Connecticut agreed Tuesday to endorse Northeast Utilities’ merger with NSTAR in return for $120 million in rate relief, $300 million in system improvements, $20 million in open space and a commitment to keep NU’s headquarters in Hartford.

Gov. Dannel P. Malloy, Attorney General George Jepsen and Consumer Counsel Elin Katz announced a deal negotiated since utility regulators reversed themselves on Jan. 18 and asserted jurisdiction to review the $4.7 billion merger.

“The agreement we’re announcing today does many things, but most importantly, it will ensure that distribution rates for our consumers will stay flat for two and a half years, providing some much needed relief,” Malloy said.

The issue before Connecticut never was a question of blocking the deal between NU, the parent of the state’s largest electric utility, and NSTAR, the provider of electricity to Greater Boston. The negotiations revolved around setting terms.

Negotiators were under intense pressure to reach a settlement since January, when the state Public Utility Regulatory Authority concluded it had jurisdiction: The merger agreement is set to expire April 16.

“The big enemy was time,” Jepsen said.

Katz declined to say if the state was disadvantaged by the short timeline.

“We pushed for it for a year, so we were just happy that it happened,” Katz said of the state jurisdiction. “It’s hard to say what would have happened had we got involved earlier. We think we got a really good deal based on where we are now.”

The merger joins two New England giants: With subsidiaries in Connecticut and western Massachusetts, NU owns the region’s largest electric delivery system; NSTAR is the Bay State’s largest investor-owned gas and electric utility.

Jepsen said a basic question was ensuring that ratepayers benefited from the deal.

“If synergies are being claimed, consumers ought to get their fair share of the savings,” Jepsen said.

Some of those savings will show up immediately in a modest rebate: $25 million in credits, which will save the average customer about $16. More valuable is a freeze in distribution rates until Dec. 1, 2014.

NU also pledges to make $300 million in improvements to the distribution system, with $100 million to be made immediately.

The utility also promises to fairly allocate resources for restoration efforts after major storms, with an updated mutual aid plan due by Sept. 1, 2012.

NU will retain its headquarters in Hartford for at least seven years. The aggregate number of line works will not be reduced, and CL&P will work with community colleges to develop a line worker program.

It also agrees to donate 1,000 acres in four parcels as open space. The land is valued at $20 million and includes: Kings Island in Enfield and Suffield, 188 acres; Skiff Mountain in Sharon, 723 acres; Hanover Road in Newtown, 57 acres; and Bartlett Road in Waterford, 13 acres.

Another 375 parcels with 8,500 acres in 90 communities will remain subject to a memorandum that gives the state or municipality the right of first refusal if NU decides to sell. The memo remains in force until 2024.

An environmental group reacted positively, if cautiously.

“From what we have read, we are pleased with the agreement that has been reached for the NU-NSTAR merger,” said Don Strait, executive director of the Connecticut Fund for the Environment.

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Mark PazniokasCapitol Bureau Chief

Mark is the Capitol Bureau Chief and a co-founder of CT Mirror. He is a frequent contributor to WNPR, a former state politics writer for The Hartford Courant and Journal Inquirer, and contributor for The New York Times.

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