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Bond Company Description

Description of PSNH Funding LLC 3 rate reduction bonds.

Securities Offered

Offered $635,663,200 in Rate Reduction Bonds (“RRBs”), Series 2018-1, scheduled to pay principal semi-annually and sequentially in accordance with the expected sinking fund schedule.

Issuing Entity and Capital Structure

PSNH Funding LLC 3 (“Issuing Entity”) is a special purpose Delaware limited liability company. Public Service Company of New Hampshire (“PSNH”) is the Issuing Entity’s sole member and owns all of its equity interests. The Issuing Entity has no commercial operation and was formed solely to purchase and own RRB Property, to issue the RRBs and to perform activities incidental thereto.

For more information, please read “Description of the Issuing Entity” in the prospectus.

In addition to the RRB Property, the Issuing Entity was capitalized with an upfront cash deposit equity contribution from PSNH equal to 0.5% of the RRBs’ initial principal amount issued (held in the capital subaccount) and will have an excess funds subaccount to retain any amounts collected and remaining on a payment date after all payments on the RRBs and all ongoing financing costs have been made.

Puprose of the Transaction

The issuance of the RRBs will enable PSNH to recover certain stranded costs associated with the divestiture of its remaining fossil and hydro-generation assets.

The Financing Act, enacted into New Hampshire law on June 12, 2000 and subsequently amended on July 9, 2015, and the New Hampshire Public Utilities Commission (“NHPUC”) approval of the 2015 Settlement Agreement provide for the issuance of RRBs and specifically authorize the use of securitization by PSNH to recover such stranded costs.

For more information, please read “The Financing Act and the Finance Order” in the prospectus.

State Pledge

The State of New Hampshire has pledged, contracted and agreed with the Issuing Entity, as owner of the RRB Property, and Holders of and the Indenture Trustee for the RRBs that neither the state, nor any of its agencies, including the NHPUC, shall limit, alter, amend, reduce or impair the RRB Charge, RRB Property, the Finance Order, and all rights thereunder or ownership thereof or security interest therein until the RRBs, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged; however nothing in the pledge shall preclude the limitation, alteration, amendment, reduction or impairment if and when adequate provision shall be made by law for the protection of such owner, the Holders and the Indenture Trustees.

For more information, please read “The Financing Act and the Finance Order” in the prospectus.

Address

PSNH Funding LLC 3
Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134