiliates (other than the Issuer).

                  (c) So long as any of the Bonds are outstanding, the Seller
shall disclose the effects of all transactions between the Seller and the Issuer
in accordance with generally accepted accounting principles.

                  (d) So long as any of the Bonds are outstanding, the Seller
shall not own or purchase any Bonds.

                  (e) The Seller agrees that, upon the sale by the Seller of the
RRB Property to the Issuer pursuant to this Agreement, (i) to the fullest extent
permitted by law, including the Statute and applicable NHPUC Regulations, the
Issuer shall have all of the rights originally held by the Seller with respect
to the RRB Property, including the right (subject to the terms of the Servicing
Agreement) to exercise any and all rights and

                                      -10-

<PAGE>

remedies to collect any amounts payable by any customer or third party supplier
in respect of the RRB Property, notwithstanding any objection or direction to
the contrary by the Seller and (ii) any payment by any customer or third party
supplier to the Issuer shall discharge such customer's or third party supplier's
obligations in respect of the RRB Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by the Seller.

                  (f) So long as any of the Bonds are outstanding, (i) (A) the
Seller shall affirmatively certify and confirm that it has sold the RRB Property
to the Issuer (other than for financial accounting or tax reporting purposes),
and (B) the Seller shall not make any statement or reference in respect of the
RRB Property that is inconsistent with the ownership thereof by the Issuer
(other than for financial accounting or tax reporting purposes), and (ii) the
Seller shall not take any action in respect of the RRB Property except solely in
its capacity as the Servicer thereof pursuant to the Servicing Agreement or as
otherwise contemplated by the Basic Documents.

         Section 4.07. Protection of Title. The Seller shall execute and file
such filings, including filings with the NHPUC pursuant to the Statute and
Uniform Commercial Code filings, and cause to be executed and filed such
filings, all in such manner and in such places as may be required by law fully
to preserve, maintain and protect the ownership or security interest of the
Issuer and the Trustee in the RRB Property and the Back-Up Security Interest,
including all filings required under the Statute and the applicable Uniform
Commercial Code relating to the transfer of the ownership or security interest
in the RRB Property by the Seller to the Issuer and the granting of a security
interest in the RRB Property by the Issuer to the Trustee and the Back-Up
Security Interest and the continued perfection of such ownership or security
interest. The Seller shall deliver (or cause to be delivered) to the Issuer and
the Trustee file-stamped copies of, or filing receipts for, any document filed
as provided above, as soon as available following such filing. The Seller shall
institute any action or proceeding necessary to compel performance by the NHPUC
or the State of New Hampshire of any of their obligations or duties under the
Statute or the Finance Order, and the Seller agrees to take such legal or
administrative actions, including defending against or instituting and pursuing
legal actions and appearing or testifying at hearings or similar proceedings, as
may be reasonably necessary (i) to protect the Issuer, the Bondholders, the
Trustee, the State of New Hampshire, the State Treasurer, agencies of the State
of New Hampshire and any of their respective affiliates, officials, officers,
directors, employees, consultants, counsel and agents from claims, state actions
or other actions or proceedings of third parties which, if successfully pursued,
would result in a breach of any representation set forth in Article III or (ii)
to block or overturn any attempts to cause a repeal of, modification of or
supplement to the Statute, the Finance Order, any Advice Letter (as defined in
the Indenture), the Settlement Agreement (as defined in the Finance Order) (to
the extent it adversely affects the rights of Bondholders or the validity or
value of the RRB Property) or the rights of Bondholders by executive action,
legislative enactment or constitutional amendment that would be adverse to the
Issuer, the Trustee or the Bondholders. If the Servicer performs its obligations
under Section 5.02(d) of the Servicing Agreement in all respects, such
performance shall be deemed to constitute performance of the Seller's

                                      -11-

<PAGE>

obligations pursuant to clause (ii) of the immediately preceding sentence. In
such event, the Seller agrees to assist the Servicer as reasonably necessary to
perform its obligations under Section 5.02(d) of the Servicing Agreement in all
respects. The costs of any such actions or proceedings shall be payable from RRB
Charge Collections as an Operating Expense in accordance with the priorities set
forth in Section 8.02(d) of the Indenture. The Seller's obligations pursuant to
this Section 4.07 shall survive and continue notwithstanding the fact that the
payment of Operating Expenses pursuant to Section 8.02(d) of the Indenture may
be delayed (it being understood that the Seller may be required to advance its
own funds to satisfy its obligations hereunder).

