DEFINITIVE PROXY STATEMENT AND FORM OF PROXY

DEF 14A 1 proxy_2004.htm DEFINITIVE PROXY STATEMENT AND FORM OF PROXY DEFINITIVE PROXY STATEMENT AND FORM OF PROXY

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __________)

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Section 240.14a-12

UIL Holdings Corporation
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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UIL HOLDINGS CORPORATION

NOTICE OF ANNUAL MEETING OF THE SHAREOWNERS

Date: May 12, 2004

Time: 10:00 a.m.

Place: Quinnipiac University
School of Law Center - Grand Courtroom
275 Mount Carmel Avenue
Hamden, Connecticut

MATTERS TO BE VOTED ON:

1. Election of Directors.

2. Ratification of the selection of PricewaterhouseCoopers LLP as UIL
Holdings Corporation's independent public accountants for 2004.

3. Proposal to approve the UIL Holdings Corporation Senior Executive
Incentive Compensation Program.

4. Any other matters properly brought before the shareowners at the annual
meeting or any adjournment of the annual meeting.

You can vote your shares of common stock at the annual meeting if UIL Holdings
Corporation's records show that you owned the shares on March 9, 2004.

WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT, PLEASE FILL IN, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT WE HAVE PROVIDED TO
YOU. IF YOU MAIL US BACK THE ENVELOPE FROM ANYWHERE IN THE UNITED STATES, THEN
YOU DON'T HAVE TO PUT ANY POSTAGE STAMPS ON THE ENVELOPE.

April 9, 2004

By Order of the Board of Directors,

SUSAN E. ALLEN
Vice President Investor Relations
and Corporate Secretary

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YOUR VOTE IS IMPORTANT

IN ORDER TO SAVE UIL HOLDINGS CORPORATION THE EXPENSE OF FURTHER
SOLICITATION TO ENSURE THAT A QUORUM IS PRESENT AT THE ANNUAL
MEETING, PLEASE RETURN YOUR PROXY PROMPTLY - REGARDLESS OF THE NUMBER
OF SHARES YOU OWN, AND REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
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DIRECTIONS TO QUINNIPIAC UNIVERSITY APPEAR AT THE END OF THE
ACCOMPANYING PROXY STATEMENT.

PROXY STATEMENT

UIL Holdings Corporation (UIL Holdings) is mailing this proxy statement and the
accompanying proxy form on or about April 9, 2004 to all of its shareowners who,
according to its records, held common stock as of the close of business on March
9, 2004, in connection with the solicitation of proxies for use at the 2004
Annual Meeting of the Shareowners. The Annual Meeting will be held on Wednesday,
May 12, 2004 at 10:00 a.m. at Quinnipiac University, School of Law Center -
Grand Courtroom, 275 Mount Carmel Avenue, Hamden, Connecticut, for the purposes
listed in the accompanying Notice of Annual Meeting of the Shareowners. UIL
Holdings is making this solicitation, and it will bear the expense of printing
and mailing proxy materials to shareowners. UIL Holdings will ask banks, brokers
and other custodians, nominees and fiduciaries to send proxy materials to
beneficial owners of shares and to secure their voting instructions, if
necessary, and UIL Holdings will reimburse them for their reasonable expenses in
so doing. Directors, officers and employees of UIL Holdings may also solicit
proxies personally or by telephone, but they will not be specifically
compensated for soliciting proxies. In addition, UIL Holdings has retained
Georgeson Shareholder Communications, Inc. of New York, New York, to aid in the
solicitation of proxies by similar methods at a cost to UIL Holdings of
approximately $12,500, plus expenses.

SHAREOWNERS ENTITLED TO VOTE

At the close of business on March 9, 2004, the record date for the annual
meeting, 14,494,387 shares of UIL Holdings' common stock were outstanding. All
outstanding shares of common stock will be entitled to vote at the meeting, each
share being entitled to one vote, on each matter coming before the meeting as
listed in the accompanying Notice of Annual Meeting of the Shareowners. In
accordance with UIL Holdings' bylaws, the President will appoint inspectors of
proxies and tellers to count all votes on each matter coming before the meeting.

Shareowners who are participants in Investors Choice, a Dividend Reinvestment
and Direct Stock Purchase and Sale Plan for the shares of UIL Holdings' common
stock, will receive proxy forms that cover the shares held in their accounts
under the plan.

If you properly sign and return a proxy form, then the shares covered by that
proxy form:

o will be voted or not voted, in accordance with the instructions you
give on the proxy form, to elect as Directors for the ensuing year the
twelve persons named in this proxy statement, or any other person or
persons that the present Board of Directors names as a substitute
nominee if one or more of the twelve persons named is unable to serve;

o will be voted for or against, or not voted, in accordance with the
instructions you give on the proxy form, with respect to the proposal
to ratify the retention of PricewaterhouseCoopers LLP as independent
public accountants for fiscal year 2004;

o will be voted for or against, or not voted, in accordance with the
instructions you give on the proxy form, with respect to the proposal
to approve the UIL Holdings Corporation Senior Executive Incentive
Compensation Program; and

o will be voted in accordance with the discretion of the person or
persons designated as proxies on the proxy form with respect to other
matters, if any, that come before the meeting. UIL Holdings is not
aware of any other matters to be presented at the meeting.

You may revoke your proxy at any time prior to its use. In order to revoke your
proxy, you must file with UIL Holdings' Corporate Secretary a written notice of
revocation or another properly signed proxy form bearing a later date. If you
attend the meeting in person, you may, if you wish, vote by ballot at the
meeting. If you do vote by ballot at the meeting, then the proxy you previously
gave would be cancelled.

Under Connecticut law and UIL Holdings' bylaws, shareowners holding a majority
of the shares of outstanding common stock will constitute a quorum for purposes
of considering and acting upon the matters listed in the accompanying Notice of
Annual Meeting of the Shareowners.

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, Directors will be elected by a plurality of the votes
cast at the meeting. Withholding authority to vote for a Director nominee will
not prevent that Director nominee from being elected. Cumulative voting for
Directors is not permitted under Connecticut law unless a Corporation's
certificate of incorporation provides for cumulative voting rights. UIL
Holdings' certificate of incorporation does not contain a provision for
cumulative voting rights.

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, the proposal to ratify the Audit Committee's selection
of PricewaterhouseCoopers LLP as UIL Holdings' independent public accountants
will be approved if the votes cast in favor of this action exceed the votes cast
against it. Proxies marked to abstain from voting with respect to this action
will not have the legal effect of voting against it.

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, the proposal to approve the UIL Holdings Corporation
Senior Executive Incentive Compensation Program will be approved if the votes
cast in favor of this action exceed the votes cast against it. Proxies marked to
abstain from voting with respect to this action will not have the legal effect
of voting against it.

PRINCIPAL SHAREOWNERS

In statements filed with the Securities and Exchange Commission, the persons
identified in the table below have disclosed beneficial ownership of shares of
UIL Holdings' common stock as shown in the table. The percentages shown in the
right-hand column are calculated based on the 14,494,387 shares of common stock
outstanding as of the close of business on March 9, 2004. In the statements
filed with the Securities and Exchange Commission, none of the persons
identified in the table, except David T. Chase, have admitted beneficial
ownership of any shares not held in their individual names. All of the persons
identified in the table, including David T. Chase, have denied that they have
acted, or are acting, as a partnership, limited partnership or syndicate, or as
a group of any kind for the purpose of acquiring, holding or disposing of UIL
Holdings' common stock.

Amount and Nature of
Name and Address Beneficial
Title of Class of Beneficial Owner Ownership Percent of Class
-------------- ------------------- -------------------- ----------------

Common Stock RLC Investments LLC (1) 625,000 shares, 4.31%
280 Trumbull Street owned directly
Hartford, CT 06103

Common Stock Cheryl A. Chase 79,000 shares, 0.55%
280 Trumbull Street owned directly and
Hartford, CT 06103 indirectly

Common Stock Arnold L. Chase 246,500 shares, 1.70%
280 Trumbull Street owned directly and
Hartford, CT 06103 indirectly

Common Stock The Darland Trust(2) 146,000 shares, 1.01%
15 Queen Street owned directly
Hamilton, Hmfx
Bermuda

Common Stock David T. Chase 1,300,000 shares, 8.97%
280 Trumbull Street owned indirectly(3)
Hartford, CT 06103

Common Stock DTC Family Investments LLC(1) 225,000 shares, 1.55%
280 Trumbull Street owned directly
Hartford, CT 06103

Common Stock The Rhoda and David Chase 71,000 shares, 0.49%
Family Foundation, Inc. (4) owned directly
280 Trumbull Street
Hartford, CT 06103

Amount and Nature of
Name and Address Beneficial
Title of Class of Beneficial Owner Ownership Percent of Class
-------------- ------------------- --------------------- ----------------

Common Stock The Sandra and Arnold Chase 26,500 shares, 0.18%
Family Foundation, Inc. (4) owned directly
280 Trumbull Street
Hartford, CT 06103

