Exhibit 13.4


                                          



                                     1993

                                 ANNUAL REPORT


                                                                             

                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 

















































                              1993 Annual Report
                    Public Service Company of New Hampshire 
                                  Index



Contents                                                            Page 

Balance Sheets .........................................            1-2

Statements of Income ...................................             3

Statements of Cash Flows ...............................             4

Statements of Common Equity ............................             5

Notes to Financial Statements ..........................            6-27

Report of Independent Public Accountants/
       Independent Auditors' Report ....................           28-29

Management's Discussion and Analysis of Financial 
 Condition and Results of Operations ...................           30-35

Selected Financial Data ................................           37-38

Statistics .............................................             39

Statements of Quarterly Financial Data .................             39

Preferred Stockholder and Bondholder Information .......         Back Cover






























PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

BALANCE SHEETS





At December 31,                                          1993           1992
- -------------------------------------------------------------------------------
                                                      (Thousands of Dollars)

                                                               
ASSETS
- ------

Utility Plant, at original cost:
  Electric.........................................  $1,980,050     $1,887,659
     Less: Accumulated provision for depreciation..     441,076        410,026
                                                     -----------    -----------
                                                      1,538,974      1,477,633
  Construction work in progress....................       8,573          4,363
  Nuclear fuel, net................................       2,107          2,337
                                                     -----------    -----------
      Total net utility plant......................   1,549,654      1,484,333
                                                     -----------    -----------

Other Property and Investments:                                     
  Nuclear decommissioning trusts, at cost..........       1,486          1,147
  Investments in regional nuclear generating                        
   companies and subsidiary company, at equity.....      19,816         19,917
  Other, at cost...................................         429            422
                                                     -----------    -----------
                                                         21,731         21,486
                                                     -----------    -----------
Current Assets:                                                     
  Cash and special deposits........................       5,995          2,328
  Receivables, less accumulated provision for                       
    uncollectible accounts of $1,816,000 in 1993
    and of $2,780,000 in 1992......................      76,665         75,094
  Receivables from affiliated companies............         859          2,827
  Accrued utility revenues.........................      35,770         32,213
  Fuel, materials, and supplies, at average cost...      41,187         45,123
  Prepayments and other............................      10,429          9,261
                                                     -----------    -----------
                                                        170,905        166,846
                                                     -----------    -----------
Deferred Charges:                                                   
  Regulatory asset--rate agreement <F1>(Note 1)....     769,498        868,716
  Regulatory asset--income taxes, net <F1>(Note 1).      54,250           -
  Unrecovered contract obligation--YAEC <F4>(Note 4)     24,150         28,160
  Energy adjustment clause <F1>(Note 1)............     122,478         82,175
  Unamortized debt expense.........................      19,643         24,679
  Deferred taxes, net..............................        -            66,670
  Deferred receivable from affiliated company......      33,284         32,909
  Other............................................       8,918         17,794
                                                     -----------    -----------
                                                      1,032,221      1,121,103
                                                     -----------    -----------



      Total Assets.................................  $2,774,511     $2,793,768
                                                     ===========    ===========


The accompanying notes are an integral part of these financial statements.

1


PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

BALANCE SHEETS





At December 31,                                              1993           1992
- -----------------------------------------------------------------------------
- ------
                                                           (Thousands of
Dollars)

                                                                   
CAPITALIZATION AND LIABILITIES
- ------------------------------

Capitalization:                                          
  Common stock, $1 par value--authorized                 
   and outstanding 1,000 shares in 1993 and 1992....... $         1    $      
  1
  Capital surplus, paid in.............................     421,245       
420,762
  Retained earnings....................................      60,840        
21,853
                                                        -----------   
- -----------
           Total common equity.........................     482,086       
442,616
  Cumulative preferred stock subject to mandatory   
   redemption--$25 par value--authorized 25,000,000 shares;
        outstanding 5,000,000 shares in 1993 and 1992..     125,000       
125,000
  Long-term debt.......................................     999,985     
1,093,985
                                                        -----------   
- -----------
           Total capitalization........................   1,607,071     
1,661,601
                                                        -----------   
- -----------

Obligations Under Seabrook Power Contract
   and Other Capital Leases <F2>(Note 2)...............     815,553       
752,866
                                                        -----------   
- -----------
Current Liabilities:                                    
  Notes payable to banks...............................        -           
35,000
  Notes payable to affiliated company..................       2,500         
8,500
  Long-term debt--current portion......................      94,000        
94,000
  Obligations under Seabrook Power Contract and          
   other capital leases--current portion <F2>(Note 2)..      41,006        
34,960
  Accounts payable.....................................      27,119        
28,406
  Accounts payable to affiliated companies.............      17,576        
19,183
  Accrued taxes........................................         122         
1,725
  Accrued interest.....................................      11,142        
11,281
  Accrued pension benefits.............................      31,890        
30,683
  Other................................................      22,014        
23,727
                                                        -----------   
- -----------
                                                            247,369       
287,465
                                                        -----------   
- -----------
Deferred Credits:                                        
  Accumulated deferred income taxes <F1>(Note 1).......      18,076          
- -
  Accumulated deferred investment tax credits..........       6,174         
6,740
  Deferred contract obligation--YAEC <F4>(Note 4)......      24,150        
28,160
  Deferred revenue from affiliated company <F11>(Note 11)    33,284        
32,909
  Other................................................      22,834        
24,027
                                                        -----------   
- -----------
                                                            104,518        
91,836
                                                        -----------   
- -----------

Commitments and Contingencies <F11>(Note 11)

           Total Capitalization and Liabilities........ $ 2,774,511    $
2,793,768
                                                        ===========   
===========


The accompanying notes are an integral part of these financial statements.
2

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

STATEMENTS OF INCOME



- -----------------------------------------------------------------------------
- ------------
                                        Jan. 1,   June 5,   Jan. 1,   May 16, 
  Jan. 1,
                                          1993      1992      1992      1991  
   1991
                                           to        to        to        to   
    to
                                        Dec. 31,  Dec. 31,  June 4,   Dec. 31, 
May 15, 
For the Periods                           1993      1992      1992      1991  
   1991
- -----------------------------------------------------------------------------
- ------------
                                                  (Thousands of Dollars)
                                                          |                  
|
                                                 |            
| 
Operating Revenues.................... $864,415  $492,559 |$381,769  $539,827
|$ 246,281
                                       --------- ---------|---------
- ---------|----------
Operating Expenses:                                       |                  
|
  Operation--                                             |                  
|
    Fuel, purchased and net                               |                  
|
     interchange power................  208,023   105,346 | 123,784   139,166
|   95,261
    Other.............................  301,534   176,679 | 103,250   119,296
|   80,231
  Maintenance.........................   35,427    20,535 |  22,520    42,335
|   19,936
  Depreciation........................   38,580    21,526 |  25,183    36,590
|   28,269
  Amortization of regulatory                              |                  
|
   assets, net........................   67,379    51,143 |  36,528    53,554
|    -
  Federal and state income                                |                  
|
   taxes <F8>(Note 8).................   73,263    39,197 |  16,449    38,316
|  (12,769)
  Taxes other than income taxes.......   34,675    16,927 |  19,805    27,815
|   13,737
                                       --------- ---------|---------
- ---------|----------
      Total operating expenses........  758,881   431,353 | 347,519   457,072
|  224,665
                                       --------- ---------|---------
- ---------|----------
Operating Income......................  105,534    61,206 |  34,250    82,755
|   21,616
                                       --------- ---------|---------
- ---------|----------
Other Income:                                             |                  
|
  Deferred Seabrook return--other                         |                  
|
   funds..............................     -         -    |  12,101    15,578
|    -
  Equity in earnings of regional                          |                  
|
   nuclear generating companies                           |                  
|
   and subsidiary company.............    1,371     1,031 |     869     1,426
|      681
  Bankruptcy related expenses.........     -         -    |  (5,084)   (2,574)| 
 (9,314)
  Gain on generating projects.........     -         -    |   6,498      -   
|   12,446
  Other, net..........................    1,041     2,519 |      63     8,706
|    3,359
  Income taxes - credit...............   23,044    14,254 |  12,814    20,665
|  (12,495)
                                       --------- ---------|---------
- ---------|----------
      Other income, net...............   25,456    17,804 |  27,261    43,801
|   (5,323)
                                       --------- ---------|---------
- ---------|----------
      Income before interest charges..  130,990    79,010 |  61,511   126,556
|   16,293
                                       --------- ---------|---------
- ---------|----------
Interest Charges:                                         |                  
|
  Interest on long-term debt..........   77,842    47,625 |  54,125    87,620
|   32,423
  Post-petition interest..............     -         -    |    -         -   
|   42,101
  Other interest......................      911     1,987 |   3,913       130
|    3,238
  Deferred Seabrook return--borrowed                      |                  
|
    funds, net of income taxes........     -         -    |  (9,305)  (13,888)| 
   -
                                       --------- ---------|---------
- ---------|----------
      Interest charges, net...........   78,753    49,612 |  48,733    73,862
|   77,762
                                       --------- ---------|---------
- ---------|----------
Income (Loss) before extraordinary                        |                  
|
  loss................................   52,237    29,398 |  12,778    52,694
|  (61,469)
Extraordinary loss from                                   |                  
|
  reorganization......................     -         -    |    -         -   
|  (39,322)
                                       --------- ---------|---------
- ---------|----------
Net Income (Loss)..................... $ 52,237  $ 29,398 |$ 12,778  $ 52,694
|$(100,791)
                                       ========= =========|=========
=========|==========



PSNH was reorganized on May 16, 1991 and became a wholly owned subsidiary of
Northeast Utilities on June 5, 1992.

The accompanying notes are an integral part of these financial statements.
                              
3

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF CASH FLOWS
 


- -----------------------------------------------------------------------------
- ------------
                                            Jan. 1,  June 5,   Jan. 1,  May 16, 
 Jan. 1, 
                                             1993     1992      1992     1991 
    1991
                                              to        to        to      to  
     to
                                            Dec. 31, Dec. 31,  June 4,  Dec. 31, 
May 15, 
 For the Periods                              1993     1992      1992     1991 
    1991
- -----------------------------------------------------------------------------
- ------------
                                                         
                                                         (Thousands of Dollars)
                                                               
        
Cash Flows From Operations:
 Net income (loss)..........................$ 52,237 $ 29,398 |$ 12,778 $ 52,694
|$ (100,791)
 Adjusted for the following:                                  |               
  |
  Depreciation..............................  38,665   21,561 |  25,183   36,590
|    28,269
  Deferred income taxes and investment                        |               
  |
    tax credits, net........................  50,027   22,543 |   3,141   17,591
|      (294)
  Deferred return - Seabrook................    -        -    | (21,406)
(29,466)|      -
  Deferred energy costs, net of amortization (39,660) (42,520)|   1,469 
(38,909)|      -
  Amortization of regulatory asset<F1>(Note 1)89,822   51,836 |  36,528   53,554
|      -
  Other sources of cash.....................  15,394   12,088 |  15,967    3,899
|     2,362
  Other uses of cash........................ (12,042)  (4,825)|  (4,355)
(47,117)|   (11,364)
  Changes in working capital:                                 |               
  |
   Receivables and accrued utility revenues.  (3,161) (18,314)|  34,432   44,976
|     7,962
     Fuel, materials, and supplies..........   3,936      459 |  (4,945)
(23,187)|     4,482
     Accounts payable.......................  (2,894)   5,083 |  (8,189)
(23,769)|    39,299
     Accrued taxes..........................  (1,602) (17,323)|  20,409 
(22,693)|    25,232
     Other working capital (excludes cash)..  (2,224)  12,610 | (26,056)
(55,114)|    27,761
                                            --------- --------|---------
- --------|-----------
Net cash flows from (used for) operations... 188,498   72,596 |  84,956 
(30,951)|    22,918
                                            --------- --------|---------
- --------|-----------
Cash Flows From Financing Activities:                         |               
  |
 Common shares..............................    -     425,000 |    -         846
|      -
 Long-term debt.............................  44,800   75,000 |    -        - 
  | 1,331,785
 Preferred stock............................    -        -    |    -        - 
  |   125,000
 Financing expenses.........................    (267)    -    |     (45) 
(7,734)|   (21,132)
 Net increase(decrease) in short-term debt.. (41,000) (64,500)|    -      87,200
|      (292)
 Reacquisitions and retirements of                            |               
  |        
   long-term debt...........................(138,800)(171,000)| (27,000)    - 
  |      -
 Cash dividends on preferred                                  |               
  |
   stock<F6>(Note 6)........................ (13,250)  (9,938)|  (3,312) 
(8,282)|      -
 Acquisition settlement <F1>(Note 1)........    -    (841,466)|    -        - 
  |      -
 Settlement of bankruptcy claims............    -        -    |    -    
(14,412)|(1,505,373)
                                            --------- --------|---------
- --------|-----------
Net cash flows from (used for)                                |               
  |
       financing activities.................(148,517)(586,904)| (30,357)  57,618
|   (70,012)
                                            -------- ---------|---------
- --------|-----------
Investment Activities:                                        |               
  |
 Investments in plant:                                        |               
  |
   Electric utility plant................... (35,360) (15,352)| (25,266)
(22,683)|   (19,852)
   Nuclear fuel.............................    (614)    (552)|  (9,990) 
(3,125)|     3,386
                                             -------- --------|---------
- --------|-----------
Net cash flows used for investments in plant (35,974) (15,904)| (35,256)
(25,808)|   (16,466)
 Sale of Seabrook assets to NAEC............    -     504,265 |    -        - 
  |      -
 Other investment activities, net ..........    (340)    (180)|    -         
30 |        (3)
                                            --------- --------|---------
- --------|-----------
Net cash flows from (used for) investments.. (36,314) 488,181 | (35,256)
(25,778)|   (16,469)
                                            --------- --------|---------
- --------|-----------
Net Incr.\(Decr.) In Cash for the Period....   3,667  (26,127)|  19,343      889
|   (63,563)
Cash and special deposits -                                   |               
  |
    beginning of period.....................   2,328   28,455 |   9,112    8,223
|    71,786
                                            --------- --------|---------
- --------|-----------
Cash and special deposits - end of period...$  5,995 $  2,328 |$ 28,455 $  9,112
|$    8,223
                                            ========= ========|=========
========|===========
Supplemental Cash Flow Information:                           |               
  |
Cash paid during the periods for:                             |               
  |
  Interest, net of amounts capitalized                        |               
  |
   during construction......................$ 75,609 $ 35,405 |$ 53,427 $ 71,909
|$  349,663
                                            ========= ========|=========
========|===========
  Income taxes..............................$  2,390 $    410 |$    909 $    
60 |$       20
                                            ========= ========|=========
========|===========
Increase in obligations:                                      |               
  |
  Seabrook Power Contract...................$ 84,796 $ 37,490 |$    -   $    - 
 |$     -
                                            ======== =========|=========
========|===========
  Capital leases............................$  4,696 $   -    |$    -   $    - 
 |$     -
                                            ========= ========|=========
========|===========


PSNH was reorganized on May 16, 1991 and became a wholly owned subsidiary of
Northeast Utilities 
on June 5, 1992.