         Section 4.08. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the NHPUC's right
to order the sequestration and payment of revenues arising with respect to the
RRB Property notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the Seller pursuant to RSA 369-B:7, V or RSA
369-B:7, VIII, the Seller shall not, prior to the date which is one year and one
day after the termination of the Indenture, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
Federal or state bankruptcy, insolvency or similar law, appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Issuer, or ordering
the winding up or liquidation of the affairs of the Issuer.

         Section 4.09. Taxes.

                  (a) So long as any of the Bonds are outstanding, the Seller
shall, and shall cause each of its subsidiaries to, pay all material taxes,
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, business, income or property
before any penalty accrues thereon if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace periods,
notices or other similar requirements, result in a lien on the RRB Property;
provided that no such tax need be paid if the Seller or one of its subsidiaries
is contesting the same in good faith by appropriate proceedings promptly
instituted and diligently conducted and if the Seller or such subsidiary has
established appropriate reserves as shall be required in conformity with
generally accepted accounting principles.

                  (b) The Seller represents, warrants and covenants that any New
Hampshire income taxes, including without limitation the New Hampshire Business
Profits Tax imposed under the provisions of New Hampshire RSA Chapter 77-A
(taking into account credits in respect of the New Hampshire Business Enterprise
Tax imposed under RSA Chapter 77-E), associated with the Issuer will be
allocated to, and paid by, the Seller in accordance with the Amended and
Restated NU Tax Allocation Agreement, dated as of January 1, 1990, as amended
(the "NU Tax Sharing Agreement"), and that the applicable provisions of the NU
Tax Sharing Agreement, which currently provide for such treatment by their
reliance on federal income tax principles in allocating state income tax
liabilities, shall not be amended or modified by the Seller in contravention of
this Section 4.09(b) for so long as the Bonds are outstanding.

         Section 4.10. Additional Sales of RRB Property. So long as any of the
Bonds

                                      -12-

<PAGE>

are outstanding, the Seller shall not sell any RRB property (as defined in the
Statute) to secure another issuance of rate reduction bonds (as defined in the
Statute) if it would cause the then existing ratings on any class of Bonds from
the Rating Agencies to be withdrawn or downgraded.

         Section 4.11. Issuance Advice Letter. The Seller hereby agrees not to
withdraw the filing of the Issuance Advice Letter with the NHPUC.

         Section 4.12. Maintenance of Working Papers. So long as any of the
Bonds are outstanding, the Seller shall keep and maintain any and all working
papers, reports and other documents used by the firm of Independent certified
public accountants in the preparation of its letters delivered on the Issuance
Date pursuant to Section 2.10(g) of the Indenture and Section 6(h) of the
Underwriting Agreement.

                                    ARTICLE 5

                                   THE SELLER

         Section 5.01. Liability of Seller; Indemnities.

                  (a) The Seller shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Seller under this
Agreement.

                  (b) (i) In the event of a breach by the Seller of any
representation and warranty specified in Sections 3.08(c) or 3.08(e) that has a
material adverse effect on the Bondholders, the Seller shall repurchase the RRB
Property from the Issuer at a purchase price equal to the then outstanding
principal amount of the Bonds and all accrued and unpaid interest thereon,
excluding any premium or penalty of any kind (the "Repurchase Price"), as of the
Repurchase Date; provided, however, that the Seller shall not be obligated to
repurchase the RRB Property if (A) within 90 days after the Date of Breach such
breach is cured or the Seller takes remedial action such that there is not and
will not be a material adverse effect on the Bondholders as a result of such
breach and (B) either (1) if the Seller had, immediately prior to the Date of
Breach, a long term debt rating of at least "A3" by Moody's and "BBB" or the
equivalent by S&P or Fitch, and the Seller enters into a binding agreement with
the Issuer to pay any amounts necessary so that all interest payments due on the
Bonds during such 90-day period will be paid in full, or (2) if the Seller does
not have such long term debt ratings, the Seller deposits, within two Business
Days after the Date of Breach, an amount in escrow with the Trustee sufficient,
taking into account amounts on deposit in the Collection Account which will be
available for such purpose, to pay all interest payments which will become due
on the Bonds during such 90-day period.