Common Stock The Cheryl Chase and Stuart 33,000 shares, 0.23%
Bear Family Foundation, owned directly
Inc.(4)
280 Trumbull Street
Hartford, CT 06103

Common Stock Barclays Global Investors, NA 1,249,373 shares (5) 8.62%
45 Fremont Street
San Francisco, CA 94105

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(1) RLC Investments LLC and DTC Family Investments LLC are limited liability
companies that are managed by David T. Chase and owned by David T. Chase,
Rhoda L. Chase, The Arnold L. Chase Family Spray Trust, a trust for the
benefit of Arnold L. Chase and his children and The Cheryl Anne Chase
Family Spray Trust, a trust for the benefit of Cheryl A. Chase and her
children.
(2) The Darland Trust is a trust for the benefit of Cheryl A. Chase and her
children. The trustee is Rothschild Trust Cayman Limited.
(3) All of the shares listed for David T. Chase are included in the shares
listed for Rhoda L. Chase, his wife, Cheryl A. Chase, his daughter, Arnold
L. Chase, his son, DTC Family Investments LLC, and The Darland Trust.
(4) The Chase family foundations are charitable private foundations that are
controlled by Cheryl A. Chase, Arnold L. Chase and David T. Chase.
(5) Based upon information provided in a Schedule 13G filed by Barclays Global
Investors, NA and its affiliates on February 17, 2004. Barclays Global
Investors, NA, Barclays Global Fund Advisors and Barclays Bank PLC have
both sole voting and dispositive power with respect to 880,797, 234,784 and
5,400 shares, respectively. The Schedule 13G notes that the shares reported
are held in trust accounts for the economic benefit of the beneficiaries of
those accounts.

There is no other person or group of persons known to UIL Holdings to be the
beneficial owner of more than 5% of the shares of UIL Holdings' common stock as
of the close of business on March 9, 2004.

PROPOSAL NO. 1 - ELECTION OF DIRECTORS

Unless you instruct otherwise on the proxy form, shares to which the signed and
returned form relates will be voted in favor of the persons listed below for
election as Directors of UIL Holdings. Although UIL Holdings knows of no reason
why any of the persons listed below will be unable to serve as a Director, if
that should occur, your shares will be voted for any other person or persons
that the present Board of Directors names as a substitute nominee. All of the
nominees listed below were elected Directors at the last annual meeting. The
stated age of the Director nominees will be their age at May 12, 2004. The Board
of Directors has adopted a policy that states that a Director will not be a
candidate for re-election after his or her seventieth birthday.

Name, Principal Occupation, Other
Corporate and Civic Affiliations and Principal Occupations Director
During the Past Five Years of Nominee Age Since
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Thelma R. Albright 57 1995
Former President, Carter Products Division, Carter-Wallace, Inc., Cranbury, New
Jersey, a consumer and healthcare products manufacturer. Currently, Director,
UIL Holdings Corporation, The United Illuminating Company and Imagistics
International Inc., and Advisor to the Board of Armkel, LLC.

Marc C. Breslawsky 61 1995
Chairman and Chief Executive Officer, Imagistics International Inc., Trumbull,
Connecticut, a sales, service and marketing organization offering enterprise
office imaging and document solutions in the United States and Europe. Also,
Director, UIL Holdings Corporation, The United Illuminating Company, Imagistics
International Inc., C.R. Bard, Inc., The Brinks Company and The Connecticut
Business and Industry Association. Vice Chairman of the Governor's Council of
Economic Competitiveness and Technology; Member, Board of Governors, the State
of Connecticut/Red Cross Disaster Relief Cabinet; and Trustee, Norwalk Hospital.

David E. A. Carson 69 1993
Former Chief Executive Officer of People's Bank and People's Mutual Holdings,
Bridgeport, Connecticut, banking institutions. Currently, Director, UIL Holdings
Corporation, The United Illuminating Company, Prudential Retail Funds Board, and
Hartford Stage Company. Co-Chairman, Business Advisory Committee of Connecticut
Commission on Children. Treasurer, Berkeley Divinity School.

Arnold L. Chase 52 1999
Member of the Board of Directors and President, Gemini Networks, Inc., Hartford,
Connecticut, an open-access, hybrid fiber coaxial communications network
provider, and Executive Vice President, Chase Enterprises, Hartford,
Connecticut, an investment holding company. Also, Director, UIL Holdings
Corporation, The United Illuminating Company, and Connecticut Public
Broadcasting, Inc.

John F. Croweak 67 1987
Former Chairman of the Board of Directors and Chief Executive Officer, Anthem
Blue Cross and Blue Shield of Connecticut, Inc., North Haven, Connecticut, a
healthcare insurance provider. Currently, Director, UIL Holdings Corporation,
The United Illuminating Company, and The New Haven Savings Bank.

Betsy Henley-Cohn 51 1989
Chairperson of the Board of Directors and Treasurer, Joseph Cohn and Son, Inc.,
New Haven, Connecticut, a construction sub-contracting business. Also,
Chairperson of BIW Limited, a water utility; and Director, UIL Holdings
Corporation, The United Illuminating Company. Former Director of The Aristotle
Corporation and Citizens Bank of Connecticut.

John L. Lahey 57 1994
President, Quinnipiac University, Hamden, Connecticut. Also, Director, UIL
Holdings Corporation, The United Illuminating Company, Yale New Haven Hospital,
The American Bar Association Council of the Section of Legal Education and
Admissions to the Bar, The NYC Saint Patrick's Day Parade, Inc. and The
Aristotle Corporation.

F. Patrick McFadden, Jr. 66 1987
Former Chairman of the Board of Directors, Citizen's Bank of Connecticut, New
Haven, Connecticut, a commercial banking institution. Currently, Vice-Chairman
of the Board of Directors, Yale-New Haven Health Services Corporation; Director,
UIL Holdings Corporation, The United Illuminating Company and Higher One, a
banking company. Member, Representative Policy Board of the South Central
Connecticut Regional Water District.

Daniel J. Miglio 63 1999
Former Chairman, President and Chief Executive Officer of SNET Corporation and
the Southern New England Telephone Company, New Haven, Connecticut,
telecommunications companies. Currently, Director, UIL Holdings Corporation, The
United Illuminating Company, Yale-New Haven Health Services Corporation and
Corporator, and The New Haven Savings Bank. Chairman, International Festival of
Arts and Ideas.

William F. Murdy 62 2001
Chairman of the Board of Directors and Chief Executive Officer of Comfort
Systems USA, a national consolidation of heating, ventilation, air conditioning
and related services companies serving the commercial and industrial markets.
From late 1997 until July of 1999, Mr. Murdy served as Chairman, President and
Chief Executive Officer of LandCare USA, Inc., a national consolidation of large
commercial landscape and tree service companies; and from July of 1999 until his
election as Chairman of the Board of Directors and Chief Executive Officer of
Comfort Systems USA in 2000, he served as Interim President and Chief Executive
Officer of Club Quarters, a chain of corporate membership hotels. Also,
Director, UIL Holdings Corporation, The United Illuminating Company, NetVersant
Solutions, and Compact Power Inc. Member, National Board and Executive Committee
of Business Executives for National Security, the Council on Foreign Relations,
the Board of Trustees of the Association of Graduates of the U.S. Military
Academy, and the Corporate Council of the Vietnam Veterans Memorial.

James A. Thomas 65 1992
Associate Dean, Yale Law School, New Haven, Connecticut. Also, Trustee, Yale New
Haven Hospital; Director, UIL Holdings Corporation, The United Illuminating
Company, People's Bank, Sea Research Foundation and Imagistics International
Inc.; and Chairman of the Board of Trustees, People's Mutual Holdings.

Nathaniel D. Woodson 62 1998
Chairman of the Board of Directors, President and Chief Executive Officer, UIL
Holdings Corporation; Chairman of the Board of Directors and Chief Executive
Officer, The United Illuminating Company, a direct subsidiary of UIL Holdings
Corporation; and Chairman of the Board of Directors, United Resources, Inc., a
direct subsidiary of UIL Holdings Corporation. Mr. Woodson served as Chairman of
the Board of Directors, President and Chief Executive Officer of The United
Illuminating Company during the period December 31, 1999 to February 1, 2001. He
has served as Chairman of the Board of Directors and Chief Executive Officer of
The United Illuminating Company since February 1, 2001 and Chairman of the Board
of Directors, President and Chief Executive Officer of UIL Holdings Corporation
since its inception on March 22, 1999. Also, Director, The New Haven Savings
Bank, The Enterprise Center, CURE (Connecticut United for Research Excellence)
and Empower New Haven; Trustee, Yale-New Haven Hospital; Member, Governor's
Council on Competitiveness and Technology; and Chairman, Regional Leadership
Council and Regional Growth Partnership; Board Member, International Festival of
Arts and Ideas.

