Document:

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                                                                   EXHIBIT 10.56

                                CL&P FUNDING LLC,

                                 as Note Issuer

                                       and

              THE CONNECTICUT LIGHT AND POWER COMPANY, as Servicer

                     TRANSITION PROPERTY SERVICING AGREEMENT

                           Dated as of March 30, 2001

ARTICLE 1     DEFINITIONS

Section 1.01.   Definitions
Section 1.02.   Other Definitional Provisions

ARTICLE 2     APPOINTMENT AND AUTHORIZATION

Section 2.01.   Appointment of Servicer; Acceptance of Appointment
Section 2.02.   Authorization
Section 2.03.   Dominion and Control Over the Transition Property

ARTICLE 3     BILLING SERVICES

Section 3.01.   Duties of Servicer
Section 3.02.   Servicing and Maintenance Standards
Section 3.03.   Certificate of Compliance
Section 3.04.   Annual Report by Independent Public Accountants

ARTICLE 4     SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES
Section 4.01.   Periodic Adjustments
Section 4.02.   Limitation of Liability
Section 4.03.   Remittances

ARTICLE 5     THE TRANSITION PROPERTY

Section 5.01.   Custody of Transition Property Records
Section 5.02.   Duties of Servicer as Custodian

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Section 5.03.   Instructions; Authority to Act
Section 5.04.   Effective Period and Termination
Section 5.05.   Monitoring of Third-Party Suppliers
Section 5.06.   Monitoring and Collecting Exit Charges

ARTICLE 6     THE SERVICER

Section 6.01.   Representations and Warranties of Servicer
Section 6.02.   Indemnities of Servicer
Section 6.03.   Limitation on Liability of Servicer and Others
Section 6.04.   Merger or Consolidation of, or Assumption of the Obligations
                of, Servicer
Section 6.05.   The Connecticut Light and Power Company Not to Resign
                as Servicer
Section 6.06.   Servicing Compensation
Section 6.07.   Compliance with Applicable Law
Section 6.08.   Access to Certain Records and Information Regarding
                Transition Property
Section 6.09.   Appointments
Section 6.10.   No Servicer Advances
Section 6.11.   Maintenance of Operations

ARTICLE 7     DEFAULT

Section 7.01.   Servicer Default
Section 7.02.   Appointment of Successor
Section 7.03.   Waiver of Past Defaults
Section 7.04.   Notice of Servicer Default
Section 7.05.   Inter-Creditor Agreement

ARTICLE 8     MISCELLANEOUS PROVISIONS

Section 8.01.  Amendment
Section 8.02.  Maintenance of Accounts and Records
Section 8.03.  Notices
Section 8.04.  Assignment
Section 8.05.  Limitations on Rights of Third Parties
Section 8.06.  Severability
Section 8.07.  Separate Counterparts
Section 8.08.  Headings
Section 8.09.  Governing Law
Section 8.10.  Assignment to Note Trustee
Section 8.11.  Nonpetition Covenants

     This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of March 30, 2001,
is between CL&P Funding LLC, a Delaware limited liability company (together with
any successor thereto permitted under the Note Indenture, as hereinafter
defined, the "Note Issuer"), and The Connecticut Light and Power Company, a
Connecticut corporation.

                                    RECITALS

     WHEREAS, pursuant to the Statute and the Financing Order, the Seller and
the Note Issuer are concurrently entering into the Sale Agreement pursuant to

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which the Seller is selling to the Note Issuer the Transition Property created
pursuant to the Statute and the Financing Order.

     WHEREAS, in connection with its ownership of the Transition Property and in
order to collect the RRB Charge, the Note 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
and for others. In addition, the Note Issuer desires to engage the Servicer to
act on its behalf in obtaining Periodic Adjustments from the DPUC. The Servicer
desires to perform all of these activities on behalf of the Note 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 DPUC by the Servicer on
behalf of the Note Issuer to set or adjust the RRB Charge, including the
Issuance Advice Letter, a Routine Annual True-Up Letter, a Routine True-Up
Letter or a Non-Routine True-Up Letter.

     "Agreement" means this Transition Property 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 The Connecticut Light and Power Company 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 March 30, 2001.

     "CTA" means the "competitive transition assessment" as defined in the

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Statute.
     "Declaration of Trust" means the Declaration of Trust dated as of March 23,
2001 by First Union Trust Company, National Association, a national banking
association, as Delaware Trustee, and the Finance Authority, as the same may be
amended and supplemented from time to time.

     "DPUC" means the Connecticut Department of Public Utility Control and any
successor thereto.

     "DPUC 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 DPUC.

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

     "Finance Authority" means the State of Connecticut, acting through the
office of the State Treasurer.

     "Financing Order" means the order of the DPUC, issued on November 8, 2000
and supplemented on December 12, 2000 and March 12, 2001 in DPUC-00-05-01.

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

     "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

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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.
"Inter-Creditor Agreement" means the Inter-Creditor Agreement dated as of March
30, 2001 among Citicorp North America, Inc., Citibank, N.A., the Servicer, the
Note Trustee, the Note Issuer and CL&P Receivables Corporation, as amended,
supplemented or modified from time to time.

     "Issuance Advice Letter" means the initial Issuance Advice Letter, dated
March 28, 2001, filed with the DPUC pursuant to the Financing 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).

     "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 DPUC in
accordance with the Financing 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 DPUC.

     "Note Indenture" means the Note Indenture dated as of March 30, 2001,
between the Note Issuer and the Note Trustee, as the same may be amended and
supplemented from time to time.

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

     "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

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pursuant to the terms of the Financing Order and in accordance with Section 4.01
hereof.

     "Principal Balance" means, as of any Payment Date, the sum of the
outstanding principal amount of the Notes.

