NSTAR ELECTRIC CO

The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the six months ended June 30, 2024 and 2023 included in this combined Quarterly Report on Form 10-Q:

Operating Revenues

Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:

Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.

Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased $287.2 million at CL&P and $156.8 million at PSNH, and increased $17.4 million at NSTAR Electric for the six month period.

Base Distribution Revenues:

•CL&P's distribution revenues were flat for the six month period.

•NSTAR Electric's distribution revenues increased $49.8 million for the six month period due primarily to a base distribution rate increase effective January 1, 2024.

•PSNH's distribution revenues increased $6.8 million for the six month period due primarily to an increase in sales volumes in 2024 compared to 2023.

Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for NSTAR Electric, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.

Customers have the choice to purchase electricity from their Eversource electric utility or from a competitive third party supplier. For customers who have contracted separately with these competitive suppliers, revenue is not recorded for the sale of the electricity commodity, as the utility is acting as an agent on behalf of the third party supplier. For customers that choose to purchase electric generation from CL&P, NSTAR Electric or PSNH, each utility purchases power on behalf of, and is permitted to recover the related energy supply cost without mark-up from, its customers, and records offsetting amounts in revenues and purchased power related to this energy supply procurement. CL&P, NSTAR Electric and PSNH each remain as the distribution service provider for all customers and charge a regulated rate for distribution delivery service recorded in revenues.

The variance in tracked distribution revenues for the six month period is due primarily to the following:

The decrease in energy supply procurement at CL&P, NSTAR Electric and PSNH for the six month period was driven by lower average prices and lower average supply-related sales volumes.

The increase in CL&P’s FMCC revenues was driven by an increase in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate. The CL&P NBFMCC rate includes the recovery of costs incurred under long-term state approved energy contracts with the Millstone and Seabrook nuclear power plants, net of the benefits received from selling this energy into the ISO-NE wholesale market. Effective January 1, 2023, CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. The rate reduction returned to customers the net benefits of higher wholesale market sales received in the ISO-NE market for these energy contracts. The average NBFMCC rate changed to $0.00000 per kWh effective July 1, 2023 and then to $0.00293 per kWh effective September 1, 2023. As a result of the April 2024 interim decision in the 2024 CL&P RAM filing, the average NBFMCC rate increased to $0.03906 per kWh effective July 1, 2024. As a result of the July 2024 draft final decision in the 2024 CL&P RAM filing, the average NBFMCC will increase to $0.04279 per kWh effective September 1, 2024. The rate increases primarily resulted from higher costs associated with power purchase agreements with the Millstone and Seabrook nuclear power plants.

Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission” expense below.

Transmission Revenues: Transmission revenues increased $36.1 million at CL&P, $46.3 million at NSTAR Electric, and $20.7 million at PSNH for the six month period, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and the impact of the annual billing and cost reconciliation filing with FERC.

Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers. The impact of eliminations decreased revenues by $47.7 million at CL&P, $46.0 million at NSTAR Electric, and $21.3 million at PSNH for the six month period.

Purchased Power and Transmission expense includes costs associated with providing electric generation service supply to all customers who have not migrated to third party suppliers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These energy supply procurement costs, other energy-related costs, and transmission costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). The variance in Purchased Power and Transmission expense is due primarily to the following:

The variance in energy supply procurement costs is offset in Operating Revenues (tracked energy supply procurement revenues). The variance in other electric distribution costs at NSTAR Electric is due to an increase in net metering costs, at CL&P is due to higher long-term contractual energy-related costs that are recovered in the non-bypassable component of the FMCC mechanism, and at PSNH is due to a decrease in long-term renewable energy purchase contract costs.

Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. The increase in transmission costs at CL&P, NSTAR Electric and PSNH was due primarily to an increase in costs billed by ISO-NE that support regional grid investments and an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease resulting from the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.

Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). The variance in Operations and Maintenance expense is due primarily to the following:

Depreciation expense increased for the six month period for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.

Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. The variance in Amortization of Regulatory (Liabilities)/Assets, Net for the six month period is due primarily to the following:

•The variance at CL&P was due primarily to the deferral adjustment of energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The CL&P non-bypassable FMCC retail rate increased in the six month period, and the higher collections lowered the regulatory under-recovery deferral adjustment recorded in the same period, resulting in an increase to amortization expense of $116.3 million.

•The increase in expense at NSTAR Electric was due to the deferral adjustment ofenergy-related and other tracked costs that are included in the transition and solar facilities regulatory mechanisms, and higher amortization of storm costs recovered in rates.

•The increase in expense at PSNH was due to the deferral adjustment of energy-related and other tracked costs that are included in the stranded cost recovery charge regulatory mechanism and the absence of a second quarter 2023 benefit related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired from Consolidated Communications on May 1, 2023. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit of $16.9 million recorded in Amortization expense on the PSNH statement of income in the second quarter of 2023.

Energy Efficiency Programs expense includes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense includes adeferral adjustment that reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The variance in Energy Efficiency Programs expense for the six month period is due primarily to the following:

•The increase at CL&P was due to the deferral adjustment, partially offset by lower program spending.

•The decrease at NSTAR Electric was due to the deferral adjustment, partially offset by higher program spending.

•The increase at PSNH was due to higher program spending, partially offset by the deferral adjustment.

Taxes Other Than Income Taxes - the variance is dueprimarily to the following:

•The increase at CL&P was due primarily to higher property taxes as a result of higher utility plant balances.

•The increase at NSTAR Electric was due primarily to higher property taxes as a result of higher utility plant balances and higher assessments.