                           (ii) In the event of a breach by the Seller of any
representation and warranty specified in Sections 3.01, 3.03, 3.04, 3.05, 3.06,
3.08(a) or 3.08(b) that has a material adverse effect on the Bondholders, if
within 90 days after the Date of Breach such breach has not been cured or the
Seller has not taken remedial action such that there is not and will not be a
material adverse effect on the Bondholders as a result of such breach, then the
Seller shall repurchase the RRB Property from the Issuer for the Repurchase
Price on the Repurchase Date.

                           (iii) Notwithstanding any other provision of this
Agreement,

                                      -13-

<PAGE>

upon the payment by the Seller of the Repurchase Price pursuant to this Section
5.01(b), neither the Issuer nor any other Person shall have any other claims,
rights or remedies against the Seller under, arising from or with respect to
this Agreement, except as set forth in Section 5.01(h).

                  (c) Subject to Section 5.01(i), the Seller shall indemnify the
Issuer, the Trustee, the State of New Hampshire, the State Treasurer, agencies
of the State of New Hampshire and the Bondholders (each an "Indemnified Person"
for purposes of this Section 5.01(c) and Section 5.01(i)) for, and defend and
hold harmless each such Indemnified Person from and against, any and all taxes
(other than taxes imposed on Bondholders solely as a result of their ownership
of Bonds) that may at any time be imposed on or asserted against any such Person
under existing law as of the Closing Date as a result of the sale of the RRB
Property to the Issuer, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes; provided,
however, that the Bondholders shall be entitled to enforce their rights against
the Seller under this Section 5.01(c) solely through a cause of action brought
for their benefit by the Trustee.

                  (d) Subject to Section 5.01(i), the Seller shall indemnify the
Issuer, the Trustee, the State of New Hampshire, the State Treasurer, agencies
of the State of New Hampshire and the Bondholders (each an "Indemnified Person"
for purposes of this Section 5.01(d) and Section 5.01(i)) for, and defend and
hold harmless each such Indemnified Person from and against, any and all taxes
that may be imposed on or asserted against any such Indemnified Person under
existing law as of the Closing Date as a result of the issuance and sale by the
Issuer of the Bonds, or the other transactions contemplated herein, including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes; provided, however, that the Bondholders shall be
entitled to enforce their rights against the Seller under this Section 5.01(d)
solely through a cause of action brought for their benefit by the Trustee. The
Seller shall be reimbursed for any payments under this Section 5.01(d) from RRB
Charge Collections as an Operating Expense in accordance with the priorities set
forth in Section 8.02(d) of the Indenture.

                  (e) Subject to Section 5.01(i), the Seller shall indemnify the
Issuer and the Bondholders (each an "Indemnified Person" for purposes of this
Section 5.01(e) and Section 5.01(i)) for, and defend and hold harmless each such
Person from and against, any and all liabilities, obligations, losses, actions,
suits, claims, damages, payments, costs or expenses of any kind whatsoever
(collectively, "Losses") that may be imposed on, incurred by or asserted against
each such Indemnified Person as a result of (i) the Seller's willful misconduct
or negligence in the performance of its duties or observance of its covenants
under this Agreement, or (ii) the Seller's breach in any material respect of any
of its representations and warranties contained in this Agreement (other than
the representations and warranties specified in Sections 3.01, 3.03, 3.04, 3.05,
3.06, 3.08(a), 3.08(b), 3.08(c) or 3.08(e), the breach of which are subject to
the repurchase obligation set forth in Section 5.01(b)), except in the case of
both clauses (i) and (ii) to the extent of Losses either resulting from the
willful misconduct or gross negligence of such Indemnified Person or resulting
from a breach of a representation and warranty made by

                                      -14-

<PAGE>

such Indemnified Person in any of the Basic Documents that gives rise to the
Seller's breach; provided, however, that the Bondholders shall be entitled to
enforce their rights against the Seller under this indemnification solely
through a cause of action brought for their benefit by the Trustee; provided,
further, that the Seller may, at its election and in full satisfaction of its
obligations under this Section 5.01(e), repurchase the RRB Property at the
Repurchase Price, in which case neither the Issuer nor any other Person shall
have any other claims, rights or remedies against the Seller under, arising from
or with respect to this Agreement, except as set forth in Section 5.01(h).

