UIL Holdings Corporation Announces Second Quarter 2009 Results and Narrows 2009 Earnings Guidance Range

"The decoupling of distribution revenues of our utility subsidiary, The United Illuminating Company (UI), provided the revenue stability the Department of Public Utility Control (DPUC) intended," stated James P. Torgerson, UIL's President and CEO. "The decoupling adjustment has been particularly important given the unseasonably cool summer weather experienced to date. We have also been successful in controlling our operating costs resulting in our distribution business having a reasonable opportunity to achieve its allowed return on equity this year. Now that our recent equity offering has been completed, we are ramping up the UI distribution and transmission capital programs."

In addition, the Company has recently completed a review of its capital expenditure program. Over the next ten years the current projection is $1.7 billion in capital projects with approximately 70% in distribution, 25% in transmission and the remaining 5% in GenConn, UI's 50-50 joint venture with NRG Energy, Inc., which is building new peaking generation plants in Connecticut.

Earnings for the second quarter and first six months of 2009, compared to the same periods in 2008, for continuing operations and discontinued operations and by line of business, (which constitutes a non-GAAP financial measure), are as follows:

                                    Quarter Ended June 30,                   Six Months Ended June 30,
                                    2009        2008            Difference   2009        2008           Difference
Net Income (Loss) ($M)
UI
Distribution, CTA and Other         $  8.1      $  5.7          $     2.4    $  14.9     $  8.0         $   6.9
Transmission                           6.2         6.2     (1)        -         12.3        11.0    (1)     1.3
Total UI Net Income                 $  14.3     $  11.9         $     2.4    $  27.2     $  19.0        $   8.2
UIL Corporate                          (0.5 )      (0.6 )             0.1       (1.3 )      (1.1 )          (0.2 )
Total Continuing Operations         $  13.8     $  11.3         $     2.5    $  25.9     $  17.9        $   8.0
Discontinued Operations - Xcelecom     -           -                  -         (0.1 )      (0.1 )          -
Total Net Income                    $  13.8     $  11.3         $     2.5    $  25.8     $  17.8        $   8.0
Average Shares Outstanding - Basic     27.0        25.1               1.9       26.1        25.1            1.0
EPS                                 $  0.51     $  0.45         $     0.06   $  0.99     $  0.71        $   0.28

(1) Includes favorable true up adjustment of $0.3 million.

Some of the favorable earnings variances in the second quarter and first six months of 2009, compared to the same periods in 2008 resulted from UI's distribution rate case final decision in February 2009. The decoupling adjustment reflects an accrual to true up actual revenues to DPUC allowed revenues in accordance with the decoupling mechanism as approved in the final decision. The relatively mild weather for the year to date contributed to a reduction of kWh usage below amounts assumed in rates. As a result, the decoupling adjustment provided $1.6 million of net income in the second quarter of 2009 and $2.4 million of net income on a year to date basis. The final decision also authorized the allocation of a portion of the uncollectible expense to the Generation Services Charges which contributed to a benefit of $1.0 million in the quarter and $2.0 million on a year to date basis to distribution earnings. In addition, the decision provides for recovery of the increase in pension and postretirement expense for 2009 either in rates or as a regulatory asset for future recovery. Finally, the allocation of customer service expense to transmission in accordance with a May 2008 Federal Energy Regulatory Commission order was favorable to distribution earnings by $0.4 million in the quarter and $1.7 million on a year to date basis. The table below provides the full distribution net income variances for the second quarter and first six months to date of 2009 compared to the same periods in 2008.