The accompanying notes are an integral part of these financial statements.

4

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

STATEMENTS OF COMMON EQUITY




- -----------------------------------------------------------------------------
- ------------
                                                       Capital                
          
                                            Common     Surplus,    Retained
                                            Stock      Paid In     Earnings   
   Total
- -----------------------------------------------------------------------------
- ------------
                                                           (Thousands of
Dollars)

                                                                  
 
Balance at January 1, 1991..............  $210,773    $435,420    $(742,207)  
$ (96,014)
                                        
    Net loss............................                            (61,469)  
  (61,469)
                                          ---------   ---------   ----------  
- ----------
Balance at May 15, 1991.................  $210,773    $435,420    $(803,676)  
$(157,483)
                                          =========   =========   ==========  
==========
_____________________________________________________________________________
____________

Balance at May 16, 1991.................  $ 31,982    $607,366    $    -      
$ 639,348
    Net income..........................                             52,694   
   52,694
    Cash dividends on preferred stock...                             (8,282)  
   (8,282)
    Stock dividends on common stock.....     5,470      38,310      (43,780)  
     -
    Issuance of 42,313 shares of
      common stock, $1 par value........        42         622                
      664
                                          ---------   ---------   ----------  
- ----------
Balance at December 31, 1991............    37,494     646,298          632   
  684,424
    Net income..........................                             12,778   
   12,778
    Cash dividends on preferred stock...                             (5,704)  
   (5,704)
    Stock dividends on common stock.....     1,962      16,456      (18,418)  
     -
    Capital stock expenses, net.........                    (2)               
       (2)
                                          ---------   ---------   ----------  
- ----------
Balance at June 4, 1992.................  $ 39,456    $662,752    $ (10,712)  
$ 691,496
                                          =========   =========   ==========  
==========
_________________________________________________________________
________________________

Balance at June 5, 1992.................  $   -       $   -       $   -       
  $  -      
    Net income..........................                             29,398   
   29,398
    Cash dividends on preferred stock...                             (7,545)  
   (7,545)
    Issuance of 1,000 shares of common  
      stock, $1 par value...............         1                            
        1
    Premium on common stock.............               424,999                
  424,999
    Capital stock expenses, net.........                (4,237)               
   (4,237)
                                          ---------   ---------   ----------  
- ----------
Balance at December 31, 1992............         1     420,762       21,853   
  442,616
    Net income..........................                             52,237   
   52,237
    Cash dividends on preferred stock...                            (13,250)  
  (13,250)
    Capital stock expenses, net.........                   483                
      483
                                          ---------   ---------   ----------  
- ----------
Balance at December 31, 1993............  $      1    $421,245    $  60,840   
$ 482,086
                                          =========   =========   ==========  
==========



PSNH was reorganized on May 16, 1991 and became a wholly owned subsidiary of
Northeast Utilities
on June 5, 1992.

The accompanying notes are an integral part of these financial statements.

5  

NOTES TO FINANCIAL STATEMENTS

<F1>
1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

EMERGENCE FROM BANKRUPTCY AND MERGER WITH NORTHEAST UTILITIES 

On January 28, 1988, Public Service Company of New Hampshire (PSNH or
the company) filed a petition for reorganization under Chapter 11 of
the Bankruptcy Code.

On January 2, 1990, Northeast Utilities Service Company (NUSCO) filed
a plan of reorganization (the Plan) on behalf of Northeast Utilities  
(NU), the Creditors Committee, the Equity Committee, and various PSNH
bondholders, with the support of the state of New Hampshire.  On      
April 20, 1990, following a vote by all classes of creditors and equity
security holders of PSNH and hearings in the Bankruptcy Court,the Plan was
confirmed by the Bankruptcy Court.  From April 30, 1990 until the June 5,
1992 acquisition date, NUSCO managed PSNH in accordance with a management
services agreement approved by the Bankruptcy Court.

On May 16, 1991 (Reorganization Date) the company emerged from        
bankruptcy pursuant to the Plan as a stand-alone company, subject to
a merger agreement (Merger Agreement) with NUSCO and NU Acquisition   
Corp. (NUAC).  On the Reorganization Date, the company's then existing
security holders and creditors were entitled to receive distributions of cash
and new PSNH securities.

Under the Plan, a distribution totaling approximately $2.3 billion in
cash and securities was made as of May 16, 1991 to former creditors   
and equity security holders of the company.  Former holders of secured claims
received cash in the full amount of their claims for principal and unpaid
interest.  Former holders of unsecured claims received a distribution in the
amount of their claims for principal plus pre-petition interest, less any
applicable original issue discount unamortized at the petition date, and a
total of $110.6 million of post-petition interest.  Approximately $593
million  of such distribution was made in cash and the balance in shares of
new common stock.  Former holders of shares of preferred and common  stock of
the company received $205 million principal amount of 15.23 percent Notes,
shares of new common stock and certificates entitling the holder to receive
warrants to purchase NU common shares. Former holders of the company's
outstanding warrants received a total of $1.3 million in cash.  

The company accounted for the reorganization using fresh start accounting. 
Accordingly, all assets and liabilities were restated to their reorganization
value, which approximated fair value at the Reorganization Date.  

On June 5, 1992 (Acquisition Date), NU completed its acquisition of PSNH when
NUAC was merged into PSNH pursuant to the Merger Agreement and the company
became a wholly owned operating subsidiary of NU.  In a related transaction,
PSNH's 35.6 percent share of the Seabrook 1 nuclear power plant (Seabrook 1)
and other Seabrook-related assets were transferred to North Atlantic Energy
Corporation (NAEC), another new NU subsidiary, for approximately $504 million
in cash and the assumption of the company's obligations under the $205
million, 15.23 percent Notes.

The total cash required to effect the acquisition of PSNH was approximately
$941 million.  The sources of the $941 million were a $425 million equity
investment by NU into PSNH, a $161 million equity investment by NU into NAEC,
and NAEC's issuance and sale of $355 million principal amount of First
Mortgage Bonds.  The proceeds were used (a) to make a distribution of $20 per
share, or approximately $789 million in the aggregate, to the holders of the
approximately 39.5 million outstanding shares of the company's new common
stock, (b) to reimburse $45 million of NU acquisition expenses under the     
Plan, 

6

(c) to provide $49 million to reduce PSNH's Term Loan, (d) to provide
$7 million to meet the tax on the transfer of Seabrook to NAEC, and (e) to
reduce PSNH's short-term borrowings with the balance of funds.  The Plan also
called upon NU to issue to former PSNH equity security holders warrants
entitling the holders to purchase approximately 8.4 million NU common shares
at an exercise price of $24 per share.  The warrants expire on June 5, 1997. 

In accordance with generally accepted accounting principles, the acquisition
of PSNH has been accounted for as a purchase. 

On June 29, 1992, PSNH's New Hampshire Yankee Division (NHY) was dissolved
and North Atlantic Energy Service Corporation (NAESCO), a wholly owned
subsidiary of NU, with the approval of the Securities and Exchange Commission
(SEC) and the Nuclear Regulatory Commission (NRC), began management of the
Seabrook 1 power plant as agent for the Seabrook joint owners.  On June 29,
1992, all NHY employees became employees of NAESCO.

GENERAL
PSNH, The Connecticut Light and Power Company, Western Massachusetts Electric
Company, NAEC, and Holyoke Water Power Company are the operating subsidiaries
comprising the Northeast Utilities system (the system)and are wholly owned by
NU.

Other wholly owned subsidiaries of NU provide substantial support services to
the system.  NUSCO supplies centralized accounting, administrative, data
processing, engineering, financial, legal, operational, planning, purchasing,
and other services to the system companies.  Northeast Nuclear Energy Company
acts as agent for system companies in constructing and operating the
Millstone nuclear generating facilities.  

All transactions among affiliated companies are on a recovery of cost basis
which may include amounts representing a return on equity, and are subject to
approval by various federal and state regulatory agencies. 

ACCOUNTING CHANGES
Income Taxes:  The company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes (SFAS 109),"
effective January 1, 1993.  For information on this change, see <F1>Note 1,
"Summary of Significant Accounting Policies - Income Taxes." 

Postretirement Benefits Other Than Pensions:  PSNH adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employer's Accounting
for Postretirement Benefits Other Than Pensions" (SFAS 106), effective
January 1, 1993.  For information on this change, see <F10>Note 10,
"Postretirement Benefits Other Than Pensions."

ACCOUNTING RECLASSIFICATIONS
For periods prior to December 31, 1993, certain amounts in the accompanying
financial statements of PSNH have been reclassified to conform with the
December 31, 1993 presentations.

PUBLIC UTILITY REGULATION
NU is registered with the SEC as a holding company under the Public Utility
Holding Company Act of 1935 (1935 Act), and it and its
subsidiaries, including PSNH, are subject to the provisions of the 1935 Act. 
Arrangements among the system companies, outside agencies, and other
utilities covering 

7

interconnections, interchange of electric power, and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC.  The company is subject to further
regulation for rates and other matters by the FERC and the New Hampshire
Public Utilities Commission (NHPUC), and follows the accounting policies
prescribed by the commissions.

REVENUES
Other than special contracts, utility revenues are based on authorized rates
applied to each customer's use of electricity. Rates can be changed only
through a formal proceeding before the appropriate regulatory commission.  At
the end of each accounting period, PSNH accrues an estimate for the amount of
energy delivered but unbilled.

For additional information see <F11> Note 11, "Commitments and Contingencies
- - PSNH Rate Agreement."

INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies:  PSNH owns common stock of four
regional nuclear generating companies (Yankee companies).  The Yankee
companies, with PSNH's ownership interests, are:

        Connecticut Yankee Atomic Power Company (CY).......    5.0%
        Yankee Atomic Electric Company (YAEC) .............    7.0
        Maine Yankee Atomic Power Company (MY) ............    5.0
        Vermont Yankee Nuclear Power Corporation (VY) .....    4.0
                                                                             
 
PSNH's investments in the Yankee companies are accounted for on the equity
basis.  The electricity produced by the facilities that are operating is
committed to the participants substantially on the basis of their ownership
interests and is billed pursuant to contractual agreements.  For more
information on these agreements, see <F11>Note 11, "Commitments and
Contingencies - Purchased Power Arrangements."

The 173-megawatt (MW) YAEC nuclear power plant was shut down permanently on
February 26, 1992. For more information on the Yankee companies, see <F4>
Note 4, "Nuclear Decommissioning." 

Millstone 3:  The company has a 2.85 percent joint ownership interest in
Millstone 3, a 1,149 MW nuclear generating unit.  As of December 31, 1993,
plant-in-service and the accumulated provision for depreciation included
approximately $118.1 million and $21.1 million, respectively, for PSNH's
proportionate share of Millstone 3.  PSNH's share of Millstone 3 expenses is
included in the corresponding operating expenses on the accompanying
Statements of Income.