INFORMATION REGARDING THE BOARD OF DIRECTORS

During the year 2003, the Board of Directors of UIL Holdings held 13 meetings.
The average attendance record of the Directors was 96% for meetings of the UIL
Holdings' Board of Directors and its committees held during 2003.

At least four times a year, the non-employee Directors of the Board of Directors
meet in executive session. Mr. McFadden, who acted as the Lead Director in 2003,
has been elected again as the Lead Director by the Board of Directors and
presides over the executive sessions. The Board of Directors adopted the
following responsibilities as they relate to the Lead Director.

o Preside at all meetings of the Board at which the Chairman is not
present, including executive sessions of the independent Directors

o Record minutes of the executive sessions and report to the Chairman on
all executive sessions

o Maintain a file of executive session minutes from Board meetings and
executive session minutes of Committee meetings

o Serve as liaison between the Chairman and the independent Directors

o Call meetings of the independent Directors

o Obtain additional information, as necessary, for agenda items, allocate
time for Board meetings and matters to be presented at the meetings and
request other materials or data to be sent to the Directors

o Ensure that he/she is available for consultation and direct
communication with major shareowners

The New York Stock Exchange has adopted new listing standards which become
applicable to UIL Holdings Corporation on May 12, 2004 and redefine the criteria
for a determination as to whether a Director is independent. The new listing
standards state that all Members of the Audit Committee, the Compensation and
Executive Development Committee and the Corporate Governance and Nominating
Committee be independent as defined by those listing standards. The Corporate
Governance and Nominating Committee reviewed the independence of each of the
outside Directors and determined that Mr. Chase does not meet the criteria of an
independent Director, as defined by Section 303A of the New York Stock Exchange
listing standards. Mr. Chase is not independent under Section 303A.02(a) because
Mr. Chase has a beneficial interest in the building known as 157 Church Street,
at which a wholly-owned subsidiary of the Corporation is a lessee. On February
23, 2004, Mr. Chase ceased serving on the Compensation and Executive Development
Committee and the Corporate Governance and Nominating Committee.

COMMITTEES OF THE BOARD OF DIRECTORS

Ms. Henley-Cohn and Messrs. Croweak, McFadden and Woodson serve on the Executive
Committee of the Board of Directors. The Executive Committee is a standing
committee that has and may exercise all the powers of the Board of Directors
when it is not in session. The Executive Committee of UIL Holdings' Board of
Directors held no meetings during 2003.

Ms. Henley-Cohn and Messrs. Carson, Croweak, Miglio, Murdy and Thomas serve on
the Audit Committee of the Board of Directors. The Audit Committee is a standing
committee that oversees financial accounting and reporting practices, evaluates
the reliability of the system of internal controls, assures the objectivity of
independent audits, explores other issues that it deems may potentially affect
UIL Holdings, and makes recommendations regarding such matters to the officers
and to the Board of Directors. Mr. Carson, Chairperson of the Audit Committee,
is also the Audit Committee financial expert, as defined by the federal
Sarbanes-Oxley Act. On February 23, 2004, the Board of Directors adopted an
Audit Committee Charter that meets the current requirements of the Securities
and Exchange Commission regulations and The New York Stock Exchange listing
standards. The Audit Committee Charter is attached to this Proxy Statement and
is posted on the Corporation's website, www.uil.com. All members of the Audit
Committee are independent as defined in the listing standards of the New York
Stock Exchange. The Audit Committee of UIL Holdings' Board of Directors held 9
meetings during 2003.

Messrs. Carson, Croweak, Lahey, McFadden and Miglio serve on the Compensation
and Executive Development Committee of the Board of Directors. Effective
February 23, 2004, all Members of the Compensation and Executive Development
Committee are independent as defined in the listing standards of the New York
Stock Exchange. The Compensation and Executive Development Committee is a
standing committee that reviews and approves compensation levels for the Chief
Executive Officer (CEO), reviews the performance of the officers, reviews and
recommends to the Board of Directors the levels of compensation and other
benefits paid and to be paid to the officers other than the CEO, reviews and
administers incentive compensation programs for the officers, recommends to the
Board of Directors changes in these programs and reviews the recommendations of
management for its succession planning and the selection of officers. The
Compensation and Executive Development Committee of UIL Holdings' Board of
Directors held 16 meetings during 2003.

Ms. Albright and Messrs. Breslawsky, Croweak, Lahey, McFadden and Murdy serve on
the Corporate Governance and Nominating Committee of the Board of Directors.
Effective February 23, 2004, all Members of the Corporate Governance and
Nominating Committee are independent as defined in the listing standards of the
New York Stock Exchange. The Corporate Governance and Nominating Committee is a
standing committee that recommends policy with respect to the composition,
organization, practices and compensation of the Board of Directors and performs
the nominating function for the Board of Directors. The Corporate Governance and
Nominating Committee has a charter that is available on UIL Holdings' website,
www.uil.com. The Corporate Governance and Nominating Committee does not set
specific, minimum qualifications that nominees must meet in order for the
Committee to recommend them for election to the Board of Directors, but rather
believes that each nominee should be evaluated based on his or her individual
merits, taking into account the needs of UIL Holdings and the composition of the
Board of Directors. Members of the Corporate Governance and Nominating Committee
discuss and evaluate possible candidates in detail, and suggest individuals to
explore in more depth. Outside consultants have also been employed to help in
identifying candidates. Once a candidate is identified whom the Committee wants
to seriously consider for nomination, the Chairman of the Corporate Governance
and Nominating Committee enters into a discussion with that nominee. The
Corporate Governance and Nominating Committee will consider nominees recommended
by shareowners. Nominees recommended by shareowners are given appropriate
consideration in the same manner as other nominees. Shareowners who wish to
submit nominees for Director for consideration by the Corporate Governance and
Nominating Committee for election at our 2005 Annual Meeting of Shareowners may
do so by submitting in writing, between December 1, 2004 and December 31, 2004,
the names of such nominees with their qualifications and biographical
information forwarded to the Committee in care of the Corporate Secretary of UIL
Holdings. The Corporate Governance and Nominating Committee of UIL Holdings'
Board of Directors held 3 meetings during 2003.

Ms. Henley-Cohn and Messrs. Breslawsky, Carson, Miglio, Thomas and Woodson serve
on the Strategic Direction and Finance Committee of the Board of Directors. The
Strategic Direction and Finance Committee is a standing committee that assists
the CEO and senior management with the development of an overall strategic plan,
taking into account key strategic issues and providing a focus for defining and
implementing the annual goals and projects comprising corporate business and
operational plans. The Committee also reviews the financial decisions and
transactions necessary to execute the strategic plan, and examines, at least
annually, projected income, cash flow and capital structure. The Strategic
Direction and Finance Committee of UIL Holdings' Board of Directors held one
meeting during 2003.

Ms. Albright and Messrs. Chase, Lahey, Murdy and Thomas serve on the Pension and
Benefits Committee of the Board of Directors. The Pension and Benefits Committee
is a standing committee that has the fiduciary responsibility for, and oversight
of, the pension and benefit plans of the Corporation. The Pension and Benefits
Committee reviews the investment standards, policies and objectives established
for, and the performance and methods of, the pension plan investment managers.
The Pension and Benefits Committee of UIL Holdings' Board of Directors held four
meetings during 2003.

TRANSACTIONS WITH MANAGEMENT

Under a lease agreement dated May 7, 1991, one of UIL Holdings' direct
subsidiaries, The United Illuminating Company (UI), leased its corporate
headquarters offices in New Haven from 157 Church Street, LLC, which is
controlled by Arnold L. Chase and members of his immediate family. During 2003,
UI's lease payments to the partnership totaled $8.7 million.

A subsidiary of United Resources, Inc., United Capital Investments, Inc. (UCI),
invested a total of $3.9 million in 2000 and 2001 to purchase a minority
ownership interest in Gemini Networks, Inc. (Gemini). Gemini proposes to
develop, build, and operate an open-access, hybrid fiber coaxial communications
network serving business and residential customers in the Northeastern United
States. Gemini is a corporation controlled by the David T. Chase family, and
Arnold L. Chase is the President and a Director of Gemini. In June 2002, UCI
wrote down its investment in Gemini to one dollar, because the
telecommunications sector had suffered substantial losses in value, and because
UCI concluded that Gemini was unlikely to continue its network development in
the absence of additional financing. In December 2003, Gemini completed a
restructuring transaction in connection with which the Chase family came to own
100% of the equity of Gemini. In connection with that transaction, UCI is
entitled to a cash payment of approximately $17,500 in exchange for its
ownership interest in Gemini, and expects to receive that amount in the second
quarter of 2004.

CORPORATE GOVERNANCE STANDARDS

The Board of Directors (the Board) of UIL Holdings Corporation (the Company) has
adopted principles of corporate governance that govern the selection of Board
candidates; compensation of Board members; rules regarding structure and
operation of Committees; and meetings of and agendas for the Board and its
Committees. These practices are reviewed by the Corporate Governance and
Nominating Committee periodically, and this review includes the evaluation by
the Corporate Governance and Nominating Committee of board practices at other
well-managed companies and emerging corporate governance issues.