Net Income: Favorable/(Unfavorable) ($M) Revenue  Quarter Ended           Six Months Ended
                                                  June 30, '09 vs. '08    June 30, '09 vs. '08
Decoupling adjustment                             $      1.6              $      2.4
Regulatory true up items                                 1.7                     2.2
Distribution rates & pricing                             0.5                     2.9
Other                                                    0.7                     0.5
Sales volume                                             (2.3   )                (2.9   )
O&M Expense
Customer service - allocated                             0.4                     1.7
Uncollectibles                                           1.0                     2.0
Outside services and other expense                       1.3                     2.4
Pension & postretirement                                 (2.6   )                (3.9   )
Other                                                    0.1                     (0.4   )
Distribution Business Net Income variance         $      2.4              $      6.9

The transmission business earnings continued to experience underlying growth both on a quarterly and year to date basis from higher rate base with approximately the same allowed return and equity capitalization compared to the same period in 2008. As previously reported, UI completed the Middletown-to-Norwalk transmission project, which went into service ahead of schedule, in December 2008.

Looking Forward

UIL is narrowing its consolidated earnings estimate for 2009 to $1.83 to $1.97 per share, compared to the previously reported estimate of $1.80 to $2.00 per share.

The estimate for total UI is also being narrowed, to $1.93 to $2.07 per share compared to the previous estimate of $1.90 to $2.10 per share. The components of this guidance within UI have also changed.

The revised estimate for Distribution, CTA & Other is $1.00 to $1.15 per share, compared to the previously reported estimate of $0.90 to $1.10 per share. The change reflects better than anticipated earnings performance mainly due to continued emphasis on cost controls partially offset by dilution from the equity issuance. Expected earnings are based upon the assumption that in 2009 distribution will earn close to its allowed return on equity.

The revised estimate for Transmission is $0.90 to $0.95 per share, compared to the previously reported estimate of $0.95 to $1.05 per share due to dilution from the equity issuance. The transmission business is still expected to experience growth in its rate base at approximately the same equity capitalization and allowed return on equity range of 12.3% to 12.5% as previously reported. The revised earnings estimate reflects the higher projected average shares outstanding resulting from the May 2009 equity issuance.

2009 Earnings Expectations
UI
Distribution, CTA & Other       $1.00 - $1.15
Transmission                    0.90 - 0.95
Total UI (1)                    $1.93 - $2.07
UIL Corporate                   (0.12) - (0.07)
Total Continuing Operations (1) $1.83 - $1.97

(1) Expectations are not intended to be additive.

Second Quarter Earnings Conference Call

In conjunction with this earnings release, UIL will conduct a webcast conference call with financial analysts on Thursday, August 6, 2009, beginning at 10:00 a.m. eastern time. UIL's executive management will present an overview of the financial results followed by a question and answer session. Interested parties, including analysts, investors and the media, may listen live via the internet by logging onto the Investors section of UIL's website at http://www.uil.com. Institutional investors can access the call via Thomson Street Events (www.streetevents.com), a password-protected event management site.

UIL Holdings Corporation (NYSE:UIL), headquartered in New Haven, Connecticut, is the holding company for The United Illuminating Company, a regulated utility providing electricity and energy related services to 324,000 customers in the Greater New Haven and Bridgeport areas. For more information on UIL Holdings, visit us at http://www.uil.com.

Use of Non-GAAP Measures for 2009 Earnings Guidance

UIL Holdings believes earnings per share (EPS) information as presented in its earnings guidance is useful in understanding the earnings expectations for the business, as a whole. The amounts presented in the earnings guidance show the EPS from continuing operations for each of UIL Holdings' lines of business. EPS is calculated by dividing the projected 2009 net income from continuing operations for each line of business by the projected average number of shares of UIL Holdings common stock outstanding for 2009. Total EPS from continuing operations is a generally accepted accounting principles (GAAP)-basis presentation.

Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdings' expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for electricity and other products and services, unanticipated weather conditions, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL Holdings' subsidiary, The United Illuminating Company. The foregoing and other factors are discussed and should be reviewed in UIL Holdings' most recent Annual Report on Form 10-K and other subsequent periodic filings with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

The following are summaries of UIL Holdings' unaudited consolidated financial information for the second quarter and first six months of 2009 and 2008:

UIL HOLDINGS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In Thousands except per share amounts)
(Unaudited)
                                                           Three Months Ended            Six Months Ended
                                                           June 30,                      June 30,
                                                           2009           2008           2009           2008
Operating Revenues
Utility                                                    $  200,161     $  215,938     $  435,433     $  450,355
Non-utility                                                   204            192            441            399
Total Operating Revenues                                      200,365        216,130        435,874        450,754
Operating Expenses
Operation
Purchased power                                               71,972         91,993         175,539        209,519
Operation and maintenance                                     50,359         52,495         102,788        104,914
Transmission wholesale                                        11,322         9,431          23,789         17,982
Depreciation and amortization                                 22,809         25,206         46,796         50,392
Taxes - other than income taxes                               12,914         11,285         27,408         23,561
Total Operating Expenses                                      169,376        190,410        376,320        406,368
Operating Income                                              30,989         25,720         59,554         44,386
Other Income and (Deductions), net                            2,346          2,024          3,817          3,879
Interest Charges, net
Interest on long-term debt                                    9,496          7,092          17,888         14,369
Other interest, net                                           420            572            911            780
                                                              9,916          7,664          18,799         15,149
Amortization of debt expense and redemption premiums          481            434            994            866
Total Interest Charges, net                                   10,397         8,098          19,793         16,015
Income Before Income Taxes, Equity Earnings and
Discontinued Operations                                       22,938         19,646         43,578         32,250
Income Taxes                                                  9,154          8,379          17,717         14,065
Income Before Equity Earnings and Discontinued Operations     13,784         11,267         25,861         18,185
Income (Loss) from Equity Investments                         16             21             28             (253    )
Income from Continuing Operations                             13,800         11,288         25,889         17,932
Discontinued Operations, Net of Tax                           (31     )      (17     )      (78     )      (74     )
Net Income                                                 $  13,769      $  11,271      $  25,811      $  17,858
Average Number of Common Shares Outstanding - Basic           26,999         25,113         26,092         25,081
Average Number of Common Shares Outstanding - Diluted         27,345         25,381         26,462         25,374
Earnings Per Share of Common Stock - Basic:
Continuing Operations                                      $  0.51        $  0.45        $  0.99        $  0.71
Discontinued Operations                                       -              -              -              -
Net Earnings                                               $  0.51        $  0.45        $  0.99        $  0.71
Earnings Per Share of Common Stock - Diluted:
Continuing Operations                                      $  0.51        $  0.44        $  0.98        $  0.70
Discontinued Operations                                       -              -              -              -
Net Earnings                                               $  0.51        $  0.44        $  0.98        $  0.70
Cash Dividends Declared per share of Common Stock          $  0.432       $  0.432       $  0.864       $  0.864

UIL HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
                                                              June 30,          December 31,
(thousands of dollars)                                        2009              2008
ASSETS
Current assets                                                $    262,963      $      252,186
Current assets of discontinued operations held for sale            4,979               5,437
Other investments                                                  10,029              10,307
Net property, plant and equipment                                  1,096,115           1,073,588
Regulatory assets                                                  705,351             723,079
Deferred Charges and Other Assets                                  46,091              18,589
Total Assets                                                  $    2,125,528    $      2,083,186
LIABILITIES AND CAPITALIZATION
Current liabilities                                           $    250,075      $      366,671
Current liabilities of discontinued operations held for sale       5,883               5,467
Noncurrent liabilities                                             324,405             304,292
Deferred income taxes                                              295,283             298,824
Regulatory liabilities                                             85,191              84,322
Total Liabilities                                                  960,837             1,059,576
Long-term debt                                                     594,443             549,031
Net common stock equity                                            570,248             474,579
Total Capitalization                                               1,164,691           1,023,610
Total Liabilities and Capitalization                          $    2,125,528    $      2,083,186

SOURCE: UIL Holdings Corporation

UIL Holdings Corporation 
Analyst: 
Susan Allen, 203-499-2409 
or 
Media: 
Anita Steeves, 203-499-2901 
After Hours, 203-499-2812