     "Projected Principal Balance" means, as of any Payment Date, the sum of the
projected outstanding principal amount of the Notes 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 Note 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 the twelve-month period commencing on January 1
of each year and ending on the last day of December of each year; provided,
however, that the initial Remittance Period shall commence on the Closing Date
and end on December 31, 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 Notes, (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 Notes then due shall have been paid in full, (ii) the Principal
Balance of the Notes is equal to the Projected Principal Balance of the Notes
for that Payment Date, (iii) the balance on deposit in the Capital Subaccount
equals the aggregate Required Capital Level, (iv) the balance on deposit in the
Overcollateralization Subaccount equals the aggregate Required
Overcollateralization Level and (v) all other fees, expenses and indemnities due
and owing and required or allowed to be

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paid under Section 8.02 of the Note 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 Notes, the Required
Debt Service shall be calculated to ensure that sufficient amounts will be
collected to retire such Notes in full as of the earlier of (x) the next Payment
Date and (y) the Final Maturity Date for such Notes. "Responsible Officer" means
the chief executive officer, the president, the chairman or 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
Servicer.

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

     "Routine Annual True-Up Letter" means a letter filed with the DPUC,
substantially in the form of Exhibit B hereto, at least 15 days prior to January
1 each year in respect of an annual Periodic Adjustment. The Routine Annual
True-Up Letter will become effective on January 1 each year, or such other date
as may be specified in such Routine Annual True-Up Letter, so long as such
effective date is at least 15 days after the filing of such Routine Annual
True-Up Letter.

     "Routine True-Up Letter" means a letter filed with the DPUC, substantially
in the form of Exhibit B hereto, in respect of a Periodic Adjustment. The
Routine True-Up Letter will become effective 15 days after the filing thereof.

     "RRB Charge" means the portion (which may become all) of the Seller's CTA
designated pursuant to the Financing Order as the RRB Charge (including, without
limitation, the RRB Charge included in special contract customer rates), as the
same may be adjusted from time to time as provided in the Financing Order, and
may in the future include a pro rata component of any exit fee collected
pursuant to Section 16-245w of the Connecticut General Statutes.

     "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
(including, without limitation, the RRB Charge included in special contract
customer rates), multiplied by the percentage of such collections which is
calculated in accordance with Annex II hereto to

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have been received in respect of the RRB Charge.

     "Sale Agreement" means the Transition Property Purchase and Sale Agreement
dated as of March 30, 2001, between The Connecticut Light and Power Company, as
Seller, and the Note Issuer, as the same may be amended and supplemented from
time to time.

     "Seller" means The Connecticut Light and Power Company, a Connecticut
corporation, and its permitted successors and assigns under the Sale Agreement.

     "Seller's Receivables Purchase and Sale Agreement" means the Receivables
Purchase and Sale Agreement dated as of September 30, 1997, as amended and
restated as of March 30, 2001, among CL&P Receivables Corporation, the Servicer,
Corporate Asset Funding Company, Inc., and Citibank, N.A. and Citicorp North
America, Inc, as the same may be amended, supplemented, restated and renewed
from time to time.

     "Servicer" means The Connecticut Light and Power Company, as the servicer
of the Transition Property, or each successor (in the same capacity) pursuant to
Sections 6.04 or 7.02.

     "Servicer Business Day" means any Business Day on which the Servicer's
offices in the State of Connecticut 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 Sections 16-245e through and including 16-245k of the
Connecticut General Statutes.

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

     "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 DPUC
Regulations, the Financing Order and the guidelines described in Schedule A to
Annex I.

     "Transition Property" means the transition property that exists under Order
6 of the Financing Order (including, without limitation, the RRB Charge included
in special contract customer rates) and is sold by the Seller to the

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Note Issuer under the Sale Agreement.

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

     Section 1.02. Other Definitional Provisions.

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

     (b) 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.

     (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 Note 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
Note 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
Transition Property, the Servicer shall be, and hereby is, authorized and
empowered by the Note Issuer to (a) execute and deliver, on behalf of itself
and/or the Note Issuer, as the case may be, any and all instruments,

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documents or notices, and (b) on behalf of itself and/or the Note Issuer, as the
case may be, make any filing and participate in proceedings of any kind with any
governmental authorities, including with the DPUC. The Note Issuer shall execute
and/or furnish the Servicer with such documents as have been prepared by the
Servicer for execution by the Note Issuer, and with such other documents as may
be in the Note 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 Note
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 Transition Property.
Notwithstanding any other provision herein, the Note Issuer shall have dominion
and control over the Transition Property, and the Servicer, in accordance with
the terms hereof, is acting solely as the servicing agent and custodian for the
Note Issuer with respect to the Transition Property and the Transition Property
Records. The Servicer shall not take any action that is not authorized by this
Agreement or that shall impair the rights of the Note Issuer in the Transition
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 Note
Issuer, shall have 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 Transition 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
Transition Property; responding to inquiries by customers, the DPUC, or any
federal, local or other state governmental authorities with respect to the
Transition Property; delivering Bills to customers and TPSs, investigating and
handling delinquencies, processing and depositing collections and making
periodic remittances; furnishing periodic reports to the Note Issuer, the Note
Trustee, the Certificate Trustee and the Rating Agencies; and taking all
necessary action in connection with Periodic

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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) DPUC 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 DPUC Regulations as in effect at the time
such duties are to be performed.

          (3) Allocation of Special Contracts. The Servicer shall allocate
revenues from special contract customers who are receiving services under
special contracts which were in effect on July 1, 1998, until such contracts
expire, on the same cents/kWh basis as the rest of the rate class in which the
special contract customer resides. The Servicer shall calculate and include an
unbundled breakdown at the bottom of each such special contract customer's bill.
The Servicer shall allocate the total revenues from each such special contract
customer to each of the unbundled rate components (including the unbundled CTA
component and its RRB Charge subcomponent) on an equivalent cents/kWh basis
times the actual kilowatt-hours. After the first six unbundled rate components
(including the unbundled CTA component and its RRB Charge subcomponent) are
fully satisfied with the proper revenue allocation, the Servicer shall allocate
any remaining revenue to the unbundled distribution rate component. If more
dollars are allocated to the first six rate components than were billed, the
Servicer shall allocate a negative revenue amount to the unbundled distribution
component.

     (b) Reporting Functions.