PRIMARY RESPONSIBILITIES OF THE BOARD OF DIRECTORS

Each Director and the Board are expected to promote the best interests of the
shareowners in terms of corporate governance; fiduciary responsibilities;
compliance with applicable laws and regulations; and maintenance of accounting,
financial, and other controls. Their primary responsibility is to provide
effective guidance of the affairs of the Company for the benefit of its
shareowners. This includes overseeing the conduct of the Company's business and,
where appropriate, approval of the Company's financial objectives; major
corporate plans; and strategies. In addition, the Board selects the Company's
Chief Executive Officer (CEO); acts as an advisor and counselor to the CEO and
senior management; and evaluates the CEO's performance.

ACCESS TO MANAGEMENT AND OUTSIDE ADVISORS

The Directors have complete access to the Company's senior management, including
executive officers. The Board expects that from time to time executives and/or
managers will be present at Board meetings to provide additional insight into
the items being discussed and to provide the Board the opportunity to evaluate
their management skills. The Board shall also have access to the Company's
outside counsel and auditors and may retain outside counsel or other
professional advisors of its choice with respect to any issue relating to its
activities.

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

Each Director is expected to attend all meetings of the Board and all meetings
of Committees on which the Director is a member. Such attendance at the meetings
of the Board and meetings of the Committees is expected to be in person,
however, telephonic board attendance is acceptable as long as it is infrequent.
The Board recognizes, however, that occasionally meetings may need to be
scheduled on short notice when participation of a Director is not possible,
either in person or by conference telephone, and that conflicts may arise from
time to time to prevent a Director from attending a regularly scheduled meeting.
However, the Board expects that Directors will make every possible effort to
keep such absences to a minimum.

SELECTION OF AGENDA

The Chairman shall establish the agenda for each Board meeting. Any Director may
suggest inclusion of additional items on the agenda and it is anticipated that
the agenda will be distributed in advance of the Board meeting. Directors may
also raise at any regular Board meeting subjects for discussion that are not on
the formal agenda; however, the desire for inclusion of such items should be
communicated to the Chairman or Corporate Secretary in advance of the meeting.
The agenda should provide for holding executive sessions of the non-management
Directors at not less than two regularly scheduled meetings in each year, one of
which shall coincide with the Annual Meeting of Shareowners. The Lead Director
shall preside over such executive sessions of the Board.

DISTRIBUTION OF BOARD MATERIALS

In addition to the Board agenda, information that is important to the Board's
understanding of the business of the Company shall be distributed to Directors
prior to each Board meeting. Directors also routinely receive quarterly
financial reports as well as material press releases, analyst reports, and other
information designed to keep them informed of the material aspects of the
Company's business performance and prospects. Directors are expected to review
Board materials in advance of meetings.

BOARD COMPOSITION

The entire Board will be elected annually. A Director will not be a candidate
for re-election after his or her seventieth birthday. As a general rule, former
executive officers of the Company will not be candidates for election as
Directors. A Director will not be a candidate for election to a sixth term
unless he or she is the beneficial owner, directly or indirectly, of at least
5,000 shares of the Company's stock.

At all times a majority of the Board shall be "Independent Directors" as that
term is defined from time to time by relevant law and New York Stock Exchange
(NYSE) listing standards. Furthermore, the Board shall affirmatively determine
the independence of Directors in accordance with relevant law, NYSE listing
standards and such other factors as the Board may deem appropriate.

In considering candidates to recommend for nomination or re-nomination to the
Board, the Corporate Governance and Nominating Committee shall consider the
background, skills, abilities, character and qualifications exhibited by such
candidates, as well as other factors bearing on such candidates' ability to
serve effectively, including other board and committee responsibilities.
Directors are expected to submit a letter of resignation, subject to acceptance
by the Board, upon any significant change in his or her primary employment.

BOARD COMPENSATION

The Corporate Governance and Nominating Committee will evaluate and make
recommendations to the Board with respect to Director compensation. Senior
management of the Company shall report periodically to the Corporate Governance
and Nominating Committee on the status of the Company's Director compensation
practices in relation to other companies in analogous industries and of
comparable size. Any changes in Director compensation should come upon the
recommendation of the Corporate Governance and Nominating Committee, but with
full discussion and concurrence by the Board.

BOARD COMMITTEES

A substantial amount of the analysis and work of the Board is done by standing
Board Committees. Directors are expected to participate actively in the meetings
of each Committee to which the Director is appointed.

The Board has established the following mandatory standing Committees:

Audit Committee: The Audit Committee will have a minimum of three members. The
---------------
Committee's functions include: assisting Board oversight of the integrity of the
Company's financial statements; assisting Board oversight of the Company's
compliance with legal and regulatory requirements, including monitoring the
integrity of the Company's reporting standards and systems of internal controls
regarding finance, accounting and legal matters; retention and termination of
independent auditors to conduct the annual audit; approval of non-audit
relationships with the independent auditors; assisting Board oversight by
monitoring the qualifications, independence, performance and scope of
examination of the Company's independent external auditors; assisting Board
oversight by monitoring the performance of the Company's internal audit
function; providing an avenue of communication among the Company's independent
external auditors, management and the Board of Directors; and reviewing the
quarterly and annual financial statements and the annual audit report.

Compensation and Executive Development Committee: The Committee's functions
------------------------------------------------
include: discharging the responsibilities of the Board relating to compensation
of the Company's executives; ensuring that the officers of the Company are
appropriately compensated by establishing competitive executive compensation
policies that are targeted to comparable companies, and by establishing other
supplemental compensation and benefit programs all of which are deemed
internally equitable, externally competitive and are designed to align the
interests of such officers with those of the Company's shareowners; making
recommendations to the Board regarding the selection of the Company's CEO and
review the CEO's nominees for other officers of the Company; evaluating the
annual performance of the Company's CEO; reviewing management development and
succession matters; and administering aspects of compensation plans and stock
plans and recommending changes in such plans.

Corporate Governance and Nominating Committee: The Committee's functions
---------------------------------------------
include: identifying individuals who are qualified to become members of the
Board; making recommendations to the Board relating to the Company's selection
and nomination of Directors; reviewing and establishing the compensation of
non-employee members of the Board; developing and recommending to the Board a
set of corporate governance principles applicable to the Company; reviewing
corporate governance trends, issues and best practices; and making
recommendations to the Board regarding the adoption of best practices most
appropriate for the governance of the affairs of the Board and the Company,
including any recommended amendments to the Company's corporate governance
principles.

Each standing Committee shall have a Board-approved written charter detailing
its purposes, duties and responsibilities. The Board may also establish other
Committees from time to time to deal with specific issues.

Composition of Committee: Only Directors deemed by the Board to be independent
------------------------
in accordance with applicable law and listing standards of the NYSE may serve on
the Audit, Compensation and Executive Development and Corporate Governance and
Nominating Committees. In addition, the composition of the Committees will be
reviewed annually to ensure that each of its members meets the criteria set
forth in applicable rules and regulations of the Securities and Exchange
Commission, NYSE and Internal Revenue Service.

Assignment and Rotation of Committee Members: The Corporate Governance and
---------------------------------------------
Nominating Committee recommends to the Board the membership of the various
Committees and their Chairperson and the Board approves such Committee
assignments. In making its recommendations to the Board, the Corporate
Governance and Nominating Committee takes into consideration the continuity,
subject matter expertise, tenure and experience of the individual Board members.

Committee Agendas/Reports to the Board: Appropriate members of management and
--------------------------------------
staff will prepare draft agendas and related background information for each
Committee meeting which, to the extent desired by the relevant Committee
Chairperson, will be reviewed and approved by such Chairperson in advance of
distribution to the other Committee members. Any background materials, together
with such agenda, should be distributed to Committee members in advance of the
meeting for their review and discussion. In addition, each Committee member is
free to suggest items for inclusion on the agenda and to raise at any Committee
meeting subjects that are not on the agenda for that meeting. Reports on the
items considered at each Committee meeting are to be furnished to the full Board
at its next meeting. In addition, all Directors are to be furnished copies of
each Committee's minutes.

FREQUENCY OF BOARD MEETINGS

The Board shall meet on at least a quarterly basis and special meetings are to
be called as necessary. Meetings of the Board and its standing Committees shall
be of such frequency and duration as will allow the Board and its Committees
adequate time to fulfill their responsibilities.

ANNUAL PERFORMANCE EVALUATION OF THE BOARD AND COMMITTEES

The Corporate Governance and Nominating Committee is responsible for overseeing
a self-assessment of the conduct of the Board, as well as reviewing with the
Board the results of these assessments, at least on an annual basis. The results
will be summarized by General Counsel. The evaluation will focus on the Board's
contribution to the Company and specifically focus on areas in which the Board
or management believes that the Board could improve. In addition, each Committee
shall perform a self-evaluation, not less than annually, which will be
summarized by General Counsel and presented to the Corporate Governance and
Nominating Committee who will present to the Board.