                  (f) Indemnification under Sections 5.01(c), 5.01(d), 5.01(e)
and 5.01(h) shall survive the resignation or removal of the Trustee and the
termination of this Agreement and shall include reasonable fees and
out-of-pocket expenses of investigation and litigation (including reasonable
attorneys' fees and expenses), except as otherwise provided in this Agreement.

                  (g) Without prejudice to any of the other rights of the
parties, the Seller will not be in breach of any representation or warranty as a
result of a change in law by means of a legislative enactment or constitutional
amendment or (if such means become available in the future) referendum or
initiative petition. Notwithstanding anything to the contrary in this Agreement,
the Seller makes no representation or warranty that any amounts actually
collected in respect of the RRB Charge will in fact be sufficient to meet
payment obligations with respect to the Bonds or that the assumptions used in
calculating the RRB Charge will in fact be realized nor shall the Seller be
obligated to reduce, or accept a reduction of, any rates or charges to which it
would otherwise be entitled in respect of services rendered or to be rendered to
customers in order to permit the payment of the RRB Charge (other than as
provided in the Finance Order with respect to other components of the "stranded
cost recovery charge" (as defined in the Statute)).

                  (h) Subject to Section 5.01(i), the Seller shall indemnify and
hold harmless the Trustee, the State of New Hampshire, the State Treasurer,
agencies of the State of New Hampshire and any of their respective affiliates,
officials, officers, directors, employees, consultants, counsel and agents (each
an "Indemnified Person" for purposes of this Section 5.01(h) and Section
5.01(i)) against any and all Losses incurred by any of such Indemnified Persons
as a result of (i) the Seller's willful misconduct or negligence in the
performance of its duties or observance of its covenants under this Agreement or
(ii) the Seller's breach in any material respect of any of its representations
and warranties contained in this Agreement, except in the case of both clauses
(i) and (ii) to the extent of Losses either resulting from the willful
misconduct or gross negligence of such Indemnified Person or resulting from a
breach of a representation or warranty made by such Indemnified Person in any of
the Basic Documents that gives rise to the Seller's breach.

                  (i) The Seller shall not be required to indemnify any
Indemnified Person under Sections 5.01(c), 5.01(d), 5.01(e) or 5.01(h) for any
amount paid or payable by such Indemnified Person in the settlement of any
action, proceeding or investigation without the written consent of the Seller,
which consent shall not be unreasonably withheld. Promptly after receipt by an
Indemnified Person of notice of its involvement in any action, proceeding or
investigation, such Indemnified Person shall, if a claim for

                                      -15-

<PAGE>

indemnification in respect thereof is to be made against the Seller under this
Section 5.01, notify the Seller in writing of such involvement. Failure by an
Indemnified Person to so notify the Seller shall relieve the Seller from the
obligation to indemnify and hold harmless such Indemnified Person under this
Section 5.01 only to the extent that the Seller suffers actual prejudice as a
result of such failure. With respect to any action, proceeding or investigation
brought by a third party for which indemnification may be sought under this
Section 5.01, the Seller shall be entitled to assume the defense of any such
action, proceeding or investigation. Upon assumption by the Seller of the
defense of any such action, proceeding or investigation, the Indemnified Person
shall have the right to participate in such action or proceeding and to retain
its own counsel. The Seller shall be entitled to appoint counsel of the Seller's
choice at the Seller's expense to represent the Indemnified Person in any
action, proceeding or investigation for which a claim of indemnification is made
against the Seller under this Section 5.01 (in which case the Seller shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to the Indemnified
Person. Notwithstanding the Seller's election to appoint counsel to represent
the Indemnified Person in an action, proceeding or investigation, the
Indemnified Person shall have the right to employ separate counsel (including
local counsel), and the Seller shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the Seller
to represent the Indemnified Person would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person and the Seller and the Indemnified
Person shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those available to the
Seller, (iii) the Seller shall not have employed counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person within a
reasonable time after notice of the institution of such action or (iv) the
Seller shall authorize the Indemnified Person to employ separate counsel at the
expense of the Seller. Notwithstanding the foregoing, the Seller shall not be
obligated to pay for the fees, costs and expenses of more than one separate
counsel for the Indemnified Persons (in addition to local counsel). The Seller
will not, without the prior written consent of the Indemnified Person, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought under this Section 5.01 (whether or not the
Indemnified Person is an actual or potential party to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of the Indemnified Person from all liability arising out of such claim, action,
suit or proceeding.