Wyman Unit 4:  PSNH has a 3.14 percent ownership interest in Wyman Unit 4
(Wyman), a 620 MW oil-fired generating unit.  At December 31, 1993,
plant-in-service and the accumulated provision for depreciation included
approximately $6.0 million and $3.1 million, respectively, for PSNH's share
of Wyman.  PSNH's share of Wyman expenses are included in the corresponding
operating expenses on the accompanying Statements of Income.
8
REGULATORY ASSET
The regulatory asset represents the aggregate value placed by the rate
agreement with the state of New Hampshire (Rate Agreement) on PSNH's assets
in excess of the net book value of PSNH's non-Seabrook assets and the $700
million value assigned to Seabrook by the Rate Agreement.  The regulatory
asset was valued at approximately $920.6 million on the Acquisition Date. 
The Rate Agreement provides for the recovery, through rates, of the
amortization of the regulatory asset with a return each year on the
unamortized portion of the asset.  The Rate Agreement provides that $425
million of the regulatory asset be amortized over the first seven years after
the Reorganization Date, with the remaining amount to be amortized over   
the 20-year period after the Reorganization Date.  In 1993, an adjustment
related to certain liabilities associated with the acquisition reduced the
regulatory asset by approximately $9.4 million.  In accordance with the Rate
Agreement, approximately $265 million of the remaining regulatory asset is
scheduled to be amortized and recovered through rates by 1998, and the
balance of approximately $504 million is scheduled to be amortized and
recovered through rates by 2011.

DEPRECIATION
The provision for depreciation is calculated using the straight-line method
based on estimated remaining lives of depreciable utility plant-in-service,
adjusted for salvage value and removal costs, as approved by the NHPUC. 
Except for major facilities, depreciation factors are applied to the average
plant-in-service during the period.  Major facilities are depreciated from
the time they are placed in service.  When plant is retired from service, the
original cost of plant, including costs of removal, less salvage, is charged 
to the accumulated provision for depreciation.  For Millstone 3, the costs of
removal, less salvage, that have been funded through an external
decommissioning trust will be paid with funds from the trust and charged to
the accumulated reserve for decommissioning included in the accumulated
provision for depreciation over the expected service life of the plant.  See
<F4> Note 4, "Nuclear Decommissioning," for additional information.

The depreciation rates for the several classes of electric plant-in-service
are equivalent to a composite rate of 3.6 percent for the year ended December
31, 1993, 3.5 percent for the six-month and twenty-six day period ending
December 31, 1992, 3.4 percent for the five-month and four-day period ending
June 4, 1992, 3.4 percent for the seven and one-half months ended December
31, 1991, and 3.1 percent for the four and one-half months ended May 15,
1991.  

INCOME TAXES
The tax effect of temporary differences (differences between the periods in
which transactions affect income in the financial statements and the periods
in which they affect the determination of income subject to tax) is accounted
for in accordance with the ratemaking treatment of the applicable regulatory
commissions.  See <F8> Note 8, "Income Tax Expense," for the components of
income tax expense.

In 1992, the Financial Accounting Standards Board (FASB) issued SFAS 109. 
SFAS 109 supersedes previously issued income tax accounting standards.  PSNH
adopted SFAS 109, on a prospective basis, during the first quarter of 1993. 
The adoption of SFAS 109 has not had a material effect on the net income or
on the balance sheet of the company.  As a result of the adoption of SFAS
109, the company has increased the deferred tax asset for
net-operating-losses (NOLs) previously not recognized.  A valuation reserve
was not established.  As it is probable that the increase in deferred tax
liabilities will be recovered from customers through rates, PSNH also
established a regulatory asset.  SFAS 109 does not permit net-of-tax
accounting. 
9

The temporary differences which give rise to the accumuated deferred tax
obligation at December 31, 1993, are as follows:
                                                                             

                                                      (Thousands of Dollars)

        Net operating loss carryforwards ...........        $(270,612)
        Accelerated depreciation and 
          other plant-related differences ..........          150,238

        The tax effect of net regulatory assets ....           80,922

        Other.......................................           57,528
                                                            ---------        

                                                            $  18,076
                                                            =========

At December 31, 1993, PSNH had a NOL carryforward of approximately $788
million, and an Alternative Minimum Tax (AMT) NOL carryforward of $600
million, both to be used against PSNH's federal taxable income and expiring
between the years 1999 and 2007.  PSNH also had Investment Tax Credit (ITC)
carryforwards of $66 million, which expire between the years 1994 and 2005. 
The reorganization of PSNH under Chapter 11 of the United States Bankruptcy
Code limits its ability to use its remaining NOL and ITC carryforwards so
that some portion may expire unused.  Of the carryforward amounts indicated
above, approximately $323 million of the NOL, $274 million of the AMT NOL,
and $35 million of the ITC carryforwards are available for use subject to
applicable limits of the Internal Revenue Code.  

ENERGY ADJUSTMENT CLAUSE
The Rate Agreement includes a comprehensive fuel and purchased power
adjustment clause (FPPAC) permitting PSNH to pass through to retail
customers, for a ten-year period, the retail portion of differences between
the fuel and purchased power costs assumed in the Rate Agreement and PSNH's
actual costs, which include the costs under the Seabrook Power Contract.  The
cost components of the FPPAC are subject to a prudence review by the NHPUC.  

The costs associated with purchases from certain small-power producers (SPPs)
over the level assumed in the Rate Agreement are deferred and recovered over
ten-year periods through the FPPAC.  At December 31, 1993, unrecovered SPP
deferrals are $107.6 million.  A majority of these purchases are under
long-term arrangements (20-30 years) at prices significantly higher than the
company's current or projected avoided costs.  

For additional information, see <F2> Note 2, "Seabrook Power Contract" and
Note 11, "Commitments and Contingencies - Purchased Power Arrangements."

<F2>
2.      SEABROOK POWER CONTRACT

On June 5, 1992, NAEC and PSNH entered into the Seabrook Power Contract
(Contract), under which PSNH is obligated to buy from NAEC, and NAEC is
obligated to sell to PSNH, all of NAEC's 35.6 percent ownership share of the
capacity and output of Seabrook 1 for a period equal to the length of the
NRC's full power operating license for Seabrook 1. Accordingly, PSNH has
included its right to buy power from NAEC on its Balance Sheets as part of
utility plant with a corresponding obligation.  At December 31, 1993, this
right was valued at approximately $852.2 million.  Under the Contract, PSNH
is unconditionally 

10

obligated to pay NAEC's cost of service during this period whether or not
Seabrook 1 is operating. NAEC's cost of service includes all of its
Seabrook-related costs, including operation and maintenance expense,
fuel expense, property tax expense, depreciation expense, and certain
overhead and other costs.  

The Contract establishes the value of the initial investment in Seabrook
(Initial Investment) at $700 million and the initial investment in nuclear
fuel at $0.  NAEC is depreciating its Initial Investment on a straight line
basis over the remaining term of Seabrook's full power operating license. 
Any subsequent additions to Seabrook 1 will be depreciated on a straight-line
basis over the remaining term of the Contract at the time the additions are
brought into service.  The Contract provides that NAEC's return on its
allowed investment in Seabrook 1 (its investment in working capital, fuel,
capital additions after the date of commercial operation of Seabrook 1 and a
portion of the Initial Investment) is calculated based on NAEC's actual
capitalization from time to time over the term of the Contract, which
includes its actual debt and preferred equity costs, and a common equity cost
of 12.53 percent for the first ten years of the Contract, and thereafter at
an equity rate of return to be  fixed in a filing with FERC.  The portion of
the Initial Investment which is included in the allowed investment was 40
percent at the Acquisition Date and will increase by 15 percent in each of
the following four years beginning May 15, 1993.  Between the Reorganization
Date and the Acquisition Date, PSNH, recorded $50.9 million of deferred
return on its investment in Seabrook 1.  In accordance with the Rate
Agreement, PSNH transferred the $50.9 million of deferred return balance to
NAEC along with the other Seabrook assets.  NAEC has recorded the $50.9
million as part of utility plant.  From the Acquisition Date through December
31, 1993, NAEC recorded an additional $85.4 million of deferred return.  The
deferred return on the excluded portion of the Initial Investment, including
the $50.9 million, will be recovered with carrying charges by NAEC through
the Contract beginning six months after the end of PSNH's Fixed Rate Period
and will be fully recovered by May 15, 2001.

If Seabrook 1 is shut down prior to the expiration of the NRC operating
license term, PSNH will be unconditionally required to pay NAEC termination
costs for 39 years, less the period during which Seabrook 1 has operated. 
These costs are designed to reimburse NAEC for its share of Seabrook 1
shut-down and decommissioning costs and to pay NAEC a return of and on any
undepreciated balance of its Initial Investment in the plant over the
then-remaining term of the Contract, and the return of and on any capital
additions to the plant made after the Acquisition Date over a period of five
years after shut down (net of any tax benefits to NAEC attributable to such
cancellation).

Contract payments charged to operating expense were $123 million, including
$33 million return on investment, for the year ended December 31, 1993.  

On February 15, 1994, NAEC acquired Vermont Electric Generation and
Transmission Cooperative Inc.'s (VEG&T) 0.4 percent ownership interest of
Seabrook for approximately $6.4 million.  NAEC will sell the output from the
Seabrook interest purchased from VEG&T on February 15, 1994 to PSNH under an
agreement that has been approved by the FERC and is substantially similar to
the Seabrook Power Contract between PSNH and NAEC that was effective on the
Acquisition Date.

11

Future minimum payments, excluding executory costs, such as property taxes,
state use taxes,insurance, and maintenance, under the terms of the Contract,
as of December 31, 1993, are approximately:

                                                                             

                                         Seabrook Power Contract
                                         -----------------------             

                                          (Thousands of Dollars) 
1994 . . . . . . . . . . . . . . .               $   63,200
1995 . . . . . . . . . . . . . . .                   72,300 
1996 . . . . . . . . . . . . . . .                   81,200 
1997 . . . . . . . . . . . . . . .                   91,100 
1998 . . . . . . . . . . . . . . .                  169,700 
After 1998 . . . . . . . . . . . .                1,509,700                  

                                                 ---------- 
Future minimum payments. . . . . .                1,987,200 
Less amount representing interest and 
  return on equity . . . . . . . .                1,135,000 
                                                 ---------- 
Present value of Seabrook Power
Contract 
  payments . . . . . . . . . . . . .             $  852,200 
                                                 ========== 
<F3>
3.      LEASES

PSNH has entered into lease agreements, for the use of substation equipment,
data processing and office equipment, vehicles, and office space.  The
provisions of these lease agreements generally provide for renewal options. 
Operating lease rental payments charged to operating expense were $6,197,000
in 1993, $8,511,000 in 1992, and $6,875,000 in 1991.

Future minimum rental payments, excluding executory costs, such as property
taxes, state use taxes, insurance, and maintenance, under long-term
noncancelable leases, as of December 31, 1993, are approximately:            

                                                                

                                                  Operating Leases
                                                  ----------------           

                                               (Thousands of Dollars)
1994 . . . . . . . . . . . . . . . . . .             $  7,700 
1995 . . . . . . . . . . . . . . . . . .                7,100 
1996 . . . . . . . . . . . . . . . . . .                6,100 
1997 . . . . . . . . . . . . . . . . . .                5,200 
1998 . . . . . . . . . . . . . . . . . .                4,100
After 1998 . . . . . . . . . . . . . . .                6,000 
                                                      ------- 
Future minimum payments. . . . . . . . .              $36,200  
                                                      ======= 
<F4>
4.      NUCLEAR DECOMMISSIONING

A 1992 decommissioning study concluded that complete and immediate
dismantlement at retirement continues to be the most viable and economic
method of decommissioning Millstone 3.  A 1991 Seabrook decommissioning study
also confirmed that complete and immediate dismantlement at retirement is the
most viable and economic method of decommissioning Seabrook 1.
12

Decommissioning studies are reviewed and updated periodically to reflect
changes in decommissioning requirements, technology, and inflation.   

The estimated cost of decommissioning PSNH's ownership share of Millstone 3
and NAEC's 36.0 percent share of Seabrook 1, in year-end 1993 dollars, is
$12.0 million and $131.7 million, respectively.  PSNH's Millstone 3
decommissioning costs are accrued over the expected service life of the unit
and are included in depreciation expense on its Statements of Income. 
Nuclear decommissioning related to PSNH's share of Millstone 3 amounted to
$0.3 million in 1993 and $0.2 million in 1992.  Nuclear decommissioning
costs, as a cost of removal, are included in the accumulated provision for
depreciation on PSNH's Balance Sheets. 

PSNH makes payments to an independent decommissioning trust for its portion
of the costs of decommissioning Millstone 3.  Under the terms of the Rate
Agreement, PSNH is obligated to pay NAEC's share of Seabrook's
decommissioning costs, even if the unit is shut down prior to the expiration
of its operating license.  Accordingly, NAEC bills PSNH directly for its
share of the costs of decommissioning Seabrook.  PSNH records its Seabrook
decommissioning costs as a component of purchased power expense on its
Statement of Income.  Under the Rate Agreement, PSNH's Seabrook
decommissioning costs are recovered through base rates.

As of December 31, 1993, PSNH has collected, through rates, approximately
$1.2 million toward the future decommissioning costs of its share of
Millstone 3, which has been transferred to the external decommissioning
trust.  Earnings on the decommissioning trusts and financing fund increase
the decommissioning trust balance and the accumulated reserve for
decommissioning.  At December 31, 1993, the balance in the company's
accumulated reserve for decommissioning amounted to $1.5 million. 

As of December 31, 1993, NAEC (including pre-Acquisition Date payments made
by PSNH) has paid approximately $7.3 million, into Seabrook 1's
decommissioning financing fund. 

Changes in requirements or technology, or adoption of a decommissioning
method other than immediate dismantlement, could change decommissioning cost
estimates.  PSNH attempts to recover sufficient amounts through its allowed
rates to cover its expected decommissioning costs.  Only the portion of
currently estimated total decommissioning costs that has been accepted by
regulatory agencies is reflected in rates of PSNH.  Although allowances for
decommissioning have increased significantly in recent years, ratepayers in
future years will need to increase their payments to offset the effects of
any insufficient rate recoveries in previous years.

