NORTHEAST UTILITIES SYSTEM

FERC ORDER 889 STANDARDS OF CONDUCT

I.Statement of Compliance

Pursuant to Part 37 of the regulations of the Federal Energy Regulatory Commission (“FERC”), 18 C.F.R. § 37.1 et seq., the Northeast Utilities Systems Companies are required to implement standards of conduct to assure that transmission system operations employees function independently of employees (including affiliate employees) engaged in wholesale purchases and sales of electric energy in interstate commerce.

The NU System Companies have adopted the following Standards of Conduct, effective on January 3, 1997 in order to ensure operation of the companies in full compliance with these regulations. All employees functioning in the areas addressed by these Standards of Conduct should receive a copy of these Standards of Conduct and are responsible for performing their jobs in full conformance with the Standards of Conduct.

II.Applicability of Standards of Conduct

These Standards of Conduct apply to the following employees of the NU System Companies and employees of affiliates of the NU System Companies:

A. Transmission System Operations/Reliability Employees. “Transmission System Operations/Reliability Employees” are those employees engaged in the operation of the transmission facilities owned by the NU System Companies and those employees who administer the NU System Companies transmission tariffs.

B. Wholesale Merchant Employees. “Wholesale Merchant Employees” are those employees engaged in the sale for resale or purchase for resale of electric energy in interstate commerce.

III.Employee Conduct Rules

A. Except as provided in part V of these Standards of Conduct, Transmission System Operations/Reliability Employees must function independently of Wholesale Merchant Employees.

B. Except in Emergency Situations (as defined in part V of these Standards of Conduct), Wholesale Merchant Employees are prohibited from:

1.conducting the functions of a Transmission System Operations/Reliability Employee;

2.having access to the NU System Companies’ system control center (e.g., CONVEX, PSNH ESCC, NEPEX) or similar facilities used for transmission operations or reliability functions that differs from access available to customers;

3.obtaining information about NU’s transmission system from Transmission System Operations/Reliability Employees other than via the Open Access Same-time Information System (“OASIS”);

4.having preferential access to any information about NU’s transmission system

from Transmission System Operations/Reliability Employees that is not

available to all users of OASIS; and

5.obtaining information about NU’s transmission system from Transmission System Operations/Reliability Employees that is on OASIS but is not publicly available to all OASIS users.

C. Except in Emergency Situations (as defined in part V of these Standards of Conduct), Transmission System Operations/Reliability Employees are prohibited from:

1.disclosing to Wholesale Merchant Employees any information concerning

NU’s transmission system or the transmission system of any other entity

(including information received from non-affiliates or information about

available transmission capability, price, curtailments, ancillary service, etc.)

through non-public communications conducted off the OASIS, through access

to information not posted on the OASIS that is not at the same time available

to the general public without restriction, or through information on the OASIS

that is not at the same time publicly available to all OASIS users; or

2.sharing any market information, acquired from non-affiliated transmission

customers or potential non-affiliated transmission customers, or developed

in the course of responding to requests for transmission service or

ancillary services on the OASIS, with Wholesale Merchant Employees,

except to the limited extent that such information is required to be posted on

OASIS in response to a request for transmission service or ancillary services.

D.If a Transmission System Operations/Reliability employee discloses

information not posted on the OASIS in any manner contrary to these

Standards of Conduct, the information disclosed must be placed on OASIS

immediately;

IV.Implementing Tariffs

A. In administering transmission tariffs, Transmission System Operations/Reliability

Employees shall:

1.strictly enforce all open access transmission service tariff provisions relating to the sale or purchase of open access transmission service if the tariff provisions do not provide for discretion;

2.where the open access transmission tariff provisions permit the use of discretion, apply all tariff provisions relating to the sale or purchase of open access transmission service in a fair and impartial manner that treats all customers in a non-discriminatory manner.

B.The NU System Companies will keep a log, available for FERC audit, detailing

the circumstances and manner in which discretion was exercised under any terms

of the NU System Companies’ open access transmission service tariff.;

C.The NU System Companies will not, through their transmission tariff or

otherwise, give preference to wholesale purchases or sales made on behalf of

the NU System Companies’ power customers or those of any NU affiliate over

the interests of any other wholesale customer in matters relating to the sale or

purchase of transmission service (including issues of price, curtailments,

scheduling, priority, ancillary services, etc.).

D.If discounts on purchases of transmission service are offered to transmission

customers of the NU System Companies or those of any affiliate of the NU

System Companies, at the same time, the NU System Companies will post on the

OASIS an offer to provide the same discount to all transmission customers on the

same path and on all unconstrained paths.

E.If discounts on ancillary services are offered to customers of the NU System

Companies or those of any affiliate of the NU System Companies, at the same

time, the NU System Companies will post on the OASIS an offer to provide the

same discount to all eligible customers.

V.Emergency Situations

A. Notwithstanding any other provisions of these Standards of Conduct, in Emergency

Situations affecting system reliability, the NU System Companies will take whatever

steps are necessary to keep the system in operation.

B. An “Emergency Situation” will be deemed to occur when any of the following events, or similar events, occur or are expected to occur:

1.any of the NU System Companies’ available capacity resources are insufficient to meet its anticipated load plus its share of New England Power Pool (“NEPOOL”) Operating Reserve requirements;

2.one or more contingencies have occurred resulting in an immediate deficiency in any of the NU System Companies’ available capacity resources required to meet its load plus its share of NEPOOL Operating Reserve requirements;

3.transmission facilities into the service territory of any of the NU System Companies are loaded beyond established transfer capabilities;

4.a region served by any of the NU System Companies is experiencing abnormal voltage and/or reactive conditions; or

5.any other condition that would require the implementation of NEPOOL Emergency Operating Procedures.

C. When an Emergency Situation occurs that results in a deviation from these Standards of Conduct, such deviation must be reported to FERC and placed on the OASIS within 24 hours of its occurrence.

VI.Employee Transfers

A. Transmission System Operations/Reliability Employees and Wholesale Merchant Employees may transfer between Transmission System Operations/Reliability and Wholesale Merchant functions so long as such transfer is not used as a means of circumventing these Standards of Conduct.

B.Notices of employee transfers pursuant to part VI.A. of these Standards of Conduct must be posted on OASIS for 90 days from the effective date of the transfer.

VII.Books and Records

The NU System Companies shall maintain separate books of account and records

for each of their affiliates and these shall be available for FERC inspection.

r:\1196.7

1