SUCCESSION ISSUES

The Board will develop and adopt a plan of succession for the Chairman and/or
CEO, in the event of either of their deaths, disability, removal or resignation.
This plan will be reviewed by the Board at least annually.

EVALUATION OF CHIEF EXECUTIVE OFFICER

The Compensation and Executive Development Committee is responsible for
conducting an assessment of the performance of the CEO, at least on an annual
basis. The results of the evaluation should be communicated to the CEO by the
Chairperson of the Committee. The evaluation should be based on objective
criteria, which should include the financial performance of the Company;
accomplishment of financial and strategic objectives; and the successful
professional development of management personnel.

DIRECTOR ORIENTATION AND CONTINUING EDUCATION

It is the belief of the Board that an orientation program for new Directors
should be conducted and which includes background information about the
Company's business information; general information about the Board and
Committees; and a review of a Director's duties and responsibilities under
Connecticut law. Some of these materials are to be included in a Director's
handbook and others will be included in meetings with key executives, preceding
or promptly following the election of a new Director to the Board. The Board
will periodically assess the need for continuing education programs for its
members. Directors are encouraged to voluntarily participate in any continuing
education events which they believe would enhance their value to the Company.
The expenses of attending any such events will be borne by the Company if the
attending Director so requests.

COMMUNICATIONS WITH DIRECTORS

In order to provide shareowners and other interested parties with a direct and
open line for communication to the independent members of the Board of
Directors, the Board of Directors has adopted the following procedures for
confidential communications to Directors. UIL Holdings' shareowners and other
interested persons may communicate with the non-management Directors of the
Company by sending a written letter to the following address:

UIL Holdings Corporation
General Counsel
Wiggin and Dana LLP
One Century Tower
P.O. Box 1832
New Haven, CT 06508-1832

All communications received in accordance with these procedures will be sent by
the General Counsel to the appropriate Director or Directors unless the General
Counsel determines that the communication:

o does not relate to the business or affairs of UIL Holdings or the
functioning or constitution of the Board of Directors or any of its
committees;

o relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors;

o is an advertisement or other commercial solicitation or communication;

o is frivolous or offensive; or

o is otherwise not appropriate for delivery to Directors.

The Director or Directors who receive any such communication will have
discretion to determine whether the subject matter of the communication should
be brought to the attention of the independent Directors, the full Board of
Directors, or one or more of its committees, as well as whether any response to
the person sending the communication is appropriate. Any such response will be
reviewed by General Counsel and will be made only in accordance with applicable
law and regulations relating to the disclosure of information.

The General Counsel will retain copies of all communications received pursuant
to these procedures for a period of at least one year. The Corporate Governance
and Nominating Committee of the Board of Directors will review the effectiveness
of these procedures from time to time and, if appropriate, recommend changes.

We have not established a formal policy regarding Director attendance at the
Annual Meetings of the Shareowners, but the Directors generally do attend the
Annual Meeting. The Chairman of the Board presides at the Annual Meeting of the
Shareowners, and the Board of Directors holds one of its regular meetings in
conjunction with the Annual Meeting of the Shareowners. Accordingly, unless one
or more members of the Board are unable to attend, all members of the Board are
present for the Annual Meeting. Eleven of the twelve members of the Board at the
time of the Company's 2003 Annual Meeting of the Shareowners attended that
meeting.

VOTE REQUIRED FOR APPROVAL

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, Directors will be elected by a plurality of the votes
cast at the meeting. Withholding authority to vote for a Director nominee will
not prevent that Director nominee from being elected. Cumulative voting for
Directors is not permitted under Connecticut law unless a corporation's
certificate of incorporation provides for cumulative voting rights. UIL
Holdings' certificate of incorporation does not contain a provision for
cumulative voting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL
CONCERNING THE ELECTION OF DIRECTORS.

STOCK OWNERSHIP OF DIRECTORS AND OFFICERS

The following table shows the number of shares of UIL Holdings' common stock
beneficially owned, directly or indirectly, as of March 9, 2004, by (i) each
Director of UIL Holdings, (ii) the Chief Executive Officer of UIL Holdings,
(iii) each of the four other most highly compensated persons who served as
executive officers of UIL Holdings at the end of 2003 and (iv) the total of all
of the Directors and executive officers of UIL Holdings serving as of December
31, 2003 as a group.

Name of Individual or Total Shares Beneficially
Number of Persons in Stock Stock Owned Directly
Group Shares Options Units or Indirectly *
----------------------------- ------------ ---------- ---------- -----------------------------
Thelma R. Albright 1,543 16,500 11,087 29,130
Marc C. Breslawsky 1,365 16,500 12,647 30,512
David E. A. Carson 2,528 16,500 18,327 37,355
Arnold L. Chase 246,500 12,000 5,775 264,275
John F. Croweak 2,274 16,500 6,586 25,360
Betsy Henley-Cohn 8,423 7,500 3,131 19,054
John L. Lahey 6,785 12,313 1,730 20,828
F. Patrick McFadden, Jr. 4,092 12,000 4,720 20,812
Daniel J. Miglio 5,200 6,000 6,149 17,349
William F. Murdy 3,765 3,000 2,504 9,269
James A. Thomas 3,044 10,500 2,584 16,128
Nathaniel D. Woodson 42,370 149,501 - 191,871
Louis J. Paglia 3,398 21,667 - 25,065
Susan E. Allen 3,240 8,567 - 11,807
Gregory W. Buckis 92 - - 92
Charles J. Pepe 3,039 7,733 - 10,772

Total 337,658 316,781 75,240 729,679

---------------------------

* The number of shares of common stock beneficially owned by Mr. Chase, as
listed in the above stock ownership table, is approximately 1.8% of the
14,494,387 shares of common stock outstanding as of March 9, 2004. The number of
shares of common stock beneficially owned by Mr. Woodson, as listed in the above
stock ownership table, is approximately 1.3% of the 14,494,387 shares of common
stock outstanding as of March 9, 2004. The number of shares of common stock
beneficially owned by each of the other persons included in the table is less
than 1.0% of the outstanding shares of common stock as of March 9, 2004; and the
number of shares of common stock beneficially owned by all of the Directors and
officers as a group represents approximately 5.0% of the outstanding shares of
common stock as of March 9, 2004.

The number of shares listed in the above stock ownership table includes those
held for the benefit of officers that are participating in the 401(k)/Employee
Stock Ownership Plan; shares that may be acquired within sixty (60) days of
March 9, 2004 through the exercise of stock options under UIL Holdings' 1990
Stock Option Plans and the 1999 Amended and Restated Stock Plan; and stock units
that are in stock accounts under the Non-Employee Directors Common Stock and
Deferred Compensation Plan, described below under "Director Compensation." Stock
units in this plan are payable, in an equivalent number of shares of UIL
Holdings' common stock, upon termination of service on the Board of Directors.

The numbers in the above stock ownership table are based in part on reports
furnished by the Directors and officers. The shares reported for Mr. Chase do
not include shares held by other members of his family or entities owned or
controlled by him and them, which are described at "Principal Shareowners"
above. Mr. Chase does not admit beneficial ownership of any shares other than
those shown in the foregoing table, and he has denied that he has acted, or is
acting, as a member of a partnership, limited partnership or syndicate, or group
of any kind for the purpose of acquiring, holding or disposing of UIL Holdings'
common stock. With respect to other Directors and officers, the shares reported
in the above stock ownership table include, in some instances, shares held by
the immediate families of a Director or officer or entities controlled by a
Director or officer, the reporting of which is not to be construed as an
admission of beneficial ownership. The Board expects that the Chief Executive
Officer will own stock with a value approximately equal to three times his
annual salary.

Each of the persons included in the above stock ownership table has sole voting
and investment power as to the shares of common stock beneficially owned,
directly or indirectly, by him or her, except that voting and investment power
is held by the other people or entities described below with respect to the
number of shares listed opposite their respective names:

Name of other person or
entity holding voting
Name Number of Shares and investment power
---- ---------------- ------------------------
David E. A. Carson 206 Spouse
Betsy Henley-Cohn 2,035 Trust
Nathaniel D. Woodson 3,495 Trust
Nathaniel D. Woodson 37,919 General Partnership Trust
Charles J. Pepe 25 Custodian for Minor Child

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires UIL Holdings'
Directors and officers, and persons who own more than ten percent of a
registered class of UIL Holdings' equity securities, to file with the Securities
and Exchange Commission (SEC) and The New York Stock Exchange, initial reports
of ownership and reports of changes in ownership of UIL Holdings' common stock
and other equity securities of UIL Holdings. Directors, officers and
greater-than-ten-percent shareowners are required by SEC regulations to furnish
UIL Holdings with copies of all Section 16(a) forms they file.

