The Formation of Northeast Utilities
The Northeast Utilities system was formed on July 1, 1966, when three companies - The Connecticut Light and Power Company, Western Massachusetts Electric Company (WMECO), and The Hartford Electric Light Company - affiliated under the common ownership of Northeast Utilities (NU), the system's parent company. The NU system was the first new multistate public utility holding company system created since the enactment of the Public Utility Holding Company Act of 1935. In 1967, Holyoke Water Power Company (HWP) joined the affiliation. In 1992, Public Service Company of New Hampshire (PSNH), became a new member of the NU system.

Western Massachusetts Companies (the parent of WMECO) was a Massachusetts business trust chartered in 1927. It was formed as a stockholding company to acquire the shares of stock outstanding in nearly all the electric operating companies in Western Massachusetts. The acquisitions were made by exchanging shares in Western Massachusetts Companies for shares in the individual companies. Thus, a parent entity already existed to facilitate the NU affiliation.

At a special meeting in November of 1965, shareholders of Western Massachusetts Companies approved a name change to Northeast Utilities and amended its Declaration of Trust to permit affiliation with CL&P and HELCO. Hearings before the Securities and Exchange Commission (SEC) were concluded on November 29, 1965, with a formal order approving the plan of affiliation issued by the SEC on April 13, 1966. In brief, the plan contemplated an exchange of NU common shares for the common stock of CL&P and HELCO. Stock solicitation was begun almost immediately and extended through an 11-week period. In a clear display of shareholder approval, just under 99 percent of CL&P and HELCO shares were deposited for exchange. On July 1, 1966, NU was in operation with three operating utility subsidiaries and a new service company, Northeast Utilities Service Company (NUSCO), to centralize corporate services.

The formation of NU was a response to changing power technologies and increasing power demand. The affiliation and the creation of NUSCO organized a corporate entity to meet the problems arising from a sharp increase in the use of electricity and an even sharper rise anticipated for the future.

Discussions for the consolidation were initiated by two of the companies' most senior officers - Howard J. Cadwell, chairman of WMECO, and Raymond A. Gibson, chairman of HELCO - in the spring of 1964. Sherman R. Knapp, chairman of CL&P, was approached by them later that year. His response was immediate and favorable.

Underlying their conversations was a pervasive knowledge that dramatic economic growth in the area demanded the very best in electric and gas service at the lowest possible rates. Through consolidation, they hoped to achieve better coordination of services and economies of scale in the development, generation, distribution and sale of electricity, gas, and energy-related services. (NU no longer provides gas service, however, as explained later.) The companies proposed to integrate their financial, technical, and managerial resources on a single-system basis, intending to produce the synergies of enhanced reliability, greater efficiency, and lower cost of service.

Upon its creation, the NU system became the largest utility in New England and one of the 20 largest in the nation. It had nearly one million customers (846,000 electric and 145,000 gas) and more than 6,000 employees. Its assets, valued at approximately $1 billion, were owned by some 107,000 shareholders. It had a system capacity of 2,489 megawatts and a peak demand of 2,290 megawatts. Its 1965 combined operating revenue was $234,000,000. Of that amount, 89 percent came from the sale of electricity, while gas revenues contributed 11 percent. Gibson was elected NU's chairman of the board, Knapp became president and chief executive, and Cadwell became chairman of the Executive Committee.

Since NU was chartered as a business trust, it is governed by a board of trustees whose function is identical to the board of directors of a corporation. Legally speaking, NU's headquarters is in Massachusetts, but for all practical purposes, its General Offices in Connecticut, is headquarters.

Corporate affiliation of CL&P, HELCO, and WMECO followed an operational association of nearly 40 years which started formally in 1925 with the creation of the nation's first electric power pool - The Connecticut Valley Power Exchange. Even prior to that, the utilities had worked in close cooperation. However, the power pool, in effect, achieved a one-system approach to dispatch and encouraged the coordinated planning and construction of generating and transmission facilities. At the time of the affiliation, the companies were already collaborating on construction of the Connecticut Yankee nuclear plant and had two other installations - Millstone Nuclear Power Station and the pumped-storage hydroelectric development at Northfield Mountain - scheduled for construction.

The history of the NU system therefore begins, through its operating companies and their predecessors, much earlier than 1966. In Connecticut and New Hampshire, it goes back to the mid-nineteenth century, when various gas companies were organized in what was to become the NU service area. In Massachusetts, the NU system history extends even farther into the past because the earliest predecessor company of NU was the Proprietor of Locks and Canals chartered in 1792 to make the Connecticut River navigable around the falls at South Hadley. The roots of NU run deep, reaching back in time almost to the founding of America.

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