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NSTAR Comment Letter dated October 26, 2005

October  26,   2005

FILED VIA EDGAR

Mr. Michael Moran

Branch Chief

Securities and Exchange Commission

Division of Corporation Finance

Mail Stop 3561

450 Fifth Street, N. W.

Washington, D.C. 20549

RE:   Follow-up Responses to the SEC Review Letter dated June 29, 2005

NSTAR

File No. 1-14768

Form 10-K for the year ended December 31, 2004

Boston Edison Company

File No. 1-2301

Form 10-K for the year ended December 31, 2004

Dear Mr. Moran:

The following are NSTAR's responses to the Commission's Follow-up Review Comment Letter referenced above in connection with the NSTAR and Boston Edison Company 2004 Annual Reports on Forms 10-K.  In order to facilitate your review,
we have included each of your comments followed by our respective responses.

NSTAR and Boston Edison Company acknowledge that (i) the Staff's comments and any changes to the NSTAR and Boston Edison Company SEC filings in response to the Staff comments does not foreclose the Commission from taking any actions
with respect to the filings, (ii) NSTAR and Boston Edison Company are responsible for the adequacy and accuracy of the disclosure in their filings, and (iii) NSTAR and Boston Edison Company may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.

NSTAR Form 10-K for the Year Ended December 31, 2004

Comment 1:

We note your response to comment one of our letter dated June 3, 2005.  Please explain in detail why you have not classified your goodwill as a regulatory asset.  In this regard, paragraph 30 of SFAS no. 71 indicates that
if the regulator permits all or a portion of goodwill to be amortized over a specific time period as an allowable cost for rate-making purposes, the regulator's action provides reasonable assurance of the existence of a regulatory asset.  We may have further
comment.

Response 1:

Effective with the filing of NSTAR'S Form 10-Q for the quarter ending September 30, 2005, NSTAR will classify its previously recorded goodwill to a regulatory asset on the Company's Condensed Consolidated Balance Sheet. In addition, as
required by SFAS 109, "Accounting for Income Taxes", NSTAR will record the appropriate level of accumulated deferred income taxes on the unamortized balance of goodwill along with the offsetting regulatory asset. This change in accounting will be applied
retrospectively to all prior periods reflected on the current financial statements. The attached Exhibit A reflects the pro-forma impact of this adjustment along with the appropriate draft of the footnote disclosure.

In addition, as a result of this change NSTAR will reallocate a portion of the previously recorded goodwill from its three non-public rate regulated subsidiaries, collectively, the Commonwealth entities to Boston Edison Company. Similar
to NSTAR, Boston Edison Company will classify this goodwill as a regulatory asset and provide the appropriate level of accumulated deferred income taxes. This will align with Boston Edison Company's rate recovery for these costs. This transfer will be effective for
the quarter ending September 30, 2005 and will be accounted for in the form of a capital contribution from NSTAR.

Boston Edison Company Form 10-K for the Year Ended December 31, 2004

Comment 2:

We note your response to comment 3 of our letter dated June 3, 2005.  The guidance to the implementation of SFAS no. 87, in particular questions 86 and 87, indicates that each subsidiary should account for its
participation in the overall single-employer pension plan as a participation in a multiemployer pension plan.  The parent company should, of course, account for the pension plan as a single-employer pension plan in its consolidated financial
statements.  In this regard, explain to us why the reimbursement from Boston Edison's affiliates would not net against the prepaid pension asset, instead of creating an inter-company payable.  In this regard, we assume you are only reflecting the amount of
pension expense related to Boston Edison on its stand alone consolidated income statement.  Quantify the amount of the reimbursement that Boston Edison received in 2004 from affiliates, and indicate to us the period for which such reimbursement relates.  It
is unclear to us why Boston Edison is reflecting the entire prepaid pension asset on its consolidated balance sheets.

Response 2:

We agree with your comment relating to the guidance to the implementation of SFAS 87, questions 86 and 87, as it pertains to the suggested accounting treatment of the "parent company" which indicates that it should account for its
pension plan as a single-employer pension plan on its consolidated balance sheet. Based on this guidance and the fact that Boston Edison Company is the sponsor of the NSTAR Pension Plan, Boston Edison Company represents the "parent company", as referenced in question
86.   In that regard, Boston Edison Company has treated its pension accounting in accordance with SFAS 87 as a single-employer plan.  As a result, the reimbursement from Boston Edison's affiliates was not netted against its prepaid pension asset in order to
retain its appropriate consolidated level of its prepaid pension asset in accordance with SFAS 87.

Boston Edison records the full SFAS 87 pension expense and in turn allocates the portion of pension expense pertaining to other affiliates. Therefore, on a stand alone basis Boston Edison only recognizes net pension expense relating to
its business activity which is in accordance with its rate-recovery mechanism approved by the MDTE.

As disclosed in Boston Edison's 2004 Form 10-K, the reimbursement received from its affiliates in 2004 amounted to $150.6 million and relates to the years 2000 through 2003.