To UIL Holdings' knowledge, based solely on review of reports furnished to UIL
Holdings and written representations that no other reports were required, during
the fiscal year ended December 31, 2003 each of its Directors, officers and
greater-than-ten-percent shareowners complied with all applicable Section 16(a)
filing requirements except that the following individuals made the number of
untimely filings set forth beside his or her name as follows: Thelma R. Albright
(2), Susan E. Allen (3), Marc C. Breslawsky (2), David E. Carson (2), Arnold L.
Chase (8), John F. Croweak (2), Betsey Henley-Cohn (1), John L. Lahey (2), F.
Patrick McFadden, Jr. (2), Daniel J. Miglio (1), William F. Murdy (2), Charles
J. Pepe (1), James A. Thomas (1). The untimely filings were due to difficulty
obtaining applicable information and meeting the Securities and Exchange
Commission's requirement to file a statement of changes in beneficial ownership
(Form 4) within forty-eight hours of a transaction. Corrective action has been
taken to assure that information in regards to reportable events are available
to the Corporation in a timely manner.

EXECUTIVE COMPENSATION

The following table shows the annual and long-term compensation, for services in
all capacities to UIL Holdings and its subsidiaries for the years 2003, 2002 and
2001, of (i) the Chief Executive Officer and (ii) the four other most highly
compensated executive officers of UIL Holdings who were serving as its executive
officers at December 31, 2003.

Long-Term Compensation
----------------------
Name and Annual Compensation Securities Underlying All Other
-------------------
Principal Position Year Salary($) Bonus($) Options/SARs(#) Compensation($)
------------------ ---- -------- ------- -------------- ---------------
Nathaniel D. Woodson 2003 $563,475 - 100,000 $8,396
Chairman of the Board of 2002 538,575 - 87,000 6,126
Directors, President and Chief 2001 482,000 289,300 46,000 6,061
Executive Officer

Louis J. Paglia 2003 $262,950 - 25,000 $8,396
Executive Vice President and 2002 176,761 23,600 20,000 2,874
Chief Financial Officer

Susan E. Allen 2003 $148,300 $18,900 5,000 $7,407
Vice President Investor 2002 140,750 26,964 4,000 5,445
Relations, Corporate Secretary 2001 121,000 35,000 2,900 5,223
and Assistant Treasurer

Gregory W. Buckis 2003 $85,674 $15,800 5,500 $10,200
Controller

Charles J. Pepe 2003 $158,525 $16,200 6,000 $7,914
Treasurer and Assistant 2002 151,500 29,425 4,000 7,636
Secretary 2001 137,625 39,700 2,900 7,280

None of the persons named in the table received any cash compensation in any of
the years shown other than the amounts appearing in the columns captioned
"Salary($)," "Bonus($)," and "All Other Compensation($)." None of these persons
received, in any of the years shown, any cash-equivalent form of compensation,
other than through participation in group life, health and hospitalization plans
that are available generally to all salaried employees and the dollar value of
which, together with the dollar value of all other non-cash perquisites and
other personal benefits received by that person, did not exceed the lesser of
$50,000 or 10% of the total salary and bonus compensation received by him or her
for the year.

The amounts appearing in the column captioned "Annual Compensation - Bonus($)"
in the above table are awards earned pursuant to the Executive Incentive
Compensation Program described below.

The amounts appearing in the column captioned "Long-Term Compensation -
Securities Underlying Options/SARs (#)" represent the number of shares of UIL
Holdings' common stock underlying options granted under the 1999 Amended and
Restated Stock Plan. The options are exercisable at the rate of one-third of the
options on each of the first three anniversaries of the grant date.

The amounts appearing in the column captioned "All Other Compensation" include
(a) cash contributions to the 401(k)/Employee Stock Ownership Plan on behalf of
each of the persons named for a (i) company match of pre-tax elective deferral
contributions by him or her to the plan from his or her salary and bonus
compensation (included in the columns captioned "Salary($)" and "Bonus($)") and
(ii) an additional contribution equal to 25% of the dividends paid on his or her
shares in the plan (for fiscal years 2001 and 2002), (b) pay for unused vacation
pay and (c) the premium value of life insurance paid by the Company.

The UIL Holdings' Executive Incentive Compensation Program was established in
1985 for the purposes of (i) helping to attract and retain executives and key
managers of high ability, (ii) heightening the motivation of those executives
and key managers to attain goals that are in the interests of shareowners and
customers, and (iii) encouraging effective management teamwork among the
executives and key managers. Under this program, cash awards may be made each
year to officers and key employees based on their achievement of pre-established
performance levels with respect to specific shareowner goals, customer goals and
individual goals for the preceding year, and upon an assessment of the officers'
performance as a group with respect to strategic opportunities during that year.
Eligible UIL Holdings' officers, performance levels and specific goals are
determined each year by the Compensation and Executive Development Committee.
Incentive awards are paid following the conclusion of an evaluation by the
Compensation and Executive Development Committee after the close of the year.

Incentive awards are made based on individual target incentive award amounts,
which are prescribed percentages of the individual participants' salaries,
ranging from 16% to 70%, depending on each participant's payroll salary grade or
competitive market conditions. A participant may, by achieving his or her
pre-established performance levels with respect to specific shareowner goals,
customer goals and individual goals for a year, become eligible for an incentive
award for this achievement of up to 150% of his or her target incentive award
amount for that year.

EMPLOYMENT AGREEMENTS

UIL Holdings' direct subsidiary, The United Illuminating Company (UI), has
entered into an employment agreement with Mr. Woodson, which continues in effect
until terminated by UI at any time or by Mr. Woodson on six months' notice. This
agreement provides that the annual salary rate of Mr. Woodson will be $400,000,
subject to upward revision by the Board of Directors at such times as the salary
rates for other officers are reviewed by the Directors, and subject to downward
revision by the Board of Directors contemporaneously with any general reduction
of the salary rates of other officers, except in the event of a change in
control of UIL Holdings. The salary paid to Mr. Woodson in 2001, 2002 and 2003,
shown on the above table, was paid pursuant to this agreement. This agreement
also provides that when Mr. Woodson's employment by UI terminates after he has
served in accordance with its terms, UI will pay him an annual supplemental
retirement benefit in an amount equal to the excess, if any, of (A) over (B),
where (A) is 2.0% of his highest three-year average total salary and bonus
compensation, multiplied by the number of years (not to exceed 30) of his deemed
service as an employee, and (B) is the annual benefit payable to him under the
UI pension plan. The agreement also provides that for each of his first five
years of actual service, Mr. Woodson will be credited with three years for
purposes of calculating the benefit payable to him under the UI pension plan. As
of December 31, 2003, Mr. Woodson has 15.8 years of combined service under the
supplemental plan and the qualified plan and a three-year average compensation
level (salary and bonus) of $720,542. Assuming he retired on December 31, 2003,
his annual benefit at age 65 under the qualified pension plan would be $18,667
payable in a single life annuity. Under the foregoing facts and assumptions, if
Mr. Woodson retired on December 31, 2003, his annual benefit at age 65 under the
supplementary plan would be $209,505 payable in a single life annuity. If UI
terminates Mr. Woodson's employment on less than three years' notice and without
cause, he will receive four benefits: (i) he will be paid the lump sum present
value of his supplemental retirement benefit, which will be calculated by
assuming that he retires at his normal retirement date and lives until the age
when an average person dies; (ii) he will continue to receive his then-current
salary for a period of three years; (iii) he will continue to participate in the
employee benefit plans and programs in which he participated prior to his
termination for one year; and (iv) if his termination occurs in connection with
a change in control of UIL Holdings, the three-years' salary continuation
benefit will be accelerated into an immediate lump-sum payment, and he will
choose either a cash severance payment equal to a year of his then-current
salary and bonus compensation, or an increase of any combination of years of
age, or years of service as an employee, totaling six, for purposes of
calculating his supplemental retirement benefit and the benefits payable under
the UI retiree medical benefit plans. Under UIL Holdings' Change in Control
Severance Plan, if Mr. Woodson's employment is terminated without cause within
two years following a change in control of UIL Holdings and it provides a
greater benefit than that available under his employment agreement, he will be
entitled to receive, in lieu of his employment agreement termination benefits, a
severance payment of three years' compensation at his then-current salary and
bonus rate, an increase of three years of service in the calculation of his
supplemental retirement benefit and the benefits payable under the UI retiree
medical benefit plans, and three years of continued participation in the
employee benefit plans and programs in which he participated prior to his
termination.