                  (j) The remedies of the Issuer and the Bondholders provided in
this Agreement are each such Person's sole and exclusive remedies against the
Seller for breach of its representations and warranties in this Agreement.

         Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) that may result from any merger or consolidation to which the
Seller shall be a party or (c) that may succeed to the properties and assets of
the Seller substantially as a whole, which

                                      -16-

<PAGE>

Person in the case described in the foregoing clause (c) executes an agreement
of assumption to perform every obligation of the Seller hereunder, shall be the
successor to the Seller under this Agreement without further act on the part of
any of the parties to this Agreement; provided, however, that (i) if the Seller
is the Servicer, no Servicer Default, and no event which, after notice or lapse
of time, or both, would become a Servicer Default shall have occurred and be
continuing, (ii) the Seller shall have delivered to the Issuer and the Trustee
an Officer's Certificate stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Seller shall have delivered to
the Issuer and the Trustee an Opinion of Counsel stating that, in the opinion of
such counsel (A) such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent provided
for in this Agreement relating to such transaction have been complied with and
(B) either (1) all filings to be made by the Seller, including filings with the
NHPUC pursuant to the Statute and filings under the applicable Uniform
Commercial Code, have been executed and filed that are necessary to preserve and
protect fully the interests of the Issuer and the Trustee in the RRB Property
and reciting the details of such filings or (2) no such action shall be
necessary to preserve and protect such interests and (iv) the Rating Agencies
shall have received prior written notice of such transaction. When any Person
acquires the properties and assets of the Seller substantially as a whole and
becomes the successor to the Seller in accordance with the terms of this Section
5.02 and execution by such successor of an agreement of assumption to perform
every obligation of the Seller hereunder, then upon satisfaction of all of the
other conditions of this Section 5.02, the Seller shall automatically and
without further notice be released from all of its obligations hereunder.

         Section 5.03. Limitation on Liability of Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters arising
hereunder.

                                    ARTICLE 6

                            MISCELLANEOUS PROVISIONS

         Section 6.01. Amendment. This Agreement may be amended by the Seller
and the Issuer, with ten Business Days' prior written notice given to the Rating
Agencies and the prior written consent of the Trustee, but without the consent
of any of the Bondholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Bondholders; provided, however,
that such action shall not, as evidenced by an Officer's Certificate delivered
to the Issuer and the Trustee, adversely affect in any material respect the
interests of any Bondholder.

         This Agreement may also be amended from time to time by the Seller and
the Issuer, with ten Business Days' prior written notice given to the Rating
Agencies and the prior written consent of the Trustee and the prior written
consent of the Holders of Bonds

                                      -17-

<PAGE>

evidencing not less than a majority of the Outstanding Amount of the Bonds
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Bondholders.

         It shall not be necessary for the consent of Bondholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.

         Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.