PSNH, along with other New England utilities, has equity investments in the
four Yankee companies.  Each Yankee company owns a single nuclear generating
unit.  The estimated costs, in year-end 1993 dollars, of decommissioning
PSNH's ownership share of CY and MY are $17.0 million and $16.2 million,
respectively.  The cost to decommission VY is currently being re-estimated. 
The cost of decommissioning PSNH's ownership share of VY is projected to
range from $12 million to $14 million.  As discussed in the following
paragraph, YAEC's owners voted to permanently shut down the YAEC unit on
February 26, 1992.  Under the terms of the contracts with the companies, the
shareholders-sponsors are responsible for their proportionate share of the
operating costs of each unit, including decommissioning.  The nuclear
decommissioning costs of the Yankee companies are included as part of the
cost of power by PSNH. 

13

YAEC has begun decommissioning its nuclear facility.  On June 1, 1992, YAEC
filed a rate filing to obtain FERC authorization to collect the closing and
decommissioning costs and to recover the remaining investment in the YAEC
nuclear power plant over the remaining period of the plant's NRC operating
license.  The bulk of these costs has been agreed to by the YAEC joint owners
and approved, as a settlement, by FERC.  At December 31, 1993, the estimated
remaining costs amounted to $345.0 million, of which PSNH's share was
approximately $24.1 million.  Management expects that PSNH will continue
to be allowed to recover such FERC-approved costs from its customers. 
Accordingly, PSNH has recognized these costs as a regulatory asset, with a
corresponding obligation, on its Balance Sheets.  PSNH has a 7.0 percent
equity investment, approximating $1.7 million, in YAEC.  PSNH had relied on
YAEC for less than one percent of its capacity.

<F5>
5.      SHORT-TERM DEBT

The system companies have various credit lines totaling $485 million.  PSNH
has credit lines totaling $125 million available through a revolving-credit
agreement with a group of 22 banks.  PSNH may borrow funds on a short-term
revolving basis using either fixed-rate or standby-loans.  Fixed rates are
set using competitive bidding.  Standby-loan rates are based upon several
alternative variable rates.  PSNH is obligated to pay a facility fee of 0.25
percent per annum on the total commitment.  At December 31, 1993, there were
no borrowings under the agreement.  The company intends to negotiate a two
year extension of the $125 million revolving credit agreement, which is
scheduled to mature on May 14, 1994.

Certain subsidiaries of NU, including PSNH, are members of the Northeast
Utilities System Money Pool (Pool).  The Pool provides a more efficient use
of the cash resources of the system, and reduces outside short-term
borrowings.  NUSCO administers the Pool as agent for the member companies. 
Short-term borrowing needs of the member companies are first met with
available funds of other member companies, including funds borrowed by NU
parent.  NU parent may lend to the Pool but may not borrow.  Investing and
borrowing subsidiaries receive or pay interest based on the average daily
Federal Funds rate.  Funds may be withdrawn from or repaid to the Pool at any
time without prior notice.  However, borrowings based on loans from NU parent
bear interest at NU parent's cost and must be repaid based upon the terms of
NU parent's original borrowing.

Maturities of PSNH's short-term debt obligations were for periods of three
months or less.

The amount of short-term borrowings that may be incurred by PSNH is subject
to periodic approval by the SEC under the 1935 Act.  Under the SEC
restrictions, PSNH was authorized, as of January 1, 1993, to incur short-term
borrowings up to a maximum of $125 million.
14











<F6>
6.      PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION

Details of preferred stock subject to mandatory redemption are:

                        December 31,        Shares
                           1993           Outstanding
                        Redemption        December 31,      December 31,
Description               Price              1993         1993       1992    
- -----------------------------------------------------------------------------
                                                       (Thousands of Dollars)
10.60% Series A 
    of 1991. . . . .      $25.00          5,000,000      $125,000   $125,000
                                                         ========   ========

In case of default on dividends or sinking-fund payments, no payments may be
made on any junior stock by way of dividends or otherwise (other than in shares
of junior stock) so long as the default continues.  If PSNH is in arrears in the
payment of dividends on any outstanding shares of preferred stock, PSNH would
be prohibited from redemption or purchase of less than all of the preferred
stock outstanding.  The Series A Preferred Stock is not subject to optional
redemption by PSNH.  It is subject to a sinking fund beginning on June 30, 1997,
sufficient to retire annually 1,000,000 shares at $25 per share.

<F7>
7.      LONG-TERM DEBT

Details of long-term debt outstanding are:

                                                         
- -----------------------------------------------------------------------------
                                                         December 31,
                                                  -------------------------
                                                    1993            1992
- -----------------------------------------------------------------------------

                        
                                                    (Thousands of Dollars)
First Mortgage Bonds:                                                        

            
8 7/8%    Series A    due 1996. . . . . . . . .  $172,500         $  172,500
9.17%     Series B    due 1998. . . . . . . . .   170,000            170,000
                                                 --------         ----------
Total First Mortgage Bonds. . . . . . . . . . .   342,500            342,500

Term Loan/Notes:
Variable Rate due 1996. . . . . . . . . . . . .   235,000            329,000

Pollution Control Revenue Bonds:                                             

          
7.65%     Series A    due 2021. . . . . . . . .    66,000             66,000
7.50%     Series B    due 2021. . . . . . . . .   108,985            108,985
7.65%     Series C    due 2021. . . . . . . . .   112,500            112,500
Adjustable Rate Series D due 2021 . . . . . . .    39,500             39,500
Adjustable Rate Series E due 2021 . . . . . . .    69,700            114,500
Adjustable Rate, Tax-Exempt, Series D due 2021.    75,000             75,000
Adjustable Rate,Tax-Exempt, Series E due 2021 .    44,800               -    


Less:  Amounts due within one year. . . . . . .    94,000             94,000
                                                 --------         ----------
Long-term debt, net . . . . . . . . . . . . . .  $999,985         $1,093,985
                                                 ========         ==========
15

Long-term debt maturities and cash sinking-fund requirements on debt
outstanding at December 31, 1993 for the years 1994 through 1998 are
approximately $94,000,000 in 1994 and 1995, $219,500,000 in 1996, $0 in 1997,
and $170,000,000 in 1998.  Also, there are annual renewal and replacement
fund requirements equal to 2.25 percent of the average of net depreciable
property owned by PSNH at the Reorganization Date, plus cumulative gross
property additions thereafter.  PSNH expects to meet its future fund
requirements by certifying property additions.  Any deficiency would need to
be satisfied the deposit of cash or bonds.

Essentially, all utility plant of PSNH is subject to the liens of its first
mortgage bond indenture.  PSNH's two bank facilities, the Term Loan and
Revolving Credit Facility have a second lien, junior to the lien of
its first mortgage bond indenture, on all PSNH property located in New
Hampshire.  At December 31, 1993, the principal amount outstanding under the
Term Loan was $235 million.  At December 31, 1993, there were no borrowings
under the Revolving Credit Facility.

The Series A and B First Mortgage Bonds are not redeemable prior to their
maturity except in limited circumstances.  The Pollution Control Revenue
Bonds, except for Series D and E, are redeemable on or after May 1, 2001, at
the option of the company with accrued interest and at specified premiums. 
Under current interest rate elections by PSNH, the Series D and E Pollution
Control Revenue Bonds are redeemable, at par plus accrued interest at the end
of each interest rate period.  Future interest rate elections by PSNH could
significantly defer or eliminate the availability of optional redemptions by
PSNH and could affect costs as well.

PSNH has entered into interest rate cap agreements to reduce the potential
impact of upward changes in interest rates on certain variable rate tax
exempt pollution control revenue bonds and on a portion of its variable rate
Term Loan.  At December 31, 1993, $50 million and $100 million of PSNH's
$235 million Term Loan was capped at 4.5 percent and 5 percent, respectively.
$75 million of its taxable Pollution Control Revenue Bonds was capped at 4.5
percent.  The total cost of interest rate caps for 1993 was approximately
$836,000, the costs of which are amortized over the terms of the contracts,
which are from one to three years.  The fair market value of outstanding
interest rate cap contracts as of December 31, 1993 is approximately
$158,000.

Concurrent with the issuance of PSNH's Series A and B First Mortgage Bonds,
PSNH entered into financing arrangements with the Industrial Development
Authority of the state of New Hampshire (IDA).  Pursuant to these
arrangements, the IDA issued five series of Pollution Control Revenue Bonds
(PCRBs) and loaned the proceeds to PSNH.  At December 31, 1993, $516.5
million of the PCRBs were outstanding.  PSNH's obligation to repay each
series of PCRBs is secured by a series of First Mortgage Bonds that were
issued under its indenture.  Each such series of First Mortgage Bonds
contains terms and provisions with respect to maturity, principal payment,
interest rate and redemption that correspond to those of the applicable
series of PCRBs; for financial reporting purposes, these bonds would not be
considered outstanding unless PSNH fails to meet its obligation under the
PCRBs.
16
<F8>
8. INCOME TAX EXPENSE

The components of federal and state income tax provisions are: 
                                                                       
                       

     
- -----------------------------------------------------------------------------
- ---------------------
                             Jan. 1, 1993   June 5, 1992  Jan. 1, 1992  May 16,
1991  Jan. 1, 1991
                                  to            to            to            to 
          to
For the Periods              Dec. 31, 1993  Dec. 31, 1992 June 4, 1992  Dec. 31,
1991 May 15, 1991
- -----------------------------------------------------------------------------
- ---------------------
                             <F1>(Note 1)         (Thousands of Dollars)
                                                               
       
Current income taxes: 
  Federal . . . . . . . . .  $  (937)         $ 2,400       $    415     $   - 
     $    -   
  State . . . . . . . . . .    1,183              -               79         
60           20
                             --------         --------      ---------   
- --------    ---------
     Total current. . . . .      246            2,400            494         
60           20
                             --------         --------      ---------   
- --------    ---------
Deferred income taxes, net:
  Federal . . . . . . . . .   47,407           23,086          8,703      25,342 
        111
  State . . . . . . . . . .    3,131              -              -           - 
          -   
                             --------         --------      ---------   
- --------    ---------  
     Total deferred . . . .   50,538           23,086          8,703      25,342 
        111
                             --------         --------      ---------   
- --------    ---------
Investment tax credits, net     (565)            (326)          (341)      
(498)        (294)
                             --------         --------      ---------   
- --------    ---------
   Total income tax expense  $50,219          $25,160        $ 8,856     
$24,904    $   (163)
                             ========         ========      =========   
========    =========

The components of total income tax expense are classified as follows:  

Income taxes charged to 
    operating expenses . .   $73,263          $39,197        $16,449     
$38,316    $(12,769)
Income taxes associated 
 with the deferred return
 on Seabrook . . . . . . .       -                -            4,793       
7,155         -     
Income taxes associated 
 with allowance for funds used
 during construction (AFUDC)
 and the deferred return on 
 New Hampshire Electric 
 Cooperative (NHEC)
 deferred costs. . . . . .       -                217            428          
98         111
Other income taxes - credit  (23,044)         (14,254)       (12,814)    
(20,665)     12,495
                            ---------         --------       --------    
- --------   ---------
  Total income tax expense   $50,219          $25,160        $ 8,856     
$24,904    $   (163)
                            =========         ========       ========    
=======    =========


17

Deferred income taxes are comprised of the tax effects of temporary differences
as follows:  
                               
- -----------------------------------------------------------------------------
- ------------------------  
                          Jan. 1, 1993     June 5, 1992    Jan. 1, 1992  May 16,
1991   Jan. 1, 1991
                               to               to             to             
to            to 
For the Periods           Dec. 31, 1993    Dec. 31, 1992   June 4, 1992  Dec.
31, 1991  May 15, 1991
- -----------------------------------------------------------------------------
- ------------------------  

                      <F1>(Note 1)           (Thousands of Dollars) 
                                                               
                     
Depreciation . . . . . . . .$  4,549         $  1,629         $12,333    
$21,450         $17,289
Energy adjustment clauses. .  15,155           14,520          (1,359)    
14,476           4,628
Deferred tax asset 
  associated with NOL. . . .  25,438            9,335          (2,317)   
(17,149)        (81,002)
Alternative minimum tax. . .   1,056           (2,441)           (394)       
- -                -     
Amortization of prepaid
  deferred taxes . . . . . .   7,667              -               -          
- -                -     
Seabrook unsecured interest.     -                -               -          
- -            52,058
Deferred return on Seabrook.     -                -             4,793      
7,155              -     
Severance benefits . . . . .     -                254          (1,020)       
- -                -     
Other . . . .. . . . . . . .  (3,327)            (211)         (3,333)      
(590)          7,138
                             --------         --------       ---------   
- --------        ---------
  Deferred income taxes, net $50,538          $23,086        $  8,703    
$25,342         $   111 
                             ========         ========       =========   
========        ========= 















A reconciliation between income tax expense and the expected tax expense at the
applicable statutory
rates is as follows:
                                                                              
                       
                               
- -----------------------------------------------------------------------------
- ---------------------------- 
   