UIL Holdings has entered into an employment agreement with Mr. Paglia, which
continues in effect until terminated by UIL Holdings at any time or by Mr.
Paglia on six months' notice. This agreement provides an annual salary of
$255,000, subject to upward revision by the Board of Directors at such times as
the salary rates of other officers are reviewed by the Directors, and subject to
downward revision by the Board of Directors contemporaneously with any general
reduction of the salary rates of other officers, except in the event of a change
in control of UIL Holdings. The salary paid to Mr. Paglia in 2002 and 2003,
shown on the above table, was paid pursuant to this agreement. This agreement
also provides that when Mr. Paglia's employment by UIL Holdings terminates after
he has served in accordance with its terms, UIL Holdings will pay him an annual
supplemental retirement benefit in an amount equal to the excess, if any, of (A)
over (B), where (A) is 2.0% of his highest three-year average total salary and
bonus compensation, multiplied by the number of years of his deemed service as
an employee, and (B) is the benefit payable to him under the UI pension plan. As
of December 31, 2003, Mr. Paglia has 1.7 years of combined service under the
supplemental plan and the qualified plan and a two-year average compensation
level (salary and bonus) of $273,504. Assuming he voluntarily terminated service

on December 31, 2003, his annual benefit at age 65 under the qualified pension
plan would be $0, because he is not yet vested under the qualified plan. Under
the foregoing facts and assumptions, if Mr. Paglia voluntarily terminated on
December 31, 2003, his annual benefit at age 65 under the supplementary plan
would be $9,117 payable in a single life annuity. If UIL Holdings terminates Mr.
Paglia's employment without cause, he will receive three benefits: (i) he will
be paid the lump sum present value of his supplemental retirement benefit, which
will be calculated based on the addition of two years of service as an employee
(the present value of the benefit will be calculated by assuming that he retires
at his normal retirement date and lives until the age when an average person
dies); (ii) he will receive a lump sum payment in an amount equal to his base
salary and bonus earned prior to his termination, plus two times his base salary
and bonus compensation immediately prior to the date of his termination; and
(iii) he will continue to participate in the employee benefit plans and programs
in which he participated prior to his termination for two years. Under UIL
Holdings' Change in Control Severance Plan, if Mr. Paglia's employment is
terminated without cause within two years following a change in control of UIL
Holdings and it provides a greater benefit than that available under his
employment agreement, he will be entitled to receive, in lieu of his employment
agreement termination benefits, a severance payment of two years' compensation
at his then-current salary and bonus rate, an increase of two years of service
in the calculation of his supplemental retirement benefit and the benefits
payable under the UIL Holdings retiree medical benefit plans, and two years of
continued participation in the employee benefit plans and programs in which he
participated prior to his termination.

UIL Holdings' direct subsidiary, UI, has also entered into employment agreements
with Ms. Allen and Mr. Pepe, each of which continues in effect until terminated
by UI at any time or by the officer on six months' notice. These agreements
provide that the annual salary rates of Ms. Allen and Mr. Pepe will be $100,000
and $100,000, respectively, subject to upward revision by the Board of Directors
at such times as the salary rates for other officers are reviewed by the
Directors, and subject to downward revision by the Board of Directors
contemporaneously with any general reduction of the salary rates of other
officers, except in the event of a change in control of UIL Holdings. The
salaries paid to Ms. Allen and Mr. Pepe in 2001, 2002 and 2003, shown on the
above table, were paid pursuant to these agreements. Mr. Pepe's agreement also
provides that when his employment by UI terminates after he has served in
accordance with its terms, UI will pay him an annual supplemental retirement
benefit in an amount equal to the excess, if any, of (A) over (B), where (A) is
(x) 1.9% of his highest three-year average total salary and bonus compensation,
multiplied by the number of years of his service as an employee, which number of
years is not to exceed 25 years, plus (y) by 0.1% of his highest three-year
average total salary and bonus, multiplied by the number of years of his service
as an employee in excess of 25 years, which number of years is not to exceed 5
years, and (B) is the annual benefit payable to him under the UI pension plan.
As of December 31, 2003, Mr. Pepe has 25.6 years of combined service under the
supplemental plan and the qualified plan and a three year average compensation
level (salary and bonus) of $184,758. Assuming he voluntarily retired on
December 31, 2003, his annual benefit at age 65 under the qualified pension plan
would be $75,626 payable as a single life annuity. Under the foregoing facts and
assumptions, if Mr. Pepe voluntarily retired on December 31, 2003, his annual
benefit at age 65 under the supplementary plan would be $12,240 payable as a
single life annuity. If UI terminates Mr. Pepe's employment without cause, he
will choose either a severance payment equal to two years of his then-current
salary and bonus compensation, or an increase of any combination of years of
age, or years of service as an employee, totaling six, for purposes of
calculating his retirement benefit and the benefits payable under the UI retiree
medical benefit plans. If UI terminates Ms. Allen's employment without cause,
she will receive a severance payment equal to two years of her then-current
salary and bonus, two years of continued participation in UI's employee benefit
plans and programs, and the addition of two years of service as an employee for
purposes of calculating her retirement benefit and the benefits payable to her
under the UI retiree medical benefit plans. Under UIL Holdings' Change in
Control Severance Plan, if the employment of either of these officers is
terminated without cause within two years following a change in control of UIL
Holdings and it provides a greater benefit than that available under his or her
employment agreement, the officer will be entitled to receive, in lieu of his or
her employment agreement termination benefits, a severance payment of two years'
compensation at his or her then-current salary and bonus rate, an increase of
two years of service in the calculation of his or her retirement benefit and the
benefits payable under the UI retiree medical benefit plans, and two years of
continued participation in the employee benefits plans and programs in which he
or she participated prior to his or her termination.

A rabbi trust has been established to ensure that the supplemental retirement
benefits accruing under the employment agreements with Messrs. Woodson, Pepe and
other officers will be paid in accordance with the terms of such agreements, and
to ensure the performance of payment obligations under each of these employment
agreements. The trust also assists the Company in meeting its obligations under
the UIL Holdings' Change in Control Severance Plan in the event of a change in
control of UIL Holdings.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Number of % of Total
Securities Options/SARS
Underlying Granted to Exercise or Grant
Options/SARS Employees in Base Price Expiration Date Present
Name Granted (#) Fiscal Year ($/Share) Date Value $ (1)
---- ----------- ----------- --------- ---- ------------
Nathaniel D. Woodson 100,000 32.5% $36.125 05/02/13 $812,000
Louis J. Paglia 25,000 8.1 36.125 05/02/13 203,000
Susan E. Allen 5,000 1.6 36.125 05/02/13 40,600
Gregory W. Buckis 5,500 1.8 38.475 07/28/13 44,660
Charles J. Pepe 6,000 1.9 36.125 05/02/13 48,720

---------------------------

(1) Based on valuations using the binomial option methodology. Specific factors
included in the valuation include a 3 year volatility of 28.34%, a
risk-free interest rate of 4.50%, a 3 year dividend yield of 6.22% and a
time to exercise of 10 years. The binomial option methodology is used to
determine the executive stock option grants.

These grants consist of options to purchase shares of UIL Holdings' common stock
granted on May 2, 2003 to Messrs. Woodson, Paglia, Pepe, and Ms. Allen and on
July 28, 2003 to Mr. Buckis. The options include reload rights and are
exercisable at the rate of one-third of the options on each of the first three
anniversaries of the grant date.

STOCK OPTION EXERCISES IN 2003 AND YEAR-END OPTION VALUES

The following table shows aggregated common stock option exercises during 2003
by (i) the Chief Executive Officer of UIL Holdings and (ii) each of the other
four most highly compensated persons who served as executive officers of UIL
Holdings at the end of 2003, including the aggregate value of gains realized on
the dates of exercise. In addition, this table shows the number of shares
covered by both exercisable and unexercisable options as of December 31, 2003.
Also reported are the values as of December 31, 2003 for "in-the-money" options,
calculated as the positive spread between the exercise price of existing options
and the year-end fair market value of UIL Holdings' common stock.

The amounts listed in the column captioned "Value of Unexercised In-the-Money
Options/SARs at FY-End($)" in the table below represent the fair market value of
the shares of common stock underlying the options listed as of December 31, 2003
($45.10 per share) minus the exercise price.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired on Value Options/SARs at FY-End(#) at FY-End($)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
Nathaniel D. Woodson - - 193,248 173,333 151,715 897,500
Louis J. Paglia - - 6,667 38,333 - 224,375
Susan E. Allen - - 4,601 8,632 1,813 44,875
Gregory W. Buckis - - - 5,500 - 36,438
Charles J. Pepe - - 3,434 9,632 6,451 53,850

RETIREMENT PLANS

The following table shows the estimated annual benefits payable as a single life
annuity under UI's qualified defined benefit pension plan on retirement at age
65 to persons in the earnings classifications and with the years of service
shown. Retirement benefits under the plan are determined by a fixed formula,
based on years of service and the person's average annual earnings during the
three years during which the person's earnings were the highest, applied
uniformly to all persons.