          (1) Notification of Laws and Regulations. The Servicer shall promptly
notify the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies in writing of any laws or DPUC 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 Note Issuer,
the Note Trustee, the Certificate Trustee, or any Rating

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Agency, the Servicer shall provide to such Note Issuer, Note Trustee,
Certificate 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 Transition Property to the extent it is reasonably available to
the Servicer, as may be reasonably necessary and permitted by law for the Note
Issuer, the Note Trustee, the Certificate 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
Note Issuer or the Certificate 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 Note
Issuer, the Servicer shall (a) manage, service, administer and make collections
in respect of the Transition Property with reasonable care and in accordance
with applicable law, including all applicable DPUC 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
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 or security interest
of the Note Issuer and the Note Trustee in the Transition Property; and (e)
comply in all material respects with all laws and regulations applicable to and
binding on it relating to the Transition 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 Transition Property,
which, in the Servicer's judgment, may include the taking of legal action, at
the Note Issuer's expense.

     Section 3.03. Certificate of Compliance. The Servicer shall deliver to the
Note Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies
on or before March 31 of each year, commencing March 31, 2002

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to and including the March 31 succeeding the Retirement of the Notes, 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 Note 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 Note Issuer, the
Note Trustee, the Certificate 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 Note Issuer, the Note Trustee, the Certificate
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
Notes, 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.

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     (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

     Section 4.01. Periodic Adjustments. From time to time, until the Retirement
of the Notes, 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 Yearly Filings.

          (1) Routine Annual Periodic Adjustments and Filings. For the purpose
of preparing a Routine Annual 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 Note
Issuer and the Certificate Issuer to the extent not fixed, in each case for the
Remittance Period beginning on January 1 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 Annual True-Up Letter with the DPUC no later than fifteen days prior
to January 1 of each year.

          (2) Routine Periodic Adjustments. Beginning in the last year the Notes
are scheduled to be outstanding, the Servicer shall file a Routine True-Up
Letter at least 15 days before the end of each calendar quarter. In addition,
the Servicer shall file a Routine True-Up Letter at least 15 days before the end
of any calendar quarter or, beginning in the last year the Notes are scheduled
to be outstanding, 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.

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          (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 Note Issuer under the conditions set forth in Section 3.18 of the Note
Indenture, the Servicer shall file a Non-Routine True-Up Letter with the DPUC
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 DPUC pursuant to the Financing 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 DPUC, the Servicer shall
send a copy of such filing to the Note Issuer, the Note Trustee, the Certificate
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 Financing Order, the Servicer shall
notify the Note Issuer, the Note Trustee, the Certificate 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 Notes are
outstanding, not later than fifteen (15) days after the end of each month after
the Certificates are issued (excluding March, 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 Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies.

          (3) Quarterly Servicer Certificate. So long as any Notes are

<PAGE>

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 Note Issuer, the Note Trustee, the Certificate
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 DPUC
(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.

Section 4.02. Limitation of Liability.

     (a) The Note 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 Note 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 DPUC (or, in connection
with any Non-Routine Periodic Adjustment, by the Rating Agencies) in any way
related to the Transition 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 Note Issuer
and the Certificate 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

<PAGE>

Noteholders or the Certificateholders, not receiving any payment, amount or
return anticipated or expected in respect of any Note or Certificate 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 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 The
Connecticut Light & Power Company imposes the RRB Charge, the Servicer will
remit to the Note Trustee, 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 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 Note Trustee of each such Remittance (including the exact
dollar amount to be remitted). In accordance with to Section 16-245g(e) of the
Statute, amounts collected from customers shall be allocated on a pro rata basis
among (i) the RRB Charge, (ii) any remaining portion of the CTA not the subject
of the Financing Order, and (iii) the Servicer's other charges.

     (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 Note Issuer, the Note
Trustee and the Certificate 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 Note Issuer or
the Note 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 Note Issuer and the Note Trustee, as applicable, the cost of
which credit enhancement shall be

<PAGE>

borne solely by the Servicer, and (iv) an executed copy of any appropriate
amendment hereto or to the Note Indenture or any other Basic Agreement as
reasonably requested by the Servicer, the Note Issuer or the Note 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 TRANSITION PROPERTY

     Section 5.01. Custody of Transition Property Records. To assure uniform
quality in servicing the Transition Property and to reduce administrative costs,
the Note Issuer hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Note Issuer and the Note
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
Transition Property, including copies of the Financing Order and Advice Letters
relating thereto and all documents filed with the DPUC in connection with any
Periodic Adjustment or Non-Routine Periodic Adjustment and computational records
relating thereto (collectively, the "Transition Property Records"), which are
hereby constructively delivered to the Note Trustee, as pledgee of the Note
Issuer with respect to all Transition Property.

     Section 5.02. Duties of Servicer as Custodian.

     (a) Safekeeping. The Servicer shall hold the Transition Property Records on
behalf of the Note Issuer and maintain such accurate and complete accounts,
records and computer systems pertaining to the Transition Property Records on
behalf of the Note Issuer and the Note Trustee as shall enable the Note Issuer
to comply with this Agreement and the Note 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 Note Issuer and the Note Trustee any
failure on its part to hold the Transition Property Records and maintain its
accounts, records and computer systems

<PAGE>

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 Note Issuer or the Note Trustee of the Transition
Property Records. The Servicer's duties to hold the Transition Property Records
on behalf of the Note Issuer set forth in this Section 5.02, to the extent such
Transition 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 Notes 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 Transition Property Records in Berlin,
Connecticut or at such other office in the United States as shall be specified
to the Note Issuer and the Note Trustee by written notice at least 30 days prior
to any change in location. The Servicer shall make available for inspection to
the Note Issuer and the Note Trustee or their respective duly authorized
representatives, attorneys or auditors the Transition Property Records at such
times during normal business hours as the Note Issuer or the Note Trustee 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 DPUC 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 Note Trustee in
accordance with the Note Indenture, the Servicer shall release any Transition
Property Records to the Note Trustee, the Note Trustee's agent or the Note
Trustee's designee, as the case may be, at such place or places as the Note
Trustee may designate, as soon as practicable.

     (d) Defending Transition Property Against Claims. The Servicer, on behalf
of the Noteholders and the Certificateholders, shall institute any action or
proceeding necessary to compel performance by the DPUC or the State of
Connecticut of any of their obligations or duties under the Statute, the
Financing Order or any Advice Letter, and the Servicer agrees to take

<PAGE>

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 Financing
Order or the rights of holders of Transition 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 Certificateholders. 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 Note 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
Note Indenture may be delayed (it being understood that the Servicer may be
required to advance its own funds to satisfy its obligations hereunder).