Based on the guidance referenced above, Boston Edison will continue to account for its pension transaction as a single-employer plan and reflect the entire prepaid pension asset or pension liability on its consolidated Balance
Sheets.

If you have any questions regarding these responses or require further information, please contact John Moreira, Director of Financial Reporting, at (781) 441-8887 or the undersigned at (781) 441-8801.

Sincerely,

/s/ ROBERT J. WEAFER, JR.

Robert J. Weafer, Jr.

   Vice President, Controller

      and Chief Accounting Officer

Exhibit A

Part I.  Financial Information

Item 1.  Financial Statements

NSTAR

Condensed Consolidated Statements of Income - PRELIMINARY

(Unaudited)

(in thousands, except earnings and dividends declared per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2005

2004

2005

2004

Operating revenues

$

   858,495

$

 781,510

$

2,430,545

$

  2,241,205

Operating expenses:

  Purchased power and cost of gas sold

462,118

  430,735

1,341,648

1,248,526

  Operations and maintenance

104,780

103,182

336,190

312,833

  *  Depreciation and amortization

85,722

62,052

249,268

192,602

  Demand side management and renewable energy programs

18,768

18,165

52,133

51,233

  Property and other taxes

23,643

24,904

78,630

78,677

  *  Income taxes

     43,987

   41,204

     90,979

       95,152

    Total operating expenses

   739,018

 680,242

2,148,848

  1,979,023

Operating income

   119,477

101,268

   281,697

     262,182

Other income (deductions):

  Other income, net

3,099

1,668

5,340

5,842

  Other deductions, net

         (399

)

             -

         (969

)

           (417

)

    Total other income, net

       2,700

     1,668

       4,371

         5,425

Interest charges:

  Long-term debt

30,106

30,332

90,794

88,621

  Transition property securitization

12,477

6,845

33,862

21,602

  Short-term debt and other

2,134

2,222

5,073

6,250

  Allowance for borrowed funds used during

    construction (AFUDC)

      (1,039

)

       (234

)

       (2,560

)

          (858

)

      Total interest charges

     43,678

   39,165

    127,169

    115,615

Preferred stock dividends of subsidiary

          490

        490

        1,470

        1,470

Net income

$

78,009

 ======

$

63,281

 =====

$

157,429

 ======

$

150,522

 ======

Weighted average common shares outstanding:

  Basic

106,808

 ======

106,336

 =====

106,738

 ======

106,191

 ======

  Diluted

107,726

 ======

107,396

 =====

107,567

 ======

107,177

 ======

Earnings per common share (Note G):

  Basic

$

0.73

 =====

$

0.60

 =====

$

1.47

 =====

$

1.42

 =====

  Diluted

$

0.72

 =====

$

0.59

 =====

$

1.46

 =====

$

1.40

 =====

Dividends declared per common share

$

0.29

 =====

$

0.2775

 =====

$

0.87

 =====

$

0.8325

 =====

The accompanying notes are an integral part of the condensed consolidated financial statements.

Statement line items denoted by an asterisk reflect the impact of the change in the classification of Goodwill.

NSTAR

Condensed Consolidated Balance Sheets - PRELIMINARY

(Unaudited)

(in thousands)

September 30,

December 31,

2005

2004

Assets

Utility plant in service, at original cost

$

4,545,329

$

4,412,073

Less: accumulated depreciation

    1,123,753

    1,090,924

3,421,576

3,321,149

Construction work in progress

       185,502

       103,866

Net utility plant

3,607,078

3,425,015

Non-utility property, net

146,079

154,963

Equity and other investments

75,416

72,983

Current assets:

Cash and cash equivalents

14,764

12,497

Restricted cash

14,979

10,254

Accounts receivable, net and accrued unbilled revenues

360,505

355,946

*  Regulatory assets

355,845

300,238

Inventory, at average cost

109,086

86,397

Income taxes

86,104

21,063

Other

        11,881

         11,434

Total current assets

      953,164

       797,829

Deferred debits:

Regulatory assets - power contracts

707,065

1,269,651

Regulatory assets - retiree benefit costs

18,145

11,897

*  Regulatory assets - goodwill

663,578

678,698

Regulatory assets - other

954,755

595,140

Prepaid pension

313,321

297,746

Other

        80,539

         87,434

    Total deferred debits

   2,737,403

    2,940,566

    Total assets

$

7,519,140

 ========

$

7,391,356

 ========

The accompanying notes are an integral part of the condensed consolidated financial statements.

Statement line items denoted by an asterisk reflect the impact of the change in the classification of Goodwill.