                            Jan. 1, 1993   June 5, 1992     Jan. 1, 1992  May
16, 1991   Jan. 1, 1991 
                                to             to               to           
to              to 
For the Periods             Dec. 31, 1993  Dec. 31, 1992    June 4, 1992  Dec.
31, 1991   May 15, 1991
- -----------------------------------------------------------------------------
- ---------------------------- 
   

                     <F1>(Note 1)            (Thousands of Dollars) 
                                                               
             
Expected
federal income 
 tax at 35 percent pretax
 income for 1993 and 34 
 percent for 1992 and 1991. .$35,860          $18,550         $ 7,356    
$26,383        $ (34,324)
Tax effect of differences:
  Depreciation differences .   1,593            1,032          (8,314)   
(12,455)            1,524
Amortization of Regulatory
  Asset - Rate Agreement . .  23,765           17,624          12,477     
18,294               -     
Seabrook intercompany loss . (19,176)         (11,903)            -          
- -                 -     
Reorganization expenses. . .     -                 22           1,728        
795             5,179
Deferred investment return .     -                -            (3,832)    
(5,231)              -     
Unused book NOL. . . . . . .     -                -               -          
- -              22,058
State tax, net of federal
   benefit . . . . . . . . .   2,804              -               -          
- -                 -     
Amortization of prepaid 
  deferred taxes . . . . . .   7,667              -               -          
- -                 -     
Other, net . . . . . . . . .  (2,294)            (165)           (559)    
(2,882)            5,400   

                             --------         --------        --------   
- --------       -----------  
Total income tax expense . . $50,219          $25,160         $ 8,856    
$24,904        $     (163)  
                             ========         ========        ========   
========       ===========

18







<F9>
9.      PENSION BENEFITS

The company participates in a uniform noncontributory defined benefit
retirement plan covering all regular system employees (the Plan).  Benefits
are based on years of service and employees' highest eligible compensation
during five consecutive years of employment.  Effective January 1993, PSNH's
plan was merged into the NU system's uniform noncontributory defined benefit
plan.  The company's direct allocated portion of the system's pension cost,
part of which was charged to utility plant, approximated $6,626,000 in 1993,
$4,422,000 for the period January 1, 1992 to June 4, 1992 and $3,467,000 for
the period June 5, 1992 to December 31, 1992 and $13,220,000 in 1991.  The
pension cost for June 5, 1992 to December 31, 1992 excludes employees of NHY,
who are now employees of NAESCO.  Pension costs for 1993 included
approximately $3,359,000 related to work force reduction programs. 

Currently, PSNH funds annually an amount at least equal to that which will
satisfy the requirements of the Employee Retirement Income Security Act and
the Internal Revenue Code.  Pension costs are determined using market-related
values of pension assets.  Pension assets are invested primarily in
domestic and international equity securities and bonds.










































The components of net pension cost for PSNH are:
                 
                   
- -----------------------------------------------------------------------------
- ----------                
                          Jan. 1, 1993     June 5, 1992   Jan. 1, 1992   Jan.
1, 1991   
                              to               to             to             to 
     
For the Periods           Dec. 31, 1993    Dec. 31, 1992  June 4, 1992   Dec.
31, 1991                
- -----------------------------------------------------------------------------
- ----------               

                                               (Thousands of Dollars) 
                                                                
       
Service cost . . . . . .     $  7,539          $ 2,889       $  3,850     $ 
8,382 
Interest cost. . . . . .       11,180            6,810          6,200      
12,771
Return on plan assets. .      (19,308)          (5,026)        (4,561)    
(45,157) 
Net amortization . . . .        7,215           (1,206)        (1,067)     
37,224 
                             --------          --------       --------    
- -------- 
Net pension cost . . .  .    $  6,626          $ 3,467        $ 4,422     
$13,220 
                             ========          ========       ========    
========                   
                                                                              
  
                 


























For calculating pension cost, the following assumptions were used:
- ------------------------------------------------------------------------------- 

                    Jan. 1, 1993     June 5, 1992   Jan. 1, 1992   Jan. 1, 1991 
                         to               to             to             to    
For the Periods     Dec. 31, 1993    Dec. 31, 1992  June 4, 1992  Dec. 31, 1991 
               
- --------------------------------------------------------------------------------

Discount rate. . . . .  8.00%           8.00%         8.00%          8.00% 
Expected long-term
 rate of return . .  .  8.50            9.00          9.00           8.50
Compensation/
progression rate . . .  5.00            6.00          6.00           6.00 
- --------------------------------------------------------------------------------
19                 
The following table represents the Plan's funded status reconciled to the
Balance Sheets:


- ----------------------------------------------------------------------- 
At December 31,                                     1993      1992 
- -----------------------------------------------------------------------       
                        
                                              (Thousands of Dollars) 
Accumulated benefit obligation,
including $111,691,000 of vested
benefits at December 31, 1993 and
$112,507,000 of vested benefits at
December 31, 1992 . . . . . . . . . .             $122,429    $113,485 
                                                  ========    ======== 
Projected benefit obligation (PBO). .             $156,475    $175,891 
Less:  Market value of plan assets. .              145,536     166,456 
                                                  ---------   --------- 
PBO in excess of plan assets. . . . .              (10,939)     (9,435) 
Unrecognized transition amount. . . .                5,338       6,741
Unrecognized prior service costs. . .                4,890       4,870 
Unrecognized net gain . . . . . . . .              (31,179)    (32,859)
                                                   ---------  --------- 
Accrued pension liability . . . . . .             $(31,890)   $(30,683)
                                                  =========   ========= 

The following actuarial assumptions were used in calculating the Plan's
year-end funded status:

                   
- ----------------------------------------------------------------------- 
At December 31,                                     1993        1992        
- ----------------------------------------------------------------------- 

Discount rate . . . . . . . . . . . .                7.75%       8.00% 
Compensation/progression rate . . . .                4.75        5.00 

The discount rate for 1993 was determined by analyzing the interest rates, as
of December 31, 1993, of long-term, high quality corporate debt securities
having a duration comparable to a 13.8-year duration of the plan. 

During 1993, NU's work force was reduced by approximately 7 percent through a
work force reduction program that involved a voluntary early retirement program
and involuntary terminations.  PSNH's direct cost of the program, which
approximated $4.9 million, included pension, severance, and other
benefits.

<F10>
10.     POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The company provides certain health care benefits, primarily medical and
dental, and life insurance benefits through a benefit plan to retired
employees.  These benefits are available for employees leaving the company
who are otherwise eligible to retire and have met specified service
requirements.  Through December 31, 1992, the company recognized the cost of
these benefits as they were paid.  In December 1990, the FASB issued SFAS
106.  This new standard requires that the expected cost of postretirement
benefits, primarily health and life insurance benefits, must be charged to
expense during the years that eligible employees render service.  Effective
January 1, 1993, the company adopted SFAS 106 on a prospective basis.  Total
health care and life insurance costs, part of which was deferred or charged
to utility plant, approximated $9,106,000 in 1993, $3,290,000 in 1992, and 
$2,783,000 in 1991.
20

On January 1, 1993, the accumulated postretirement benefit obligation (APBO)
represented the company's prior-service obligation upon the adoption of SFAS
106.  As allowed by SFAS 106, the company is amortizing its APBO of
approximately $63 million over a 20-year period.  For current employees and
certain retirees, the total SFAS 106 benefit is limited to two times the 1993
health care costs.  The SFAS 106 obligation has been calculated based on this
assumption.

During 1993, the company began funding SFAS 106 postretirement costs through
external trusts.  The company is funding annually amounts that have been rate
recovered and which also are tax-deductible under the Internal Revenue Code. 
The trust assets are invested primarily in equity securities and bonds. 

The following table represents the plan's funded status reconciled to the
Balance Sheet at December 31, 1993:

                                                                             

                                                  (Thousands of Dollars) 

Accumulated postretirement benefit obligation of:

Retirees . . . . . . . . . . . . . . . . . . . . . . .   $(51,832) 
Fully eligible active employees. . . . . . . . . . . .        (99) 
Active employees not eligible to retire  . . . . . . .     (7,888)     
                                                         --------- 
Total accumulated postretirement benefit obligation. .    (59,819) 
Less:  Market value of plan assets . . . . . . . . . .      2,387 
                                                        --------- 
Accumulated postretirement benefit
obligation in excess of plan assets . . . . . . . . . .   (57,432) 

Unrecognized transition amount. . . . . . . . . . . . .    55,870 

Unrecognized net gain . . . . . . . . . . . . . . . . .    (1,065)
                                                         --------- 
Accrued postretirement benefit liability. . . . . . . .  $ (2,627)       
                                                         =========           

                                 
                


The components of health care and life insurance costs for the year ended
December 31, 1993 are:
- -------------------------------------------------------------------------
                                                 (Thousands of Dollars)  
Service cost . . . . . . . . . . . . . .               $1,260 
Interest cost. . . . . . . . . . . . . .                4,800 
Net amortization . . . . . . . . . . . .                3,046
                                                       ------ 
Net health care and life insurance costs               $9,106  
                                                       ====== 
- -------------------------------------------------------------------------
21                 

For measurement purposes, an 11.1-percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1993; the rate
was assumed to decrease to 5.4 percent for 2002.  The effect of increasing
the assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
December 31, 1993 by $5.1 million and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for the
year then ended by $476,000.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75 percent.  The discount rate for
1993 was determined by analyzing the interest rates, as of December 31, 1993,
of long-term, high-quality corporate debt securities having a duration
comparable to that of the plan.  The trust holding the plan assets is subject
to federal income taxes at a 35 percent tax rate.  The expected long-term
rate of return on plan assets after estimated taxes was 5.00 percent for
health assets and 8.50 percent for life assets. 

PSNH is currently recovering SFAS 106 costs.  

<F11>
11.     COMMITMENTS AND CONTINGENCIES

CONSTRUCTION PROGRAM
The construction program is subject to periodic review and revision.  Actual
construction expenditures may vary from estimates due to factors such as
revised load estimates, inflation, revised nuclear safety regulations,
delays, difficulties in the licensing process, the availability and cost of
capital, and the granting of timely and adequate rate relief by regulatory
commissions, as well as actions by other regulatory bodies.

PSNH currently forecasts construction expenditures (including AFUDC) of $172.5
million for the years 1994-1998, including $37.5 million for 1994.  In addition,
PSNH estimates that nuclear fuel requirements, for its share of Millstone 3,
will be $5.7 million for the years 1994-1998, including $1.7 million for 1994. 


PSNH RATE AGREEMENT
The Rate Agreement provided the financial basis for the Plan.  The Rate
Agreement calls for seven successive 5.5 percent annual increases in PSNH's
base rates for its charges to retail customers (the Fixed-Rate Period).  The
first four increases were put into effect on January 1, 1990, May 16, 1991,
June 1, 1992 and June 1, 1993, respectively.  The remaining three increases
are scheduled to be put into effect annually beginning on June 1, 1994. 
PSNH's base rates, as adjusted to reflect the 5.5 percent annual increases,
are intended to recover assumed increases in PSNH's costs and to provide
PSNH with a reasonable cumulative return on investment over the Fixed-Rate
Period.  As discussed in <F1>Note 1, "Summary of Significant Accounting
Policies-Energy Adjustment Clause," the FPPAC protects PSNH form changes in
fuel and purchased power costs.  Although the Rate Agreement provides an
unusually high degree of certainty as to PSNH's future retail rates, it also
entails a risk when sales are lower than anticipated or if PSNH should
experience unexpected increases in its costs other than those for fuel and
purchased power, since PSNH has agreed that it will not seek additional rate
relief during the Fixed-Rate Period, except in limited circumstances. 
However, in order to provide protection from significant variations from the
costs assumed in base rates over the Fixed-Rate Period, the Rate Agreement
establishes a return on equity (ROE) collar to prevent PSNH from earning a
ROE in excess of an upper limit or below a lower limit.  To date, PSNH's ROE
has been within the limits of the ROE collar.  
22

In January 1994, the NHPUC approved a Memorandum of Understanding (the
Memorandum) between PSNH, NAEC, Northeast Utilities Service Company, and the
Attorney General of the state of New Hampshire relating to certain issues
which had arisen under the Rate Agreement.  The Memorandum addressed, among
other things, the tax legislation in New Hampshire, accounting treatments
resulting from adoption of SFAS 106 and SFAS 109, and recovery for certain
aspects of PSNH's settlement with the VEG&T, including the purchase by NAEC
of VEG&T's 0.4 percent share of Seabrook.  The Memorandum provides for the
establishment of a regulatory liability attributable to significant NOL
carryforwards and establishes that such liability should be amortized over a
six-year period beginning on May 1, 1993.

ENVIRONMENTAL MATTERS
PSNH is subject to regulation by federal, state, and local authorities with
respect to air and water quality, handling and the disposal of toxic
substances and hazardous and solid wastes, and the handling and use of
chemical products.  PSNH has an active environmental auditing program to
prevent, detect, and remedy noncompliance with environmental laws or
regulations and believes that it is in substantial compliance with current
environmental laws and regulations.  Changing environmental requirements
could hinder the construction of new fossil-fuel generating units,
transmission and distribution lines, substations, and other facilities.  The
cumulative long-term, economic cost impact of increasingly stringent
environmental requirements cannot be estimated.  Changing environmental
requirements could also require extensive and costly modifications to PSNH's
existing hydro, nuclear, and fossil-fuel generating units, and transmission
and distribution systems, and could raise operating costs significantly.  As
a result, PSNH may incur significant additional environmental costs, greater
than amounts included in cost of removal and other reserves, in connection
with the generation and transmission of electricity and the storage,
transportation, and disposal of by-products and waste.  PSNH may also
encounter significantly increased costs to remedy the environmental effects
of prior waste handling and disposal activities.  
 