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

<PAGE>

accordance with the terms and provisions of the Financing Order, the TPS Service
Agreement and Schedule A to Annex I hereto.

     Section 5.06. Monitoring and Collecting Exit Charges. 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, bill and collect any exit charges to
which it may be entitled pursuant to Section 16-245w of the Connecticut General
Statutes, and shall remit that portion of the exit charges representing (or
allocable to) the RRB Charge together with the RRB Charge Payments for a
particular billing date.

                                    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 Note Issuer is deemed to have relied in entering into this Agreement
relating to the servicing of the Transition 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 Connecticut, 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 Transition Property and to hold the Transition Property
Records as custodian.

     (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 Transition
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 Transition 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

<PAGE>

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 Noteholders or the Certificateholders.

     (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 Note 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

<PAGE>

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 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 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 Note Issuer, the Noteholders, and the
Certificateholders and any Swap Counterparty(each an "Indemnified Person" for
purposes of Section 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
Transition 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 Noteholders, and the Certificateholders and any Swap
Counterparty 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 Note Trustee or the Certificate Trustee, as the case may
be; and, provided, further, that the Servicer shall not be liable for any
Losses, regardless of when incurred, after the Notes and the Certificates have
been

<PAGE>

paid in full and any Losses are fully paid to any Swap Counterparty, except as
provided in Section 6.02(c).

     (c) The Servicer shall indemnify and hold harmless the Note Trustee, the
Delaware Trustee, any Swap Counterparty, the Certificate Trustee, the
Certificate Issuer, the State of Connecticut, the Finance Authority, the State
Treasurer, agencies of the State of Connecticut 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 Transition
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 (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 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 (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 (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
(c), the Servicer shall be entitled to assume the defense of any such action,
proceeding or

<PAGE>

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 (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 (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

<PAGE>

all liability arising out of such claim, action, suit or proceeding.

     (e) Indemnification under Section 6.02(b) and 6.02(c) 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.

     (f) For purposes of Section 6.02(b) and 6.02(c), in the event of the
termination of the rights and obligations of The Connecticut Light and Power
Company (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.

     (g) The indemnities contained in this Section 6.02 survive the resignation
or termination of the Note Trustee, the Certificate Trustee or the Delaware
Trustee or the termination of this Agreement or any Swap Agreement.

     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 Note 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 Note
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 Transition 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

<PAGE>

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 Note Issuer and
the Note 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 Note Issuer and the Note Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all statutory filings to be
made by the Servicer, including filings with the DPUC pursuant to the Statute,
have been executed and filed that are necessary to preserve and protect fully
the interests of the Note Issuer in the Transition Property and reciting the
details of such filings or (B) stating that, in the opinion of such counsel, 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 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. The Connecticut Light and Power Company Not to Resign as
Servicer. Subject to the provisions of Section 6.04, The Connecticut Light and
Power Company 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
DPUC shall have approved such resignation. Notice

<PAGE>

of any such determination permitting the resignation of The Connecticut Light
and Power Company shall be communicated to the Note Issuer, the Note Trustee,
the Certificate 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 The Connecticut Light and Power Company'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 The Connecticut Light and Power Company
to the Note Issuer, the Note Trustee and the Certificate 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 The Connecticut Light and Power Company in accordance with
Section 7.02.

     Section 6.06. Servicing Compensation.

     (a) In consideration for its services hereunder, until the Retirement of
the Notes, the Servicer shall receive an annual fee (the "Servicing Fee") in an
amount equal to (i) five one-hundredth of one percent (0.05%) of the initial
principal balance of the Notes for so long as the Servicer is The Connecticut
Light and Power Company or any successor Servicer that bills the RRB Charge
concurrently with other charges for services or (ii) up to one and one-quarter
percent (1.25%) of the initial principal balance of the Notes 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
Note 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 Note Trustee, on
each Payment Date in accordance with the priorities set forth in Section 8.02(d)
of the Note 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

<PAGE>

be added to the Servicing Fee payable on the subsequent Payment Date.

     (c) The Note Issuer shall pay all expenses incurred by the Servicer in
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 Noteholders and
Certificateholders, subject to the priorities set forth in Section 8.02(d) of
the Note Indenture).

     Section 6.07. Compliance with Applicable Law. The Servicer covenants and
agrees, in servicing the Transition Property, to comply in all material respects
with all laws applicable to, and binding upon, the Servicer and relating to such
Transition Property the noncompliance with which would have a material adverse
effect on the value of the Transition 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
Transition Property. The Servicer shall provide to the Noteholders, the Note
Trustee and the Certificate Trustee access to the Transition Property Records in
such cases where the Noteholders, the Note Trustee and the Certificate 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 DPUC 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

<PAGE>

servicing and administering of the Transition 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 Transition 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 DPUC
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 Note Issuer, the
Note Trustee, the Noteholders 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 Note Issuer than would be available from unaffiliated
parties or that would be available if the Servicer 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 Notes or the Certificates.

     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 Note 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 Note Issuer or the Note

<PAGE>

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 Noteholders or Certificateholders 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 Note Issuer or (B) to the Servicer by the Note Trustee or by the Holders of
Notes evidencing not less than 25 percent of the Outstanding Amount of the
Notes; 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 Noteholders or Certificateholders 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 Note Issuer
or the Note Trustee;

     (d) an Insolvency Event occurs with respect to the Servicer; or

     (e) an "Event of Termination" under the Seller's Receivables Purchase and
Sale Agreement occurs and has not been remedied or waived; then, and in each and
every case, so long as the Servicer Default shall not have been remedied, either
the Note Trustee, or the Holders of Notes evidencing not less than 25 percent of
the Outstanding Amount of the Notes, by notice then given in writing to the
Servicer (and to the Note Trustee if given by the Noteholders) (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 DPUC for sequestration and payment
of revenues arising with respect to the Transition Property in accordance with
Sections 16-245k(e) and Section 16-245k(g) of the Statute: (1) the Note Trustee
or the Noteholders; (2) the Certificate Trustee or the Certificateholders; (3)
the Delaware Trustee; (4) the Note Issuer or its assignees; or (5) pledgees or
transferees of the Transition Property.  On or after the receipt by the Servicer
of a Termination Notice, and subject to the approval of the DPUC, all authority
and power of the Servicer under this Agreement, whether with respect to the
Notes, the Transition Property, the RRB Charge or otherwise, shall,

