UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 4, 2010

NSTAR

(Exact name of registrant as specified in its charter)

Section 1

Registrant’s Business and Operations

Item 1.01.

Entry into a Material Definitive Agreement.

On October 4, 2010, Northern Pass Transmission LLC (“NPT”) and H.Q. Hydro Renewable Energy, Inc. (“Hydro Renewable Energy”), an indirect, wholly-owned subsidiary of Hydro-Québec, entered into a Transmission Service Agreement (the “TSA”) in connection with the Northern Pass Transmission Line.  NPT is a joint venture indirectly owned by Northeast Utilities (“NU”) and NSTAR, on a 75 percent and 25 percent basis, respectively. The Northern Pass Transmission Line will be a new high voltage direct current (“HVDC”) transmission line from the Canadian border to southern New Hampshire and an associated alternating current radial transmission line to be constructed by NPT.  It will interconnect at the U.S.-Canadian border with a new HVDC transmission line to be constructed in Québec by Hydro-Québec TransÉnergie, the transmission division of Hydro-Québec.  Pursuant to the TSA, NPT will sell firm electric transmission rights to Hydro Renewable Energy over the 1,200 megawatt Northern Pass Transmission Line for a forty-year term.  

NPT intends to file the TSA for approval with the Federal Energy Regulatory Commission (“FERC”) during the fourth quarter of 2010.  NPT expects to file the Northern Pass Transmission Line project design with ISO-New England Inc. for technical approval in the fourth quarter of 2010, and submit applications for required federal and state permits over the next 16 to 18 months.  Assuming timely regulatory review and siting approvals, NPT expects to commence construction of the line in late 2012 or early 2013, with power flowing in the second half of 2015.

NPT will charge Hydro Renewable Energy cost-based rates under the TSA for firm transmission service using a FERC approved formula rate.  The projected cost-of-service calculation includes a return on equity (“ROE”) of 12.56 percent through the construction phase of the project, after which the ROE will be tied to the ISO-New England regional rates’ base ROE, which is currently 11.14 percent, plus 142 basis points.  The TSA rates will be based on a deemed capital structure for NPT of 50 percent debt and 50 percent equity.  NPT is currently negotiating the arrangements for construction financing with Hydro-Québec.  During the development phase and the construction phase under the TSA, NPT will capitalize its financing costs through non-cash Allowance for Funds Used During Construction (“AFUDC”) earnings.

The estimated project costs are approximately $1.1 billion.  NSTAR’s share of the NPT Line costs will total approximately $280 million (including capitalized AFUDC and property taxes).  

For further information, see NSTAR’s Annual Report on Form 10-K for the year ended December 31, 2009, and its Quarterly Report on Form 10-Q for the period ended June 30, 2010, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Proposed Transmission Investments.”

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