In most cases, the extent of additional future environmental cleanup costs is
not reasonably estimable due to factors such as the unknown magnitude of
possible contamination, the appropriate remediation method, the possible
effects of future legislation and regulation, the possible effects of
technological changes related to future cleanup, and the difficulty of
determining future liability, if any, for the cleanup of sites at which PSNH
may be determined to be legally liable by federal or state environmental
agencies.  In addition, PSNH cannot estimate the potential liability for
future claims that may be brought against it by private parties.  However,
considering known facts and existing laws and regulatory practices,
management does not believe that such matters will have a material adverse
effect on PSNH's financial position or future results of operations.  

NUCLEAR INSURANCE CONTINGENCIES
The Price-Anderson Act currently limits public liability from a single
incident at a nuclear power plant to $9.4 billion.  The first $200 million of
liability would be provided by purchasing the maximum amount of commercially
available insurance.  Additional coverage of up to a total of $8.8 billion
would be provided by an assessment of $75.5 million per incident, levied on
each of the 116 nuclear units that are currently subject to the Secondary
Financial Protection Program in the United States, subject to a maximum
assessment of $10 million per incident per nuclear unit in any year.  In
addition, if the sum of all public liability claims and legal costs arising
from any nuclear incident exceeds the maximum amount of financial protection,
each reactor operator can be assessed an additional 5 percent, up to $3.8
million, or $437.9 million in total, for all 116 nuclear units.  The
maximum assessment is to be adjusted at least every five years to reflect
inflationary changes.  Under the terms of the Contract with NAEC, PSNH would
23

be obligated to pay for any assessment charged to NAEC as a "cost of
service."  At December 31, 1993, based on PSNH's ownership interests in
Millstone 3, and NAEC's ownership interests in Seabrook 1, PSNH's maximum
liability would be $30.4 million per incident.  In addition, through PSNH's
purchased power contracts with the four Yankee regional nuclear generating
companies, PSNH would be responsible for up to an additional $16.7 million
per incident.  These payments for PSNH's ownership interest in nuclear
generating facilities and costs resulting from the Contract with NAEC would
be limited to a maximum of $5.9 million per incident per year. 

Insurance has been purchased from Nuclear Electric Insurance Limited (NEIL)
to cover (1) certain extra costs incurred in obtaining replacement power
during prolonged accidental outages with respect to PSNH's Contract with
NAEC; and (2) the cost of repair, replacement, or decontamination or
premature decommissioning of utility property resulting from insured
occurrences with respect to PSNH's ownership interests in Millstone 3, CY,
MY, and VY; and NAEC's ownership interest in Seabrook.  All companies insured
with NEIL are subject to retroactive assessments if losses exceed the
accumulated funds available to NEIL.  The maximum potential assessments
against PSNH (including costs resulting from PSNH's Contract with NAEC) with
respect to losses arising during current policy years are approximately $1.9
million under the replacement power policies and $1.9 million under the
property damage, decontamination, and decommissioning policies.  Although
PSNH has purchased the limits of coverage currently available from the
conventional nuclear insurance pools, the cost of a nuclear incident could
exceed available insurance proceeds. 

Insurance has been purchased from American Nuclear Insurers/Mutual Atomic
Energy Liability Underwriters, aggregating $200 million on an industry basis
for coverage of worker claims.  All companies insured under this coverage are
subject to retrospective assessments of $3.2 million per reactor.  The
maximum potential assessments against PSNH (including costs resulting from
PSNH's Contract with NAEC) with respect to losses arising during the current
policy period are approximately $1.9 million.

FINANCING ARRANGEMENTS FOR THE REGIONAL NUCLEAR GENERATING COMPANIES
PSNH believes that the regional nuclear generating companies may require
additional external financing in the next several years for construction
expenditures, nuclear fuel, possible refinancings, and other purposes. 
Although the ways in which each regional nuclear generating company will
attempt to finance these expenditures have not been determined, PSNH may be
asked to direct or indirect financial support  for one or more of these
companies.

PURCHASED POWER ARRANGEMENTS
PSNH purchases a portion of its electricity requirements pursuant to
long-term contracts with the Yankee companies.  Under the terms of its
agreements, the company pays its ownership share (or entitlement share) of
generating costs, which include depreciation, operation and maintenance
expenses, the estimated cost of decommissioning, and a return on invested
capital.  These costs are recorded as purchased power expense and recovered
through the company's rates.  The total cost of purchases under these
contracts for the units that are operating amounted to $26.5 million in 1993,
$24.8 million in 1992, and $23.9 million in 1991.  See <F1>Note 1, "Summary
Of Significant Accounting Policies-Investments and Jointly Owned Electric
Utility Plant" and <F4>Note 4, "Nuclear Decommissioning" for more information
on the Yankee companies.  

PSNH has entered into various arrangements for the purchase of capacity and
energy from nonutility generators.  Some of these arrangements generally have
terms from 20 to 30 years, and require the  
24

company to purchase the energy at specified prices or formula rates.  For the
12 months ended December 31, 1993, 14 percent of NU system load requirements
was met by cogenerators and small power producers.  The total cost of the
company's purchases under these arrangements amounted to $133.4 million in
1993, $92.1 million in 1992, and $105.7 million in 1991.  These costs are
eventually recovered through the company's rates.

In an effort to control cost and price increases from nonutility generators,
PSNH is in the process of attempting to renegotiate new rate orders with 13
nonutility generators.  Settlement agreements have been reached with certain
nonutility generators and have been filed with the NHPUC for approval. 
Negotiations continue with the remaining nonutility generators.   

PSNH entered into a buy-back agreement to purchase the capacity and energy of
the New Hampshire Electric Cooperative, Inc. (NHEC) and to pay all of NHEC's
Seabrook costs for a ten-year period which began July 1, 1990.  The total
cost of purchases under this agreement was $14.4 million in 1993, $13.8
million in 1992, and $11.6 million in 1991.  Part of these costs is collected
currently through the FPPAC and part is deferred for future collection in
accordance with the Rate Agreement.  In connection with the agreement, NHEC
agreed to continue as a firm-requirements customer of PSNH for 15 years.   

The estimated annual cost of PSNH's significant purchased power arrangements
is provided below:

                        
- ---------------------------------------------------------------------------- 

                      1994          1995         1996        1997       1998
                      ----          ----         ----        ----       ---- 

                                                                            
                                       (Millions of Dollars) 

Yankee companies. . $ 26.5        $ 29.7       $ 32.2      $ 29.4     $ 34.0 
Nonutility 
  generators. . . .  142.7         145.4        148.9       152.5      156.1 
NHEC. . . . . . . .   14.6          15.2         16.2        24.4       32.4  
                        
                     
                            
- ---------------------------------------------------------------------------- 

                 
            
HYDRO-QUEBEC
Along with other New England utilities, PSNH entered into agreements to
support transmission and terminal facilities to import electricity from the
Hydro-Quebec system in Canada.  PSNH is obligated to pay, over a 30-year
period, its proportionate share of the annual operation, maintenance, and
capital costs of these facilities, which are currently forecast to be $53.8
million for the years 1994-1998, including $11.6 million for 1994. 

PROPERTY TAXES
PSNH and CY have significant court appeals pending for property tax
assessments in the towns of Bow, New Hampshire, and Haddam, Connecticut,
respectively, concerning production plant.  In each case, the central issue
is the fair market value of utility property.  The company believes that
properly derived assessments that recognize the effect of rate regulation
will result in fair market values that approximate net book cost.  This is
the assessment level that taxing authorities are predominantly using
throughout Connecticut, Massachusetts, and some of New Hampshire.  However,
towns such as Bow and Haddam advocate a method that approximates reproduction
cost.  The company estimates that, for the assessments in the towns where the
appeals are pending, the change to a reproduction cost methodology could
result in property tax valuations approximately three times greater than
values approximating net book cost.  Although PSNH and CY are currently
paying  property taxes based on the 
25

higher assessments, to date, the higher assessments have not had a material
adverse effect on CY or the company.  

The company believes that assessment levels that approximate net book cost
accurately reflect the fair market value of regulated utility property. 
However, because of uncertainties associated with the court appeals and the
potential impact of adverse court decisions on property tax assessment policy
in New Hampshire and Connecticut, the company cannot estimate the potential
effects of adverse court decisions on future results of operations or
financial condition.  However, the company believes that, based upon past
regulatory practices, it would be allowed to recover any increased property
tax assessments prospectively beginning at the time new rates are
established.
        
DEFERRED RECEIVABLE FROM AFFILIATED COMPANY
At the time PSNH emerged from bankruptcy on May 16, 1991, in accordance with
the phase-in under the Rate Agreement, it began accruing a deferred return on
a portion of its Seabrook investment.  From May 16, 1991 to the Acquisition
Date, PSNH accrued a deferred return of $50.9 million.  On the Acquisition
Date, PSNH sold the $50.9 million deferred return to NAEC as part of the
Seabrook-related assets.

At the time PSNH transferred the deferred return to NAEC, it realized, for
income tax purposes, a gain that is deferred under the consolidated income
tax rules.  This gain will be restored for income tax purposes when the
deferred return of $50.9 million, and the associated income taxes of $32.9
million, are collected by NAEC through the Contract.  When NAEC recovers the
$32.9 million in years eight through ten of the Rate Agreement, it is
obligated to make corresponding payments to PSNH.  

On the Acquisition Date, PSNH recorded the $32.9 million of income taxes
associated with the deferred return as a deferred receivable from NAEC, with
a corresponding entry to deferred revenue, on its Balance Sheet.  In 1993,
due to changes in tax rates, this amount was adjusted to $33.3 million.  

<F12>
12.     FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each of the following financial instruments:

Cash, special deposits and nuclear decommissioning trusts:  The carrying
amounts approximate fair value.

Preferred stock and long-term debt:  The fair value of PSNH's securities is
based upon the quoted market price for those issues or similar issues. 
Adjustable rate securities are assumed to have a fair value equal to their
carrying value. 
26

The carrying amounts of PSNH's financial instruments and the estimated fair
values are as follows:

                                                                             

                        
- ---------------------------------------------------------------------------- 
At December 31, 1993                Carrying Amount         Fair Value       
- ---------------------------------------------------------------------------- 

                                           (Thousands of Dollars) 
Preferred stock subject to 
  mandatory redemption . . . . . .      $125,000              $139,375 
Long-term debt - 
  First Mortgage Bonds . . . . . .       342,500               359,878 
  Other long-term debt . . . . . .       751,485               783,389 
                                                                             
- ---------------------------------------------------------------------------- 

                 

- ---------------------------------------------------------------------------- 
At December 31, 1992                   Carrying Amount         Fair Value    
- ----------------------------------------------------------------------------  
                                              (Thousands of Dollars) 
Preferred stock subject to 
  mandatory redemption . . . . . .      $125,000              $140,625 
Long-term debt - 
  First Mortgage Bonds. . . . . . .      342,500               385,747 
  Other long-term debt. . . . . . .      845,485               861,297 
                       

                                             
- ---------------------------------------------------------------------------- 

                       
                 

The fair values shown above have been reported to meet disclosure
requirements and do not purport to represent the amounts that those
obligations would be settled at.

In May 1993, the FASB issued Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities (SFAS
115)."  SFAS 115 requires companies to disclose the classification of
investments in debt or equity securities based on management's intent
and ability to hold the security.  SFAS 115 also requires disclosure of the
aggregate fair value, gross unrealized holding gains, gross unrealized
holding losses and amortized cost basis by major security type.  Effective
January 1, 1994, PSNH will adopt SFAS 115 on a prospective basis.  PSNH
anticipates that the adoption of SFAS 115 will not have a material impact on
future results of operations or financial position. 
27

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
of Public Service Company of New Hampshire:


We have audited the accompanying balance sheets of Public Service Company of
New Hampshire (a New Hampshire corporation and a wholly owned subsidiary of
Northeast Utilities) as of December 31, 1993 and 1992, and the related
statements of income, common equity and cash flows for the year ended
December 31, 1993 and the periods from January 1, 1992 to June 4, 1992 and
June 5, 1992 to December 31, 1992.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Public Service Company of
New Hampshire as of December 31, 1993 and 1992, and the results of its
operations and cash flows for the year ended December 31, 1993 and the
periods from January 1, 1992 to June 4, 1992 and June 5, 1992 to December 31,
1992, in conformity with generally accepted accounting principles.  

As discussed in <F1>Note 1 to the financial statements, "Summary of
Significant Accounting Policies - Accounting Changes," effective January 1,
1993, Public Service Company of New Hampshire changed its methods of
accounting for income taxes and postretirement benefits other than pensions. 


                                                /S/ ARTHUR ANDERSEN & CO.     
                                                    ARTHUR ANDERSEN & CO. 

Hartford, Connecticut
February 18, 1994
28

INDEPENDENT AUDITOR'S REPORT


The Board of Directors
Public Service Company of New Hampshire

We have audited the balance sheet and statement of capitalization of Public
Service Company of New Hampshire as of December 31, 1991 (not presented
herein), and the related statements of income, cash flows and common stock
equity for the periods January 1, 1991 to May 15, 1991, and May 16, 1991 to
December 31, 1991.  These financial statements are the responsibility of
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Public Service Company of
New Hampshire at December 31, 1991 and the results of its operations and its
cash flows for the periods January 1, 1991 to May 15, 1991 and May 16, 1991
to December 31, 1991.