<PAGE>

without further action, pass to and be vested in such successor Servicer as may
be appointed under Section 7.02; and, without limitation, the Note 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
necessary or appropriate to effect the purposes of such Termination Notice,
whether to complete the transfer of the Transition Property Records and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer, the Note Issuer and the Note 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 Transition 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 Transition 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 Note 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 Note Issuer shall appoint, subject to the approval of
the DPUC, a successor Servicer with the Note 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 Note Issuer and the Note Trustee. If within 30 days after the
delivery of the

<PAGE>

Termination Notice, the Note Issuer shall not have obtained such a new Servicer,
the Note Trustee may appoint (subject to the approval of the DPUC) or petition
the DPUC 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 DPUC 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 Note 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 Notes evidencing not
less than a majority of the Outstanding Amount of the Notes may, on behalf of
all Noteholders, 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 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
Note Issuer, the Note Trustee, the Certificate Trustee, the Certificate Issuer,
the Finance Authority 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 (b).

     Section 7.05. Inter-Creditor Agreement. So long as the Inter-Creditor
Agreement remains in effect, the rights and remedies set forth in this Article 7
shall be subject to the provisions of the Inter-Creditor Agreement.

<PAGE>

                                    ARTICLE 8

                            MISCELLANEOUS PROVISIONS

Section 8.01.   Amendment.

     (a) This Agreement may be amended in writing by the Servicer and the Note
Issuer with ten Business Days' prior written notice given to the Rating Agencies
and the prior written consent of the Note Trustee (which consent shall not be
unreasonably withheld), but without the consent of any of the Noteholders or any
of the Certificateholders (notwithstanding any provision of any other document
that would otherwise require such consent as a precondition of Note Trustee
consent), 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 Noteholders; provided, however, that such action
shall not, as evidenced by an Officer's Certificate delivered to the Note
Issuer, the Note Trustee and any Swap Counterparty, adversely affect in any
material respect the interests of any Noteholder, or any Certificateholder or
adversely affect the interests of any Swap Counterparty. No amendment may be
made to this Agreement that would adversely affect any Swap Counterparty without
its prior written consent.

     (b) This Agreement may also be amended in writing from time to time by the
Servicer and the Note Issuer with ten Business Days' prior written notice given
to the Rating Agencies and the prior written consent of the Note Trustee (which
consent shall not be unreasonably withheld) and the prior written consent of the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes, 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 Noteholders; provided, however, that any amendment
of the provisions of Sections 4.01 or 4.03 shall satisfy the Rating Agency
Condition.

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

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

<PAGE>

Agreement.

     (e) Prior to its consent to any amendment to this Agreement, the Note
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 Note Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Note Trustee's own rights, duties or immunities
under this Agreement or otherwise.

Section 8.02. Maintenance of Accounts and Records.

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

     (b) The Servicer shall permit the Note 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 Transition 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 DPUC 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

The Connecticut Light and Power Company
c/o Northeast Utilities Service Company
if by U.S. Mail:
P.O. Box 270
Hartford, CT  06141-0270

<PAGE>

if by courier:
107 Selden Street
Berlin, CT  06037
Attention:  Treasurer
Facsimile:   (860) 665-5457
Telephone:   (860) 665-3258
Email:      shoopra@nu.com

     (b) if to the Note Issuer, to

CL&P Funding LLC
c/o The Connecticut Light and Power Company
if by U.S. Mail:
P.O. Box 270
Hartford, CT  06141-0270

if by courier:
107 Selden Street
Berlin, CT  06037
Attention:   President
Facsimile:   (860) 665-5457
Telephone:   (860) 665-3258
Email:       shoopra@nu.com

with a copy to:

The Connecticut Light and Power Company
if by U.S. Mail:
P.O. Box 270
Hartford, CT  06141-0270
if by courier:
107 Selden Street
Berlin, CT  06037

Attention:   Treasurer
Facsimile:   860-665-5457
Telephone:   860-665-3258
Email:       shoopra@nu.com

     (c) if to the Note Trustee, to

First Union Trust Company, National Association
One Rodney Square
920 King Street, 1st Floor
Wilmington, DE 19801-7475
Attention:  Corporate Trust Administration
Facsimile:   (302) 888-7544
Telephone:   (302) 888-7500

     (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

<PAGE>

Standard & Poor's
55 Water Street, 40th Floor
New York, NY 10041
Attention:  Asset Backed Surveillance Department
Facsimile:   (212) 438-2655
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
Email:      surv@fitchratings.com

     (g) if to the Finance Authority, to

Office of the State Treasurer
55 Elm Street
Hartford, CT 06103
Attention:     Assistant Treasurer - Debt Management
Facsimile:   (860) 702-3127
Telephone:   (860) 702-3034

     (h) if to the Certificate Issuer, to:

Connecticut RRB Special Purpose Trust CL&P-1
First Union Trust Company, National Association
One Rodney Square
920 King Street, 1st Floor
Wilmington, DE 19801-7475
Attention:  Corporate Trust Administration
Facsimile:   (302) 888-7544
Telephone:   (302) 888-7500

(with copies to the Finance Authority at the addresses listed herein)

     (i) if to any Swap Counterparty, to the address and in the manner set forth
in any Swap Agreement (a copy of which will be provided by the Certificate
Trustee, upon request); and

     (j) 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 Note Issuer, the
Noteholders, the Certificateholders, any Swap Counterparty, the Note Trustee,
the Certificate Trustee, the Delaware Trustee, the Finance

<PAGE>

Authority, the Certificate Issuer 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 Noteholders, and the Certificateholders and
any Swap Counterparty 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 Note Trustee or the Certificate Trustee, as the case may be.
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
Transition 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
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 Connecticut, 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 Note Trustee. The Servicer hereby acknowledges
and consents to the collateral assignment of any or all of the Note Issuer's
rights and obligations hereunder to the Note Trustee for the benefit of the
holders of the Notes and to the further assignment of the Note Trustee's rights
and obligations under the Note Indenture to the

<PAGE>

Certificate Trustee for the benefit of the holders of the Certificates.