NSTAR

Condensed Consolidated Balance Sheets - PRELIMINARY

(Unaudited)

(in thousands)

September 30,

December 31,

2005

2004

Capitalization and Liabilities

Common equity:

  Common shares, par value $1 per share,

    200,000,000 shares authorized; 106,808,376 shares in 2005 and

        106,550,282 shares in 2004 issued and outstanding (Note G)

$

106,808

$

106,550

  Premium on common shares

811,861

819,454

  Retained earnings

582,794

518,252

  Accumulated other comprehensive loss

          (3,374

)

         (3,374

)

    Total common equity

    1,498,089

   1,440,882

Cumulative non-mandatory redeemable preferred

  stock of subsidiary

         43,000

        43,000

Long-term debt

1,636,552

1,792,654

Transition property securitization

       787,966

      308,748

  Total long-term debt

    2,424,518

   2,101,402

     Total capitalization

    3,965,607

   3,585,284

Current liabilities:

  Long-term debt

108,803

108,197

  Transition property securitization

138,546

41,048

  Notes payable

148,500

161,400

  Deferred income taxes

11,047

8,072

  Accounts payable

277,234

239,613

  Power contracts

176,064

171,312

  Accrued expenses

      253,951

       231,490

    Total current liabilities

   1,114,145

       961,132

Deferred credits:

  *  Accumulated deferred income taxes and unamortized

    investment tax credits

1,264,772

1,114,588

  Power contracts

707,065

1,269,651

  Pension liability

32,657

31,296

  Regulatory liability - cost of removal

266,331

258,722

  Other

      168,563

       170,683

      Total deferred credits

   2,439,388

    2,844,940

Commitments and contingencies

  Total capitalization and liabilities

$

7,519,140

 ========

$

    7,391,356

 ========

The accompanying notes are an integral part of the condensed consolidated financial statements.

Statement line items denoted by an asterisk reflect the impact of the change in the classification of Goodwill.

NSTAR

Condensed Consolidated Statements of Cash Flows - PRELIMINARY

(Unaudited)

(in thousands)

Nine Months Ended

September 30,

2005

2004

Operating activities:

  Net income

$

157,429

$

150,522

  Adjustments to reconcile net income to net cash

    (used in) provided by operating activities:

    *  Depreciation and amortization

244,249

193,183

    *  Deferred income taxes

170,918

31,795

    AFUDC

(2,560

)

(858

)

    Effects of purchase power contract buy-outs

(554,270

)

-

  Net changes in:

    Accounts receivable and accrued unbilled revenues

(4,559

)

(10,112

)

    Accounts payable

47,217

(37,640

)

    Other current assets

(143,759

)

2,903

    Other current liabilities

23,910

92,322

  Net change from other operating activities

    44,355

 (81,989

)

Net cash (used in) provided by operating activities

   (17,070

)

340,126

Investing activities:

  Plant expenditures (excluding AFUDC)

(280,362

)

(198,600

)

  Increase in restricted cash

(5,425

)

(1,369

)

  Proceeds from sale of property

3,500

14,252

  Investments

     (2,537

)

    (3,412

)

Net cash used in investing activities

 (284,824

)

(189,129

)

Financing activities:

  Long-term debt redemptions

(156,408

)

(187,213

)

  Transition property securitization redemptions

(97,784

)

(51,166

)

  Issuance of transition property securitization

674,500

-

  Issuance of long-term debt

-

300,000

  Debt issue costs

(6,513

)

(1,851

)

  Net change in notes payable

(12,900

)

(118,900

)

  Change in disbursement accounts

(9,596

)

(6,464

)

  Common stock issuance

7,146

3,965

  Dividends paid

   (94,284

)

  (89,817

)

Net cash provided by (used in) financing activities

  304,161

(151,446

)

Net (decrease) increase in cash and cash equivalents

2,267

(449

)

Cash and cash equivalents at the beginning of the year

    12,497

   16,526

Cash and cash equivalents at the end of the period

$

14,764

$

16,077

Supplemental disclosures of cash flow information:

=======

======

Cash paid during the period for:

  Interest, net of amounts capitalized

$

122,344

$

108,361

  Income taxes, net of refunds

$

5,144

$

3,680

Noncash financing activity:

  Noncash common stock issuance

$

-

$

4,063

The accompanying notes are an integral part of the condensed consolidated financial statements.

Statement line items denoted by an asterisk reflect the impact of the change in the classification of Goodwill.

Note L.  Change in Classification of Goodwill

In the third quarter of 2005, NSTAR changed its classification of the amount included in the 2004 Condensed Consolidated Balance Sheet as Goodwill to a Deferred debit - Regulatory asset – goodwill.  As a result of this change
in classification to a regulatory asset and in accordance with the requirements of SFAS 109, “Accounting for Income Taxes,” the Company recognized $268.2 million of accumulated deferred income taxes on the unamortized balance of Goodwill along with an
offsetting regulatory asset as of September 30, 2005.  The new classification of goodwill was adopted to better align with the Company's rate structure.   For comparative purposes, NSTAR has adopted the new classification retrospectively to the financial
statements of prior periods.  The regulatory asset, representing the accumulated deferred income taxes, will be amortized over the remaining life of the regulatory asset – goodwill in accordance with the Company’s merger rate