/S/ KPMG Peat Marwick
    KPMG Peat Marwick
    Boston, Massachusetts
    February 7, 1992

29

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
                        
                   
MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                


This section contains management's assessment of Public Service Company of
New Hampshire's (the company or PSNH) financial condition and the principal
factors having an impact on the results of operations.  The company is a
wholly-owned subsidiary of Northeast Utilities (NU).  This discussion
should be read in conjunction with the company's financial statements and
footnotes.

FINANCIAL CONDITION

Overview

On June 5, 1992 (the Acquisition Date),  NU and PSNH completed an affiliation,
which represented the second step of a two-step bankruptcy court approved plan
(the Plan) that was devised in 1989 to return the then-bankrupt company to
financial health.  The first step took place on May 16, 1991 (the Reorganization
Date) when PSNH emerged from bankruptcy as a stand-alone company, subject to a
Merger Agreement (the Merger Agreement) with NU's subsidiaries Northeast
Utilities Service Company and NU Acquisition Corporation (NUAC).

The final step in the affiliation plan occurred on June 5, 1992, when NUAC was
merged into the company pursuant to the Merger Agreement and the company became
a wholly owned operating subsidiary of NU.  In a related transaction, the
company's 35.6 percent share of the Seabrook 1 nuclear power plant (Seabrook)
and other Seabrook-related assets were transferred to North Atlantic Energy
Corporation (NAEC), another wholly owned subsidiary of NU.  On June 29, 1992,
PSNH's New Hampshire Yankee division was dissolved and North Atlantic Energy
Service Corporation, a wholly owned subsidiary of NU, received approval to
manage Seabrook as agent for the Seabrook joint owners.

At the Acquisition Date, the company and NAEC entered into the Seabrook Power
Contract, under which the company is obligated to buy from NAEC, and NAEC is
obligated to sell to the company, all of NAEC's capacity and output of Seabrook
for a period equal to the length of the Nuclear Regulatory Commission full-power
operating license for Seabrook (through 2026).  Under the contract, the company
is unconditionally obligated to pay NAEC's "cost of service" during the period
whether or not Seabrook is operating and without regard to the cost of
alternative sources of power.  In addition, the company will be obligated to pay
decommissioning and project cancellation costs after the termination of the
operating license.

NAEC's "cost of service" includes all of its prudently incurred Seabrook-related
costs, including operation and maintenance expense, fuel expense, property tax
expense, depreciation expense, certain overhead and other costs, and a phased-in
return on its Seabrook investment.  The Seabrook Power Contract established the
initial recoverable investment at Seabrook at $700 million (Initial Investment),
plus any capital additions, net of depreciation.

The company's net income for the 12 months ended December 31, 1993 was $52.2
million.  The 1993 net income reflects a one-time $3 million charge to income
in the third quarter of 1993 for the costs of an employee reduction program. 
The company's workforce was reduced by about 18 percent in 1993 through an
employee reduction program that involved early retirements and involuntary
terminations.

Retail sales for 1993 increased 1.4 percent as compared to 1992, as a result of
warmer summer weather which offset the effects of a sluggish New Hampshire
economy.  The company expects retail sales growth of about 1 percent in 1994,
based on some expected improvement in the economy.

30

In 1994, the company will continue to face challenges associated with a lagging
economy and competition.  Competition within the electric utility industry is
increasing.  In response, the company has developed, and is continuing to
develop, a number of initiatives to retain and continue to serve its existing
customers and to expand its retail customer base.  These initiatives are aimed
at keeping customers from either leaving the company's retail service territory
or replacing the company's electric service with alternative energy sources.  

The cost of doing business, including the price of electricity, is higher in the
Northeast than in most other parts of the country.  Relatively high energy and
other costs of doing business in New England also contribute to competitive
disadvantages for many industrial and commercial customers of PSNH.  These
disadvantages have aggravated the pressures on business customers in the current
weakened regional economy.  The company is working with the New Hampshire Office
of Business and Industrial Development to package development incentives for a
variety of retail and wholesale customers.  These economic development packages
may include electric rate discounts, as well as technical support, and energy
conservation services.  Targeted rate reductions in effect at the end of 1993
to a limited group of large customers were successful in preserving company
revenues of approximately $15 million.  The amount of discounts provided to
customers may increase in the future as the company intensifies its efforts to
retain existing customers and gain new customers.

The ability of retail customers to select an electricity supplier and then force
the local electric utility to transmit the power to the customer's site is known
as "retail wheeling". While wholesale wheeling is mandated by the Energy Policy
Act of 1992, under limited circumstances, retail wheeling is not required in the
company's jurisdictions.  In New Hampshire, there have been no legislative
proposals on retail wheeling to date. 

NU management has taken steps to make the NU system companies, including
PSNH, more competitive and profitable in the changing utility environment.  A
systemwide emphasis on improved customer service is a central focus of the
reorganization of NU that became effective on January 1, 1994.  The
reorganization entails realignment of the system into two new core business
groups.  The first core business group is devoted to energy resource
acquisition and wholesale marketing and focuses on nuclear, fossil, and
hydroelectric generation, wholesale power marketing, and new business
development.  The second core business group oversees all customer service,
transmission and distribution operations, and retail marketing in New
Hampshire, Connecticut, and Massachusetts.  These two core business groups
are served by various support functions.

In connection with NU's reorganization, the system companies have begun a
corporate reengineering process which should help PSNH to identify opportunities
to become more competitive while improving customer service and maintaining
excellent operational performance.  NU has aggressive cost-reduction targets
over the next three years, which should help enable PSNH to remain competitive. 
 
To date, PSNH has not been materially affected by competition and it does not
foresee substantial adverse effects in the near future unless the current
regulatory structure is substantially altered.  The company believes the steps
it is taking will have significant, positive effects in the next few years.  In
addition,  PSNH benefits from a diverse retail base.  The company has no
significant dependence on any one customer or industry.  The NU system's
extensive transmission facilities and diversified generating capacity are all
strong positive factors in the regional wholesale power market.  NU serves about
30 percent of New England's electric needs and is one of the 20 largest electric
utility systems in the country. 
  
Achieving measurable improvements in earnings in 1994 will depend in part on
the success of the company's wholesale power marketing, customer retention
and reengineering efforts.  These efforts should help increase earnings and
improve the company's competitive position.

31

Rate Matters

Deferred charges at December 31, 1993 were $1.0 billion, which includes
$769.5 million for the regulatory asset under the rate agreement with the
state of New Hampshire and $122.5 million for costs deferred under PSNH's
energy adjustment clause.  The regulatory asset was established under PSNH's
reorganization plan. The Rate Agreement provides for the recovery of $425
million of the regulatory asset over the seven-year period ending May 1998
with the remaining amount to be amortized over a 20 year period.  Management
expects that substantially all of the deferred charges will be recovered
through future rates.   

The company adopted Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes, in 1993.  Under SFAS No. 109, the company
reflected a regulatory asset of $54.3 million and a deferred tax liability
for the cumulative amount of income taxes associated with timing differences
for which deferred taxes had not been provided but are expected to be
recovered from customers in the future.  The adoption of SFAS No. 109 has not
had a material effect on results of operations.

The company also adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, in 1993.  Adopting SFAS No. 106
has not had a material impact on financial condition or results of operations
because the company is currently recovering these costs from customers.

See the "Notes To Financial Statements" for further details on deferred
charges and recently adopted accounting standards.

PSNH's rates are determined under a rate agreement executed by the Governor
and the Attorney General of New Hampshire in 1989 and subsequently approved
by the New Hampshire Public Utilities Commission (NHPUC) (the Rate
Agreement).  The Rate Agreement sets out a comprehensive plan of rates for
PSNH, providing for seven base rate increases of 5.5 percent per year (the
fixed-rate period), and a comprehensive fuel and purchased power adjustment
clause (FPPAC).  The fourth base rate increase took place on June 1, 1993. 
The remaining three base rate increases are scheduled to be put into effect
annually on each June 1.   

The FPPAC recovers or refunds the difference between actual prudent energy
and purchased power costs, including the costs incurred under the Seabrook
Power Contract and the costs included in base rates.  The FPPAC is reviewed by
the NHPUC every six months and adjusted to reflect actual fuel and purchased
power costs and to anticipate expenditures for the next six-month period.

In June 1993, PSNH's base rates increased by 6.2 percent.  The increase above
the 5.5 percent under the Rate Agreement reflected a temporary increase to
recover the increased costs associated with recently enacted tax legislation. 
Concurrently, the FPPAC rate was lowered resulting in a net average rate
increase of 4.5 percent.  

In November 1993, the NHPUC approved a 1.8 percent increase in PSNH's average
retail rates effective on December 1, 1993 for an increased FPPAC rate.  The
increase was attributed primarily to the anticipated costs of a refueling
outage at Seabrook scheduled to begin in March 1994.  To mitigate the
rate increase the NHPUC approved the collection of the refueling outage costs
over eighteen months.

In January 1994, the NHPUC approved a Memorandum of Understanding between
PSNH, NAEC, Northeast Utilities Service Company and the Attorney General of
the State of New Hampshire relating to certain issues which had arisen under
the Rate Agreement (the Global Settlement).  The Global Settlement addressed
changes in tax legislation in New Hampshire, accounting treatments resulting
from adoption of SFAS No. 106 and SFAS No. 109 and recovery for certain
aspects of PSNH's settlement with the Vermont Electric Generation and
Transmission Cooperative, Inc. (VEG&T), including the purchase by NAEC of
VEG&T's approximately 0.4 percent share of Seabrook among other results. NAEC
will sell the output from the Seabrook interest purchased from VEG&T to PSNH
under an agreement that is substantially similar to the Seabrook Power
Contract.  The Global

32

Settlement as approved allowed the accelerated recognition of tax benefits which
will result in moderate increases in PSNH's earnings in the next several years
beginning in 1993.

The costs associated with purchases from certain small-power producers (SPPs)
over the level assumed in the Rate Agreement are deferred and recovered over
ten-year periods through the FPPAC.  At December 31, 1993, SPP deferrals are
approximately $107.6 million.  A majority of these purchases is under
long-term arrangements (20-30 years) at prices significantly higher than
PSNH's current or projected avoided costs.  PSNH is attempting to renegotiate
these arrangements and must report to the NHPUC on the results of the
negotiations.  

In January 1994, PSNH filed agreements reached with certain SPPs with the
NHPUC which call for PSNH to pay the SPPs a total of $91.8 million.  In
return PSNH would no longer be obligated to buy power from
these SPPs and the SPPs are barred from attempting to provide service to any
customers now on the PSNH system or on the entire NU system.  If approved by
the NHPUC, the agreements will provide benefits to customers over the terms
of the arrangements.  Management expects to recover any payments from its
customers.  The NHPUC will be examining the prudence of PSNH's efforts and
will consider the implementation of temporary rates for the SPPs that have
not settled with PSNH.

As prescribed by the Rate Agreement, NAEC is phasing in its $700 million
initial investment in Seabrook.  As of December 31, 1993, NAEC has included
in rates $385 million of its Seabrook investment.  The remaining investment
($315 million) will be phased into rates over the next three years beginning
May 15, 1994.  The deferred return associated with the amount of investment
that has not been included in rates is $136.3 million through December 31,
1993.  This amount and the additional deferred amounts associated with the
remaining phase-in will be billed to PSNH and recovered through the Seabrook
Power Contract over the period 1997 through 2001.

Environmental Matters

The NU system devotes substantial resources to identify and then to meet the
multitude of environmental requirements it faces.  PSNH has active auditing
programs addressing a variety of different regulatory requirements, including
an environmental auditing program to detect and remedy noncompliance with
environmental laws or regulations.

PSNH is potentially liable for environmental cleanup costs at a number of
sites both inside and outside of its service territory.  To date the future
estimated environmental remediation costs for the sites, which the company
expects to bear legal liability have not been material with respect to the
earnings or financial position of the company.  The extent of additional
future environmental cleanup costs is not estimable due to factors such as
the unknown magnitude of possible contamination and changes in existing laws
and regulatory practices.

The company expects that the implementation of Phase 1 of the 1990 Clean Air
Act Amendments will require only minimal emissions reductions for PSNH.  The
company has more exposure for stringent emission limits for nitrogen oxides
within the next five years.  The costs for meeting Phase II requirements
cannot be estimated at this time because the emission limits have not been
determined. 

The estimated cost of decommissioning PSNH's share of Millstone 3 and NAEC's
share of Seabrook is approximately $12 million and $131.7 million,
respectively, in year-end 1993 dollars.  Under the terms of the Rate
Agreement, the company is obligated to pay NAEC's share of Seabrook's
decommissioning costs, even if the unit is shut down prior to the expiration
of its operating license.  In addition, the company's estimated cost to
decommission its share of the regional nuclear generating units is
estimated to be approximately $46 million.  These costs are being recovered
and recognized over the lives of the units.  Yankee Atomic Electric Company
(YAEC) has begun decommissioning its nuclear facility.  PSNH's estimated
obligation to YAEC has been recorded on the Balance Sheets.  Management
expects that the company will continue to be allowed to recover these costs. 