     Section 8.11. Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement or the Note Indenture, but subject to the DPUC's right to
order the sequestration and payment of revenues arising with respect to the
Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the
Transition Property pursuant to Sections 16-245k(e) and 16-245k(g) of the
Statute, the Servicer shall not, prior to the date which is one year and one day
after the termination of the Note Indenture with respect to the Note Issuer,
petition or otherwise invoke or cause the Note Issuer or the Trust to invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Note Issuer or the Trust 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 Note Issuer or the Trust or any substantial part of the property of the
Note Issuer or the Trust, or ordering the winding up or liquidation of the
affairs of the Note Issuer or the Trust.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

                                 CL&P FUNDING LLC,
                                 Note Issuer

                                 By:    /S/RANDY A. SHOOP
                                 Name:   Randy A. Shoop
                                 Title:  President

                                 THE CONNECTICUT LIGHT AND POWER COMPANY,
                                 Servicer

                                 By      /S/RANDY A. SHOOP
                                 Name:   Randy A. Shoop
                                 Title:  Treasurer

<PAGE>

                                    EXHIBIT A

                            CERTIFICATE OF COMPLIANCE

     The undersigned hereby certifies that he/she is the duly elected and acting
[________] of The Connecticut Light and Power Company, as servicer (the
"Servicer") under the Transition Property Servicing Agreement, dated as of March
__, 2001 (the "Servicing Agreement"), between the Servicer and CL&P Funding LLC
(the "Note 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__ .

                                 THE CONNECTICUT LIGHT AND POWER COMPANY,
                                 Servicer
                                 By:  /S/ RANDY A. SHOOP
                                 Name:  RANDY A. SHOOP
                                 Title:  Treasurer

                              ANNEX A TO EXHIBIT A

                            LIST OF SERVICER DEFAULTS

           Nature of Default                            Status

                                    EXHIBIT B

                         FORM OF ROUTINE TRUE-UP LETTER
                                     [date]

                                     ADVICE

<PAGE>

THE STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL (THE "DEPARTMENT")

SUBJECT: Periodic RRB Charge True-Up Mechanism Advice Filing

Pursuant to DPUC Docket No. 00-05-01 (the "Financing Order"), The Connecticut
Light and Power Company ("CL&P"), 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 fifteen days
prior to January first of each year and at such additional intervals as may be
provided for in the Financing Order. Any capitalized terms not defined herein
shall have the meanings ascribed thereto in the Financing Order.

PURPOSE

This filing establishes the revised RRB Charge to be assessed and collected from
CL&P's customers, whether or not CL&P's distribution system is being operated by
CL&P or a successor distribution company. The RRB Charge is a usage-based
component of the competitive transition assessment on each customer's monthly
bill and may include any back-up, maintenance, emergency or other delivery or
energy service fee collected until the Total RRB Payment Requirements are
discharged in full. The RRB Charge is applied equally to all customers of the
same class in accordance with the method of allocation in effect on July 1,
1998. In the Financing Order, the Department authorized CL&P to file Routine
True-Up Letters fifteen days prior to the first day of January of each year and
at such additional intervals, if necessary, as provided for in the Financing
Order. CL&P, or a successor Servicer, is authorized to file periodic RRB Charge
adjustments to the extent necessary 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 Requirement for the upcoming year, which may include
indemnity obligations of the SPE in the RRB transaction documents for SPE
officers and directors, trustee fees, liabilities of the special purpose trust
and liabilities to the underwriters related to the underwriting of the RRBs.
Routine True-Up Letter filings are those where CL&P uses the methodology
approved by the Department in the Financing Order to adjust upward or downward
the existing RRB Charge.

Using the methodology approved by the Department in the Financing Order, this

<PAGE>

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 March 30, 2001.

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

                                     TABLE I

                           INPUT VALUES FOR RRB CHARGE

Forecasted retail kWh sales for the period:_____

Forecasted percent of customers' billed amounts charged-off:_____
Percent of customers' billed amounts 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 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 customers is as follows: _____

EFFECTIVE DATE

In accordance with the Financing Order, Routine True-Up Letters for annual
RRB Charge adjustments shall be filed fifteen days prior to January 1 each
year or more frequently, if necessary, with the resulting changes to be
effective 15 days after the filing, notwithstanding the fact that

<PAGE>

adjustments to other components of the CTA will occur simultaneously and may not
become effective immediately. No approval by the Department 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 CL&P's corporate headquarters.

Enclosures

                                    EXHIBIT C
                      FORM OF MONTHLY SERVICER CERTIFICATE

     Pursuant to Section 4.01(d)(2) of the Transition Property Servicing
Agreement, dated as of March 30, 2001 (the "Agreement"), between The Connecticut
Light and Power Company, as servicer (the "Servicer") and CL&P 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):

<PAGE>

Executed as of this        day of              .

                                 THE CONNECTICUT LIGHT AND POWER COMPANY,
                                 Servicer

                                 By:     /s/ RANDY A. SHOOP
                                 Name:   RANDY A. SHOOP
                                 Title:  TREASURER

                                    EXHIBIT D

                     FORM OF QUARTERLY SERVICER CERTIFICATE

     Pursuant to Section 4.01(d)(3) of the Transition Property Servicing
Agreement, dated as of March 30, 2001 (the "Agreement"), between The Connecticut
Light and Power Company, as servicer (the "Servicer"), and CL&P 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.   Collection Account Balance (sum of xii.through xv. above):

2.   Outstanding Principal Balance as of Prior Payment Date by Tranche:

     i.    Class A-1 Principal Balance Outstanding Note/Certificate:
     ii.   Class A-2 Principal Balance Outstanding Note/Certificate:

<PAGE>

     iii.  Class A-3 Principal Balance Outstanding Note/Certificate:
     iv.   Class A-4 Principal Balance Outstanding Note/Certificate:
     v     Class A-5 Principal Balance Outstanding Note/Certificate:
     vi.   Total Note/Certificate Principal Balance:

