COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF PUBLIC UTILITIES

Exhibit 10.2

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

SETTLEMENT AGREEMENT

COMMONWEALTH OF MASSACHUSETTS

DEPARTMENT OF PUBLIC UTILITIES

SETTLEMENT AGREEMENT

WHEREAS, this Settlement Agreement is entered into by and between NSTAR Electric Company (“NSTAR Electric”), NSTAR Gas Company (“NSTAR Gas”) and Western Massachusetts Electric Company (“WMECO”) (together the “Companies”), and the Massachusetts Department of Energy Resources (“DOER”), collectively, the “Settling Parties”, with regard to the Joint Petitioners’ proposed merger application and ancillary matters pending before the Department of Public Utilities (“Department”) in the above-referenced proceeding:

WHEREAS, the Settling Parties have engaged in negotiations with regard to the matters specified in the articles of this Settlement Agreement; and

WHEREAS, the Settling Parties have raised competing and disputed claims with regard to the factors considered by the Department in reviewing a proposed merger application, including, but not limited to the impact of the merger on the advancement of the Commonwealth’s clean energy goals established by the Green Communities Act (“GCA”) and the Global Warming Solutions Act (“GWSA”); long-term strategies that will assure a reliable, cost-effective energy delivery system; the impact on rates, service quality, and post-merger financial integrity; the equitable allocation of merger benefits; the effect on competition, and societal and economic impacts, but wish to resolve those matters on mutually agreeable terms, and without establishing any new precedent or principle applicable to any other proceedings; and

WHEREAS, the Settling Parties have the mutual objective of resolving the competing and disputed claims with respect to DOER’s Renewed Motion for Stay of the Proceedings, filed with the Department on July 14, 2011, in this proceeding; and

WHEREAS, the Settling Parties have the mutual objective of establishing a regulatory framework to take effect upon the Department’s approval of the Proposed Merger in order to further the Commonwealth’s policies on the reduction of greenhouse gas emissions and to secure long-term cost savings available from the Proposed Merger for customers.

WHEREAS, it is the objective of the Settling Parties to allocate the impacts of the Proposed Merger among the various states in which the merged entity will operate in a way that achieves comparability among the states with respect to merger savings, service improvements and employment impacts, and the Settling Parties have structured this Settlement Agreement to achieve such comparability, and are committed to structuring any settlement agreements in other jurisdictions in a way that will maintain such comparability.

NOW THEREFORE, in consideration of the exchange of promises and covenants herein contained, the legal sufficiency of which is hereby acknowledged, the Settling Parties agree, subject to approval by the Department, as follows:

ARTICLE 1: MERGER-RELATED FINANCIAL BENEFITS

The Settling Parties recognize the value of providing merger savings to customers immediately, and of providing stable electric and natural gas prices over an extended period of time. Accordingly, the Settling Parties have agreed to the following provisions:

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ARTICLE 2: CORPORATE LEADERSHIP ON CLIMATE CHANGE

The Settling Parties recognize that, as a result of the merger, the Companies will be part of a regional utility having significant size and substantial impact. As such, the Companies recognize their obligation to play a strong leadership role with respect to the advancement of the Commonwealth’s climate change policies. Therefore, the Settling Parties agree as follows:

Notwithstanding the foregoing, NSTAR Electric shall include as a provision in its contract with Cape Wind, and the Department shall issue an Order in this proceeding to the effect that, if Cape Wind does not commence physical construction of the facility prior to December 31, 2015, then NSTAR Electric shall terminate the Cape Wind Contract as of December 31, 2015. If the Cape Wind Contract has been terminated, then NSTAR Electric shall issue a request for proposal (“RFP”) for new Massachusetts RPS Class-I qualified renewable contract(s) with a term of at least 15 years, for approximately 2.0 percent of its 2013 electric load requirement. The RFP shall be issued no later than March 31, 2016 in accordance with the provisions of procurement obligations under Section 83 of the GCA; provided, however, that in the event that Cape Wind, its successors or assigns, or another party representing its interests, challenges the

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validity or effectiveness of NSTAR Electric’s termination of the Cape Wind Contract, NSTAR Electric shall issue such RFP, but shall not be required to execute a renewable contract(s) resulting from such RFP, until there has been a final determination that said contract has been terminated. The alternative renewable contract(s) resulting from the RFP will be proposed to the Department for review and approval. For purposes of this paragraph, “physical construction” shall mean any physical installation of equipment or materials into the seabed of the Cape Wind construction site that is integral to the assembly of the wind turbine generation units. The Cape Wind Contract shall provide that the determination as to whether physical construction has commenced shall be made by the Department, upon petition by NSTAR Electric.

The costs associated with the Cape Wind Contract or any alternative long-term renewable contract entered into in accordance with paragraph 2.2 shall be recovered from NSTAR Electric distribution customers, with the difference between the contract price paid by NSTAR Electric and net revenues received to be charged or credited to distribution customers in accordance with Department practice.

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Commencing in 2013, NSTAR Electric and WMECO shall increase their aggregate energy efficiency savings target to at least 2.5% of retail sales annually through energy efficiency, so long as there is no material change in the framework for assessing the success of the program and associated incentives, or providing for program funding. This annual commitment will remain in place until the expiration of Base-Rate Freeze period. If the Energy Efficiency Advisory Council (“EEAC”) determines that the minimum target established in the 3-year plans during this period should be increased to a level above 2.5%, and the Department approves the EEAC’s minimum savings target, NSTAR Electric and WMECO shall be required to meet that higher standard, accordingly.

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ARTICLE 3: EQUITY AND TRANSPARENCY

The Settling Parties believe that it is critical to maintain customer service levels while merger efficiencies are being achieved; that any merger-related workforce reductions should be shared equitably across the several states in which the utilities operate, and that post-merger utility reporting should meet high standards of accuracy. Accordingly, the Settling Parties commit to the following:

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ARTICLE 4: DEPARTMENT APPROVALS

ARTICLE 5: OTHER CONDITIONS

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The signatories listed below represent that they are authorized on behalf of their principals to enter into this Settlement Agreement.

Dated: February 15, 2012

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