         Section 6.02. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States mail, courier
service, facsimile transmission or electronic mail (confirmed by telephone,
United States mail or courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of communication,
and any such notice, direction, consent or waiver shall be effective when
delivered, or if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid:

                  (a) if to the Seller, to

                           if prior to April 1, 2002:

                           1000 Elm Street
                           Manchester, NH 03101

                           if on or after April 1, 2002:

                           780 North Commercial Street
                           Manchester, NH 03101

                           Facsimile: (860) 665-5457
                           Telephone: (860) 665-3258
                           E-Mail: shoopra@nu.com (email)

                           with a copy to:

                           Public Service Company of New Hampshire
                           c/o Northeast Utilities Service Company

                                      -18-

<PAGE>

                           if by U.S. Mail:

                           P.O. Box 270
                           Hartford, CT 06141-0270

                           if by courier:

                           107 Selden Street
                           Berlin, CT  06037

                           Attention: Assistant Treasurer - Finance
                           Facsimile: (860) 665-5457
                           Telephone: (860) 665-3258
                           E-Mail: shoopra@nu.com

                  (b) if to the Issuer, to

                           PSNH Funding LLC 2
                           c/o Public Service Company of New Hampshire

                           if prior to April 1, 2002:

                           1000 Elm Street
                           Manchester, NH 03101

                           if on or after April 1, 2002:

                           780 North Commercial Street
                           Manchester, NH 03101

                           Facsimile: (860) 665-5457
                           Telephone: (860) 665-3258
                           E-Mail: shoopra@nu.com (email)

                           with a copy to:

                           Public Service Company of New Hampshire
                           c/o Northeast Utilities Service Company

                           if by U.S. Mail:

                           P.O. Box 270
                           Hartford, CT 06141-0270

                                      -19-
<PAGE>
                           if by courier:

                           107 Selden Street
                           Berlin, CT 06037

                           Attention: Assistant Treasurer - Finance
                           Facsimile: (860) 665-5457
                           Telephone: (860) 665-3258
                           E-Mail: shoopra@nu.com

                  (c) if to the Trustee, to

                           The Bank of New York
                           5 Penn Plaza
                           16th Floor
                           New York, New York 10001
                           Attention: ABS Unit
                           Facsimile: (212) 328-7623
                           Telephone: (212) 328-7549

                  (d) if to Moody's, to

                           Moody's Investors Service, Inc.
                           99 Church Street
                           New York, NY 10007
                           Attention: ABS Monitoring Department
                           Facsimile: (212) 553-0573
                           Telephone: (212) 553-3686

                  (e) if to S&P, to

                           Standard & Poor's
                           55 Water Street, 41st Floor
                           New York, NY 10041
                           Attention: Asset Backed Surveillance Department
                           Facsimile: (212) 438-2664
                           Telephone: (212) 438-2000

                  (f) if to Fitch, to

                           Fitch, Inc.
                           One State Street Plaza
                           New York, NY 10004
                           Attention: ABS Surveillance
                           Facsimile: (212) 514-9879
                           Telephone: (212) 908-0500
                           E-mail: surv@fitchratings.com

                  (g) as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.

         Section 6.03. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by the Seller.

                                      -20-

<PAGE>

         Section 6.04. Limitations on Rights of Third Parties. The provisions of
this Agreement are solely for the benefit of the Seller, the Issuer, the
Bondholders, the Trustee, the State of New Hampshire, the State Treasurer,
agencies of the State of New Hampshire and the other Persons expressly referred
to herein, and such Persons shall have the right to enforce the relevant
provisions of this Agreement, except that the Bondholders shall be entitled to
enforce their rights against the Seller under this Agreement solely through a
cause of action brought for their benefit by the Trustee. Nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the RRB Property or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

         Section 6.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 6.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

         Section 6.07. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

         Section 6.08. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New Hampshire, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

         Section 6.09. Assignment to Trustee. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Bondholders of all right, title and interest of the Issuer in, to and under the
RRB Property and the proceeds thereof and the mortgage, pledge, assignment of,
and grant of a security interest by the Issuer to the Trustee in, any or all of
the Issuer's rights and obligations hereunder to the Trustee.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -21-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Purchase and
Sale Agreement to be duly executed by their respective officers as of the day
and year first above written.

                                        PSNH FUNDING LLC 2,
                                        Issuer

                                        By: /s/ Randy A. Shoop
                                            ------------------------------------
                                            Name:  Randy A. Shoop
                                            Title: President

                                        PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
                                        Seller

                                        By: /s/ Randy A. Shoop
                                            ------------------------------------
                                            Name:  Randy A. Shoop
                                            Title: Assistant Treasurer - Finance

                                     -S-22-

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