3.   Required Funding/Payments as of Current Payment Date

     a)   Projected Principal Balances and Payments

                                              Projected         Quarterly
                                              Principal       Principal Due

     i.    Class A-1 Note/Certificate
     ii.   Class A-2 Note/Certificate
     iii.  Class A-3 Note/Certificate
     iv.   Class A-4 Note/Certificate
     v.    Class A-5 Note/Certificate
     vi.   Total Projected Principal Amount:

b)   Required Interest Payments

                                       Note/Cert        Days in       Interest
                                     Interest Rate     Applicable       Due
     i.    Class A-1 Note/Certificate
     ii.   Class A-2 Note/Certificate
     iii.  Class A-3 Note/Certificate
     iv.   Class A-4 Note/Certificate
     v.    Class A-5 Note/Certificate
     vi.   Total Required Interest
           Amount:

c)   Projected Subaccount Payments and Levels

                                    Subaccount      Projected        Level
                                                      Level        Required

     i.    Capital Subaccount:
     ii.   Overcollateralization Subaccount:
     iii.  Total Subaccount
           Payments and Levels:

4.   Allocation of Remittances as of Current Payment Date Pursuant to Section
     8.02(d) of Note Indenture:

     a)    Quarterly Expenses

     Net Expense Amount (Payable on Current Payment Date)

     i.     Note, Delaware and Certificate Trustee Fees and Expenses:
     ii.    Quarterly Servicing Fee:
     iii.   Quarterly Administration Fee:
     iv.    Operating Expenses (subject to $100,000 cap):

<PAGE>

     v.     Total Expenses:

     b)     Quarterly Interest

                                               Per $1000 of       Aggregate
                                                 Original     Principal Amount
     i.    Class A-1 Note/Certificate
     ii.   Class A-2 Note/Certificate
     iii.  Class A-3 Note/Certificate
     iv.   Class A-4 Note/Certificate
     v.    Class A-5 Note/Certificate
     vi.   Total Quarterly Interest:

     c)    Quarterly Principal

                                              Per $1000 of       Aggregate
                                                 Original     Principal Amount

     i.     Class A-1 Note/Certificate
     ii.    Class A-2 Note/Certificate
     iii.   Class A-3 Note/Certificate
     iv.    Class A-4 Note/Certificate
     v.     Class A-5 Note/Certificate
     vi.    Total Quarterly Principal:

     d)     Other Payments

     i.     Operating Expenses (in excess of
            $100,000):
     ii.    Funding of Capital Subaccount
            (to required amount):

     iii.   Funding of Overcollateralization
            Subaccount (to required level):
     iv.    Deposits to Reserve Subaccount:
     v.     Interest earnings on Capital Account
            Released to Note Issuer:

     e)     Aggregate Payments Pursuant to Section 8.02(d)(i) of Note Indenture

     i.     To Note Trustee, Certificate Trustee and
            Delaware Trustee:
     ii.    To Finance Authority and Certificate Issuer:

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 Note/Certificate:
     ii.    Class A-2 Principal Balance Outstanding Note/Certificate:
     iii.   Class A-3 Principal Balance Outstanding Note/Certificate:
     iv.    Class A-4 Principal Balance Outstanding Note/Certificate:
     v.     Class A-5 Principal Balance Outstanding Note/Certificate:

<PAGE>

     vi.    Total Note/Certificate Principal Balance:

     b)     Collection Account Balances Outstanding:

     i.     Capital Subaccount:
     ii.    Overcollateralization Subaccount:
     iii.   Reserve Subaccount:
     iv.    Total Subaccount Amount:

6.   Subaccount Draws as of Current Payment Date (if applicable,
     pursuant to Section 8.02(e) of Note Indenture):

     i.     Capital Subaccount:
     ii.    Overcollateralization Subaccount:
     iii.   Reserve Subaccount:
     iv.    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 Note/Certificate
     ii.   Class A-2 Note/Certificate
     iii.  Class A-3 Note/Certificate
     iv.   Class A-4 Note/Certificate
     v.    Class A-5 Note/Certificate
     vi.   Total Quarterly Interest Shortfall:

     b)   Quarterly Principal Shortfall

     i.     Class A-1 Note/Certificate
     ii.    Class A-2 Note/Certificate
     iii.   Class A-3 Note/Certificate
     iv.    Class A-4 Note/Certificate
     v.     Class A-5 Note/Certificate
     vi.    Total Quarterly Principal Shortfall:

8.   Shortfalls in Required Subaccount Levels as of Current
     Distribution Date:

     i.     Capital Subaccount

     ii.    Overcollateralization Subaccount:

     iii.   Total Subaccount Shortfalls:

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

                                THE CONNECTICUT LIGHT AND POWER COMPANY,
                                Servicer

                                By: /s/RANDY A. SHOOP
                                Name:  RANDY A. SHOOP
                                Title: TREASURER

<PAGE>

                                SCHEDULE 4.01(a)
                         Expected Amortization Schedule
                          Outstanding Principal Balance

<TABLE>
<CAPTION>
Payment       Class          Class          Class          Class      Class
Date           A-1            A-2            A-3            A-4        A-5
<S>      <C>             <C>           <C>           <C>           <C>
Closing  224,858,822     255,056,333   292,381,624   287,907,878   378,195,343
9/30/01  181,027,904     255,056,333   292,381,624   287,907,878   378,195,343
12/30/01 145,111,154     255,056,333   292,381,624   287,907,878   378,195,343
3/30/02  112,308,456     255,056,333   292,381,624   287,907,878   378,195,343
6/30/02   87,709,027     255,056,333   292,381,624   287,907,878   378,195,343
9/30/02   58,292,404     255,056,333   292,381,624   287,907,878   378,195,343
12/30/02  32,187,247     255,056,333   292,381,624   287,907,878   378,195,343
3/30/03            0     255,056,333   292,381,624   287,907,878   378,195,343
6/30/03            0     227,732,868   292,381,624   287,907,878   378,195,343
9/30/03            0     195,337,425   292,381,624   287,907,878   378,195,343
12/30/03           0     166,293,780   292,381,624   287,907,878   378,195,343
3/30/04            0     131,792,472   292,381,624   287,907,878   378,195,343
6/30/04            0     102,416,672   292,381,624   287,907,878   378,195,343
9/30/04            0      67,903,967   292,381,624   287,907,878   378,195,343
12/30/04           0      36,747,662   292,381,624   287,907,878   378,195,343
3/30/05            0               0   292,381,624   287,907,878   378,195,343
6/30/05            0               0   260,766,487   287,907,878   378,195,343
9/30/05            0               0   223,906,099   287,907,878   378,195,343
12/30/05           0               0   190,375,878   287,907,878   378,195,343
3/30/06            0               0   151,200,741   287,907,878   378,195,343
6/30/06            0               0   117,159,077   287,907,878   378,195,343
9/30/06            0               0    77,796,006   287,907,878   378,195,343
12/30/06           0               0    41,760,787   287,907,878   378,195,343
3/30/07            0               0             0   287,907,878   378,195,343
6/30/07            0               0             0   251,293,044   378,195,343
</TABLE>