33

See the "Notes to Financial Statements" for further information regarding
nuclear decommissioning and other environmental matters.

Seabrook Performance 

The Seabrook plant operated at 89.8 percent of capacity for the year ended
December 31, 1993 compared with 77.9 percent in 1992 and a national average
of 70.6 percent for 1993.  Seabrook began commercial operation on June 30,
1990.  The unit was shut down on September 7, 1992, for refueling and
maintenance and returned to service on November 13, 1992.  The next refueling
and maintenance outage is scheduled for March 1994.  

Liquidity And Capital Resources

Cash flows from operations provided the primary source of funds for the
period ended December 31, 1993, while the reacquisition and retirement of
long-term debt, repayment of short-term debt, and investment in utility plant
were the primary uses of funds.   

As a result of the transactions established by the Plan, the company has a
more leveraged capital structure than most other investor-owned public
utilities and is required to make substantial interest payments.  The
company's indebtedness under the Term Loan, Revolving Credit Facility, and
some of the company's pollution control revenue bonds bear interest at
floating rates to be set periodically, causing the company to be sensitive to
prevailing interest rates.  The company has entered into interest rate cap
agreements to reduce the potential impact of upward changes in interest rates
on a portion of its variable rate long-term debt.  To take advantage of favor
able market conditions during 1993, the company refinanced $45 million of 
Pollution Control Bonds. The company expects to refinance a substantial
portion of its Series A and B bonds when they mature in 1996 and 1998,
respectively.  In addition, the company's Term Loan must be repaid in 16
quarterly installments of $23.5 million that commenced in August 1992. 
PSNH's Series A preferred stock has an annual sinking fund of $25 million
beginning in 1997.

The company's construction program expenditures, including allowance for
funds used during construction (AFUDC), for the period 1994 through 1998 are
estimated to be approximately $172.5 million, including $37.5 million for
1994.  The construction program's main focus is maintaining and upgrading the
existing transmission and distribution system, and nuclear and
fossil-generating facilities.  The company does not foresee the need for new
major generating facilities until at least the year 2007.   

Management believes that, as a result of the annual rate increases provided
for by the Rate Agreement and the FPPAC, cash flow from operations should be
sufficient to cover its cash requirements.  The company expects to meet cash
requirements not covered by cash from operations through borrowings under
the Revolving Credit Facility and/or the NU system Money Pool.  The Revolving
Credit Facility's final maturity is May 14, 1994.  At December 31, 1993,
there were no borrowings under the Revolving Credit Facility and $2.5 million
in borrowings outstanding under the Money Pool.  The company may need to
issue new debt in 1994 to finance a buyout of some of its arrangements with
the SPPs. 

See the "Notes to Financial Statements" for further information regarding the
Revolving Credit Facility and the Money Pool.  

Results of Operations

PSNH's results of operations for the 12 months ended December 31, 1993 and
for the period June 5, 1992 through December 31, 1992 reflect the results
after the acquisition.  PSNH's results of operations for the period January
1, 1992 to June 4,1992 and May 16, 1991 to December 31, 1991 reflect the
results of the reorganized

34

company.  Prior to May 16, 1991, PSNH was in bankruptcy.  The results for each
of these periods are not comparable because of the significant impacts on the
company of the acquisition and reorganization.  

Operating Revenues

Operating revenues for the year ended December 31, 1993 decreased $9.9
million, compared to the same period in 1992, primarily due to lower
short-term power sales to other utilities as a result of the
elimination, effective with the acquisition, of sales to NU, and the one-time
impact in 1992 of $15.8 million of revenues released from escrow at the
acquisition date.  These decreases were partially offset by increases under
the Rate Agreement and FPPAC.   The third and fourth steps of the Rate
Agreement were effective June 1, 1992 and 1993.  Retail sales increased 1.4
percent in 1993 over 1992 sales levels.

Operating revenues for the year ended December 31, 1992 increased $88.2
million, compared to the same period in 1991, primarily due to increases
under the Rate Agreement and FPPAC and increased short-term
power sales.  Operating revenues for the year ended December 31, 1992,
include $125.4 million in short-term sales, of which $96.0 million was sold
to NU compared to $108.2 million, of which $97.0 million was sold to NU in
1991.  In addition, retail sales increased approximately 2 percent. 
Operating revenues for the period June 5, 1992 to December 31, 1992, also
include the one-time impact of $15.8 million of revenues released from
escrow.  

Fuel, purchased and net interchange power expense decreased $21.1 million for
the year ended December 31, 1993, compared to the same period in 1992,
primarily due to the timing in the recovery of fuel expenses under the FPPAC.

The payments made by PSNH to NAEC under the Seabrook Power Contract
(excluding fuel expense) are reflected as purchased power capacity costs and
are included in other operation expenses.  The year ended December 31, 1993,
and the period June 5, 1992 to December 31, 1992, include $115.0 million and
$76.0 million, respectively, of costs associated with the "cost of service"
under the Seabrook Power Contract.  Maintenance, depreciation, and taxes
other than income taxes for these periods do not reflect any Seabrook costs
as a result of the transfer of the company's investment in Seabrook to NAEC
and the inclusion of such costs in the Seabrook Power Contract. 

Amortization of regulatory assets, net decreased $20 million for the year
ended December 31, 1993 as compared to the same period in 1992 due to the
amortization of the regulatory liability recognized from the PSNH Global
Settlement.  Approximately $128 million of pre-acquisition losses are being
amortized over six years.  

The company has not recorded a deferred Seabrook return after June 4, 1992
because the company's investment in Seabrook was transferred to NAEC at the
Acquisition Date.  Prior to the transfer of Seabrook to NAEC, a deferred
return was calculated on the portion of the Seabrook investment not
reflected in rate base in accordance with the Rate Agreement.

Bankruptcy-related expenses for the period prior to June 5, 1992, represent
costs associated with PSNH's bankruptcy.  In 1988, PSNH filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code.

The gain on generating projects of $6.5 million for the period prior to June 
5, 1992, represents a first quarter 1992 adjustment related to the settlement
of a Seabrook contractor dispute and a Seabrook property tax abatement. 

Interest on long-term debt and other interest are lower for the year ended
December 31, 1993, as compared to the same period in 1992, due to the
assumption by NAEC, at the acquisition date, of the company's obligations
under the 15.23 percent Notes, paydown of the Term Loan and a reduction in
borrowings under the revolving credit facility.
35
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36










































SELECTED FINANCIAL DATA
- -----------------------------------------------------------------------------
- ------------------------ 

               
               
- -----------------------------------------------------------------------------
- ------------------------ 
                             January 1, 1993    June 5, 1992<F14>* January 1,
1992  May 16, 1991<F15>** 
                                  to                   to                to   
            to 
For the Periods             December 31, 1993   December 31, 1992     June 4,
1992   December 31, 1991
- -----------------------------------------------------------------------------
- -------------------------

                                                     (Thousands of Dollars) 
                                                                  
            
Operating Revenues. . . .      $864,415              $492,559        $381,769 
           $539,827 

Operating Income. . . . .       105,534                61,206          34,250 
             82,755 

Net Income (Loss) . . . .        52,237                29,398          12,778 
             52,694 



                                                                     
                       

        
- -----------------------------------------------------------------------------
- ------------------------ 
At                          December 31, 1993   December 31, 1992  June 4,
1992<F14>* December 31, 1991
- -----------------------------------------------------------------------------
- ------------------------ 

                                                    (Thousands of Dollars)
                                                                     
          
Total Assets. . . . . . . .    $2,774,511          $2,793,768         $2,693,414 
      $2,636,525 

Long-Term Debt <F13>(a) . .     1,093,985           1,187,985          1,488,985 
       1,515,985 

Liabilities Subject to 
    Settlement <F13>(a) . .         -                   -                  -  
              -      

Preferred Stock Subject to
  Mandatory Redemption <F13>(a)  125,000               125,000           
125,000           125,000 

Preferred Stock Not Subject 
  to Mandatory Redemption .       -                     -                  -  
              -      

Obligations Under Seabrook 
  Power Contract and Other 
  Capital Leases <F13>(a) .     856,559               787,826              -  
              -      



<F13>(a)Includes portions due within one year.



<F14>*PSNH was acquired by NU on June 5, 1992 - See <F1>Note 1 of Notes to
Financial Statements.
<F15>**PSNH was reorganized on May 16, 1991 - See <F1>Note 1 of Notes to
Financial Statements.

37
SELECTED FINANCIAL DATA
 


- -----------------------------------------------------------------------------
- -------
                             January 1, 1991  January 1, 1990       January 1,
1989
                                   to                to                to     
   
For the Periods                May 15, 1991   December 31, 1990    December 31,
1989
- -----------------------------------------------------------------------------
- -------                  

                                          (Thousands of Dollars) 
                                                                 
Operating Revenues. . . .      $246,281              $660,122        $624,137 

Operating Income. . . . .        21,616                63,059          98,126 

Net Income (Loss) . . . .      (100,791)             (210,012)       (203,237) 



                                                                     
                       
        
- -----------------------------------------------------------------------------
- --------- 
At                           May 15, 1991<F15>**  December 31, 1990  December
31, 1989
- -----------------------------------------------------------------------------
- ---------                

                                     (Thousands of Dollars) 
                                                               
Total Assets. . . . . . . .    $2,502,237          $2,490,534         $2,447,521


Long-Term Debt<F13>(a). . .         -                   -                  -  
   
Liabilities Subject to 
    Settlement<F13>(a). . .     1,901,803           1,864,681          1,681,199 


Preferred Stock Subject to
  Mandatory Redemption<F13>(a)      -                 420,613            420,613

Preferred Stock Not Subject 
  to Mandatory Redemption .         -                  48,587             48,587 


Obligations Under Seabrook 
  Power Contract and Other 
  Capital Leases<F13>a).  .         -                   -                  -  
   


38
           

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
- -----------------------------------------------------------------------------
- ------------------------
STATISTICS
- -----------------------------------------------------------------------------
- ------------------------

          Gross Electric                    Average
          Utility Plant                     Annual
           December 31,                     Use Per         Electric          

          (Thousands of     kWh Sales     Residential      Customers     
Employees
             Dollars)      (Millions)   Customer (kWh)    (Average)   (December
31,)
- -----------------------------------------------------------------------------
- ------------------------
                                                             
1993        1,990,730         11,146         6,817          397,277        1,426

1992<F16>*  1,894,359         12,294         6,874          394,046        1,680

1991        1,782,894         11,377         7,184          390,793        2,639

1990        2,585,890          8,324         7,015          336,720        2,766
1989        2,555,404          7,656         7,311          383,497        2,786 





                                                                              
                       

- -----------------------------------------------------------------------------
- ------------------------ 

STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)                            
                       
- -----------------------------------------------------------------------------
- ------------------------

- -----------------------------------------------------------------------------
- ------------------------ 
1993                           March 31          June 30           September 30 
     December 31 
- -----------------------------------------------------------------------------
- ------------------------ 
                                                 (Thousands of Dollars) 
                                                                  
          
Operating Revenues. . . . .   $224,705          $192,360             $222,717 
         $224,633 
                              ========          ========             ======== 
         ========
Operating Income. . . . . .   $ 30,411          $ 17,133             $ 19,678 
         $ 38,312
                              ========          ========             ======== 
         ======== 
Net Income (Loss) . . . . .   $ 15,558          $  2,995             $  8,583 
         $ 25,101
                              ========          ========             ======== 
         ========
                                                                              
                      

               

- -----------------------------------------------------------------------------
- ------------------------ 

                                              April 1 -    June 5 -
1992<F16>*                        March 31    June 4       June 30         Sept.
30    Dec. 31     
- -----------------------------------------------------------------------------
- ------------------------ 

                                                  (Thousands of Dollars) 
                                                                  
        
Operating Revenues. . . . .     $252,707        $129,062    $ 74,182       
$204,161   $214,216
                                ========        ========    ========       
========   ========
Operating Income. . . . . .     $ 34,094        $    156    $ 17,112        $
22,452   $ 21,642
                                 ========       ========    ========       
========   ======== 
Net Income (Loss) . . . . .     $ 27,810        $(15,032)   $ 12,478        $
10,379   $  6,541
                                 ========       ========    ========       
========   ======== 



<F16>*PSNH was acquired by NU on June 5, 1992 - See <F1>Note 1 of Notes to
Financial Statements.

39  



















                   PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 



                           First Mortgage Bonds
                           --------------------
                      Trustee and Interest Paying Agent
                    First Fidelity Bank, N.A., New Jersey
                             765 Broad Street
                             Newark, NJ 07102


                              Preferred Stock
                              ---------------
            Transfer Agent, Dividend Disbursing Agent and Registrar          

           Northeast Utilities Service Company Shareholder Services          

                 P.O. Box 5006, Hartford, Connecticut 06102-5006 




                          1994 Dividend Payment Dates
                                10.60% Series A
               March 31, June 30, September 30, and December 31 

                  Address General Correspondence in Care of: 
                      Northeast Utilities Service Company
                         Investor Relations Department
                                P.O. Box 270
                        Hartford, Connecticut 06141-0270
                              Tel. (203) 665-5000



                                General Office
                                1000 Elm Street
                                  P.O. Box 330
                         Manchester, New Hampshire 03105
                         _______________________________

The data contained in this Report is submitted for the sole purpose of
providing information to present stockholders about the Company.