Interest Expense - the variance is dueprimarily to the following:

•The increase at CL&P was due to higher interest on long-term debtas a result of new debt issuances($14.7 million), higher interest on short-term notes payable due to increased borrowings ($4.9 million), an increase in interest expense on regulatory deferrals ($4.1 million), and higher amortization of debt discounts and premiums, net ($0.4 million), partially offset by an increase in capitalized AFUDC related to debt funds ($0.7 million).

•The increase at NSTAR Electric was due to an increase in interest expense on regulatory deferrals ($7.3 million), higher interest on long-term debtas a result of new debt issuances ($6.2 million), and higher interest on short-term notes payable due to increased borrowings ($5.6 million), partially offset by an increase in capitalized AFUDC related to debt funds ($6.9 million).

•The increase at PSNH was due to higher interest on long-term debtas a result of new debt issuances($6.8 million) and higher interest on short-term notes payable ($0.6 million), partially offset by an increase in capitalized AFUDC related to debt funds ($2.9 million), a decrease in interest expense on regulatory deferrals ($0.8 million), a decrease in RRB interest expense ($0.7 million) andlower amortization of debt discounts and premiums, net ($0.3 million).

Other Income, Net - the variance is due primarily to the following:

•The increase at CL&P was due primarily to an increase in interest income primarily on regulatory deferrals ($11.7 million), an increase in capitalized AFUDC related to equity funds ($2.8 million) and lower investment losses driven by market volatility ($0.8 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($4.2 million).

•The increase at NSTAR Electric was due primarily to an increase in capitalized AFUDC related to equity funds ($9.9 million), an increase in interest income primarily on regulatory deferrals ($6.8 million) and investment income in 2024 compared to investment loss in 2023 driven by market volatility ($1.1 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($3.2 million).

•The increase at PSNH was due primarily to an increase in interest income primarily on regulatory deferrals ($2.0 million) and an increase in capitalized AFUDC related to equity funds ($1.8 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($0.8 million).

Income Tax Expense - the variance is due primarily to the following:

•The decrease at CL&P was due primarily to lower pre-tax earnings ($3.2 million), lower state taxes ($2.2 million), and a decrease in valuation allowances ($2.8 million), partially offset by a higher share-based payment tax deficiency ($0.6 million), a decrease in amortization of EDIT ($1.3 million) and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.7 million).

•The increase at NSTAR Electric was due primarily to higher pre-tax earnings ($15.7 million), higher state taxes ($4.4 million), a higher share-based payment tax deficiency ($0.6 million), and a decrease in amortization of EDIT ($7.0 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.1 million).

•The increase at PSNH was due primarily to higher pre-tax earnings ($0.1 million), and a decrease in amortization of EDIT ($1.0 million), partially offset by lower state taxes ($0.1 million), and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.1 million).

EARNINGS SUMMARY

CL&P's earnings decreased $11.7 million for the six month period due primarily to higher operations and maintenance expense, higher interest expense, and higher depreciation expense, partially offset by an increase in transmission earnings driven primarily by a higher transmission rate base, higher revenues from its capital tracking mechanism due to increased electric system improvements, and an increase in interest income primarily on regulatory deferrals.

NSTAR Electric's earnings increased $49.0 million for the six month period due primarily to higher revenues as a result of the base distribution rate increase effective January 1, 2024, an increase in transmission earnings driven primarily by a higher transmission rate base, an increase in interest income primarily on regulatory deferrals, and higher AFUDC equity income. The earnings increase was partially offset by higher interest expense, higher property tax expense, higher operations and maintenance expense, and higher depreciation expense.

PSNH's earnings decreased $0.9 million for the six month period due primarily to the absence of a prior year benefit related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023, higher depreciation expense, and higher interest expense. The earnings decrease was partially offset by an increase in transmission earnings driven primarily by a higher transmission rate base, and higher base distribution revenues driven by an increase in sales volumes.

LIQUIDITY

Cash Flows: CL&P had cash flows provided by operating activities of $109.8 million for the six months ended June 30, 2024, as compared to $129.0 million in the same period of 2023. The decrease in operating cash flows was due primarily to an increase in regulatory under-recoveries driven primarily by the timing of collections for energy supply costs, costs included in the SBC and other regulatory tracking mechanisms, the timing of cash collections on our accounts receivable, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Liabilities, Net on the statements of cash flows. These unfavorable impacts were partially offset by the timing of cash payments made on our accounts payable, a $40.1 million decrease in cash payments to vendors for storm costs, and a decrease in cost of removal expenditures.

NSTAR Electric had cash flows provided by operating activities of $341.4 million for the six months ended June 30, 2024, as compared to $233.5 million in the same period of 2023. The increase in operating cash flows was due primarily to a decrease in regulatory under-recoveries driven primarily by the timing of collections for net metering costs, solar costs and other regulatory tracking mechanisms, a decrease in cost of removal expenditures, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets, Net on the statements of cash flows. These favorable impacts were partially offset by a $72.2 million decrease in operating cash flows due to income tax payments made in 2024 compared to income tax refunds received in 2023, a $35.4 million increase in cash payments to vendors for storm costs, the timing of cash collections on our accounts receivable, and the timing of cash payments made on our accounts payable.

PSNH had cash flows provided by operating activities of $76.5 million for the six months ended June 30, 2024, as compared to cash flows used in operating activities of $92.6 million in the same period of 2023. The increase in operating cash flows was due primarily to a decrease in regulatory under-recoveries driven primarily by the timing of collections for energy supply costs, stranded costs and other regulatory tracking mechanisms, the timing of cash payments made on our accounts payable, a $37.9 million decrease in cash payments to vendors for storm costs, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets/(Liabilities), Net on the statements of cash flows. These favorable impacts were partially offset by a $41.5 million decrease in income tax refunds received in 2024 compared to 2023, the timing of cash collections on our accounts receivable, and an increase in cost of removal expenditures.

For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.