<PAGE>

<TABLE>
<S>      <C>             <C>           <C>           <C>           <C>
9/30/07            0               0             0   209,247,737   378,195,343
12/30/07           0               0             0   170,490,986   378,195,343
3/30/08            0               0             0   125,955,154   378,195,343
6/30/08            0               0             0    86,550,513   378,195,343
9/30/08            0               0             0    41,638,744   378,195,343
12/30/08           0               0             0             0   378,195,343
3/30/09            0               0             0             0   330,702,282
6/30/09            0               0             0             0   288,320,065
9/30/09            0               0             0             0   240,335,496
12/30/09           0               0             0             0   195,586,975
3/30/10            0               0             0             0   144,900,682
6/30/10            0               0             0             0    99,319,619
9/30/10            0               0             0             0    48,054,208
12/30/10           0               0             0             0             0
</TABLE>

                                     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 or allocated from special contract customers in accordance
with Section 3.01(a)(3) of the Agreement, in each case 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

<PAGE>

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 DPUC 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
Noteholders or Certificateholders.

     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 DPUC 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 Note 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 Note
Issuer be entitled to any credit against the Servicing Fee for any cost savings
realized by the Servicer or any TPS as a 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 DPUC 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

<PAGE>

     (a) The Servicer shall implement the RRB Charge as of the Closing Date and
shall thereafter bill each customer or the Applicable TPS, or allocate from
special contract customers in accordance with Section 3.01(a)(3) of the
Agreement, in each case 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, or allocate from special contract customers in accordance with
Section 3.01(a)(3) of the Agreement, in each case 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 Note
Issuer, the Note Trustee, the Certificate 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
Certificateholders.

     (c) Format.

     (i) Each Bill to a customer shall contain or be deemed to contain a CTA
that shall include the RRB Charge owed by such customer for the applicable
billing period, subject, in the case of special contract customers, to Section
3.01(a)(3) of the Agreement.

     (ii) Each Bill in which the CTA is listed as a line item shall contain a
statement (as a footnote) to the effect that all or a portion of the CTA is
owned by the Note 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 DPUC 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 DPUC 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.

     (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

<PAGE>

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 DPUC 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 DPUC Regulations and the Servicer Policies
and Practices.

     (B) The Servicer shall deliver past-due and shut-off notices in accordance
with applicable DPUC 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 Sections 16-262c, 16-262d and 16-262e of the Connecticut General
Statutes or successor provisions, applicable DPUC Regulations and the Servicer
Policies and Practices.

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

     (F) The Servicer shall comply with the provisions of Section 3.01(a)(3) of
the Agreement relating to special contract customers.

<PAGE>

     (ii) The Servicer shall not waive any late payment charge or any other 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 Certificateholders 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 DPUC 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 Note 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 Note Issuer shall cause to be established the Collection Account in
the name of the Note Trustee in accordance with Section 8.02 of the Note
Indenture.

<PAGE>

     (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 Note 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.

                                   SCHEDULE A

                                   TO ANNEX I

               Additional Servicing Procedures Applicable to TPSs

1.   Establishing TPS Relationship

In addition to any actions required by the DPUC 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 DPUC that each TPS is licensed to supply electricity in
Connecticut;

     (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 Financing Order and
applicable TPS Service Agreement.

2.   Monitoring TPS Obligations

<PAGE>

     (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 DPUC and the Financing Order in the event of a
default in payment.

3.   Enforcing TPS Obligations

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

                                    ANNEX II

                             REMITTANCE METHODOLOGY<PAGE>

                                                                   Exhibit 10.57

                       PURCHASE AND SALE AGREEMENT between
                                PSNH FUNDING LLC
                                     Issuer
                                       and
                 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE Seller
                           Dated as of April 25, 2001
<PAGE>
     This PURCHASE AND SALE AGREEMENT, dated as of April 25, 2001, is between
PSNH Funding LLC, 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.

     "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).
<PAGE>
     "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 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.

     "Closing Date" means April 25, 2001.

     "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 99-099 , issued on
September 8, 2000 (Order No. 23,550).

     "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
<PAGE>
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
April 23, 2001, 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) of the Indenture.
<PAGE>
     "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 April 20, 2001 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 Overcollateralization 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.

     "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.
<PAGE>
     "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
April 20, 2001 among Public Service Company of New Hampshire, the Issuer and
the 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 $518,558,601.33, the Seller does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Issuer, WITHOUT RECOURSE OR WARRANTY, except as
<PAGE>
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

     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
<PAGE>
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
<PAGE>
having jurisdiction over the Seller or its properties.

     Section 3.06. No Proceedings. Except as described under the caption "Risk
Factors - Bondholders could experience payment delays or losses as a result of
amendment, repeal or invalidation of the securitization statute, breach of the
state pledge or invalidation of the stranded cost recovery charge - Appeal of
settlement order" in the Prospectus, 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 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
<PAGE>
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 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
<PAGE>
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.
<PAGE>
          (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 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 14 years
after "competition day" (as defined in the Statute) 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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) 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.

               (i) 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
<PAGE>
such breach, then the Seller shall repurchase the RRB Property from the Issuer
for the Repurchase Price on the Repurchase Date.

               (ii) Notwithstanding any other provision of this Agreement,
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
     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

1000 Elm Street
Manchester, NH
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

          (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
<PAGE>
               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
          (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.

     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
<PAGE>
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]
<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,
                              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

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