Average
Annual Earnings During
the Highest 3 Estimated Annual Benefits Payable at Age 65
-------------------------------------------
Years of Service 20 Years 25 Years 30 Years 35 Years 40 Years
---------------------- -------- --------- -------- -------- ---------
$100,000 $32,000 $40,000 $48,000 $48,000 $48,000
150,000 48,000 60,000 72,000 72,000 72,000
200,000 64,000 80,000 96,000 96,000 96,000
250,000 64,000 80,000 96,000 96,000 96,000
300,000 64,000 80,000 96,000 96,000 96,000
350,000 64,000 80,000 96,000 96,000 96,000
400,000 64,000 80,000 96,000 96,000 96,000
450,000 64,000 80,000 96,000 96,000 96,000
500,000 64,000 80,000 96,000 96,000 96,000

Earnings amounts listed in the column captioned "Average Annual Earnings During
the Highest 3 Years of Service" include annual salary and cash bonus awards paid
under the Executive Incentive Compensation Program (see "Executive Compensation"
above). The annual estimated benefit amounts shown in the table are not subject
to any deduction for Social Security or other offset amounts.

Internal Revenue Code Section 401(a)(17) limits earnings used to calculate
qualified plan benefits to $200,000 for 2003. This limit was used in the
preparation of the table. The Board of Directors has funded a supplemental
executive retirement plan trust that permits the Directors to pay supplemental
retirement benefits to Messrs. Woodson, Pepe and other officers individually
selected by the Directors in amounts sufficient to prevent these Internal
Revenue Code limitations from adversely affecting their retirement benefits
determined by the pension plan's fixed formula.

As of their last employment anniversary dates, Messrs. Woodson, Paglia, Pepe,
and Buckis and Ms. Allen had 6, 1, 25, 0 and 20 years of service, respectively.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Under the terms of the Supplemental Executive Retirement Plan (SERP) and the
terms of the employment agreements of three of the named executive officers
(Messrs. Woodson, Paglia and Pepe), the executive officer may be entitled to a
supplemental retirement benefit equal to the excess, if any, of (A) over (B),
where (A) is a percentage stated in the executive's employment agreement of the
executive's highest three-year average total salary and bonus compensation times
the number of years of his deemed service as an employee (subject in some cases
to a cap), and (B) is the annual benefit payable to him under the UI pension
plan.

For quantification of the SERP benefits to which Messrs. Woodson, Paglia and
Pepe are entitled, see EXECUTIVE COMPENSATION - EMPLOYMENT AGREEMENTS, above.

BOARD OF DIRECTORS
COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

All of The Members of the Compensation and Executive Development Committee of
the Board of Directors (Committee) are non-employee Directors.

During 2003, the Committee retained a new outside compensation consulting firm
to assist and advise regarding all policies and plans pertaining to compensation
of the Chief Executive Officer and other officers and key employees of UIL
Holdings and its subsidiaries. The Committee determines the compensation of the
Chief Executive Officer based on its evaluation of his performance in light of
goals and objectives it has established. The Committee recommends to the Board
of Directors all of the elements of the compensation of other officers,
including the design and adoption of incentive compensation programs, the
identity of program participants, salary grades and structure, and annual
salaries. The Committee establishes the performance goals applicable to the
annual incentive compensation plan, administers the plan and certifies that
performance goals and any other material terms were in fact satisfied before
authorizing payment of any awards. With respect to the long-term incentive plan,
the Committee administers the plan and makes grants and awards under the plan.
The Committee held 16 meetings in 2003, met in executive session 10 times, and
utilized the expertise of its outside consultant multiple times.

The compensation of UIL Holdings' officers for the year 2003, as described above
at "Executive Compensation," was paid and awarded to the named individuals,
other than Mr. Paglia and Mr. Buckis, as officers of both UIL Holdings and its
direct subsidiary, The United Illuminating Company (UI). Compensation was paid
and awarded to Mr. Paglia and Mr. Buckis as officers of UIL Holdings.

The executive compensation program for 2003 consisted of three components:
annual salaries, bonuses under an annual incentive compensation program, and
long-term incentive program awards. The overall objective of this program is to
attract and retain qualified executives and to produce strong financial
performance for the benefit of shareowners, while providing a high level of
service and value for our customers. Accordingly, all of the Committee's
decisions in 2003 have ultimately been based on the Committee's assessment of
UIL Holdings' performance and that of its business units in these regards. As
benchmarks for 2003, the Committee compared UIL Holdings' overall compensation
levels and programs relative to other energy service and general industry
companies of comparable size. The Committee also considered UIL Holdings'
strategic objectives and challenges.

The base salary range for each officer was based on a weighted blend of median
base salary levels for comparably-sized companies that reflected UIL Holdings'
portfolio (using the 2002 based blend of 70% utility and 30% general industry)
based on revenues. Within the applicable range, each individual officer's annual
salary was then set at a level that would compensate the officer for day-to-day
performance, in the light of the officer's level of responsibility, past
performance and potential future contributions to strategic objectives.

As described in detail above at "Executive Compensation," the annual incentive
compensation program and the long-term incentive program are performance-based,
and intended to reward performance within different time-frames. Under the
annual Executive Incentive Compensation Program, cash awards may be made each
year to officers based on their achievement of performance levels formulated by
the Committee with respect to (1) specific financial goals, (2) specific
corporate or business unit goals, (3) specific team/individual goals, and (4)
assessment of the officers' performance as a group with respect to strategic
opportunities during that year. The UIL Holdings Corporation 1999 Amended and
Restated Stock Plan, which was approved by shareowners in 2003, rewards officers
and key employees for contributing to the success of the Company over the longer
term, and enables the Company to attract, retain and reward the officers and
managerial employees who possess the required experience and talent.

For 2003, the bonus opportunities of UIL Holdings' officers were targeted by the
Committee so that the combination of each officer's 2003 salary and annual
Executive Incentive Compensation Program award, assuming that pre-established
performance goals were met, would approximate, on average, the 50th percentile
of the weighted blend of 70% median utility and 30% median general industry
salary and target annual award opportunity levels for comparably-sized
companies. Goals were established to focus the officers' attention on corporate
financial measures or on business unit goals based on financial, operational,
customer and human resource measures. For 2003, the pre-established corporate
financial goals, accounting for 60% of the bonus awards of each of the Chairman
of the Board of Directors, President and Chief Executive Officer and the
Executive Vice President and Chief Financial Officer, and 50% of the other
officers' bonus awards, included two measures: recurring earnings per share from
operations and recurring cash from operations available for capitalization
reduction or investment. The remaining 40% of the bonus awards of each of the
Chairman of the Board of Directors, President and Chief Executive Officer and
the Executive Vice President and Chief Financial Officer, and the remaining 50%
of the other officers' bonus awards for 2003 was based on (1) the Committee's
assessment of the performance of all corporate officers as a group with respect
to 2003 strategic opportunities and (2) the Committee's assessment of the
leadership capabilities of each corporate officer with respect to
pre-established competencies.

The officers' achievements with respect to 2003 pre-established shareowner
financial goals were mixed: 0% of target was achieved with respect to the
recurring earnings per share from operations goal and 150% of target was
achieved with respect to the recurring cash available for capitalization
reduction or investment goal. Achievements of specific business unit goals were
also mixed, and ranged between 0% and 116% of target.

Overall, since the UIL Holdings' earnings per share threshold for 2003 was not
attained, no bonus awards were paid under the Executive Incentive Compensation
Program. Special limited recognition awards were approved by the Committee for
the President of UI and his direct reports, as well as for the direct reports of
the Executive Vice President and Chief Financial Officer of UIL Holdings,
depending on the individual executive's achievements.

Under the 1999 Amended and Restated Stock Plan, the officers and other
executives were awarded, in 2003, a total of 307,810 Non-qualified Stock
Options, with reload rights. The number of options granted to each executive was
based on median long-term award levels for comparably-sized companies.

Section 162(m) of the Internal Revenue Code provides that no deduction will be
available to a publicly-held corporation for any compensation in excess of $1
million paid in a tax year to certain executive officers, unless certain
conditions are satisfied. The Company prefers to preserve deductibility when
possible, unless it is in the Company's best interest to pay compensation that
may not be fully deductible.

CHIEF EXECUTIVE OFFICER COMPENSATION FOR 2003

In March of 2003, the Committee recommended, and the Board of Directors
approved, a 2003 annual salary of $567,600 for Mr. Woodson, as Chairman of the
Board of Directors, President and Chief Executive Officer. This annual salary
was at the median of comparable salary data for the weighted blend of data from
energy services and general industry companies of comparable size. It was the
Committee's judgment that the salary was appropriate for an executive with the
skills and abilities needed to successfully lead UIL Holdings in the tumultuous
general business environment and the recently deregulated utility industry. Mr.
Woodson's bonus performance target for 2003 under the annual Executive Incentive
Compensation Program was set based on a threshold level of recurring earnings
per share from operations, and pre-established goals with respect to recurring
cash from operations available for capitalization reduction or investment, and
strategic opportunities. Because earnings per share were below the required
threshold level, Mr. Woodson received no bonus for 2003.

COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE

Dated March 22, 2004

David E. A. Carson
John F. Croweak*
John L. Lahey
F. Patrick McFadden, Jr.
Daniel J. Miglio (Chair)

*Mr. Arnold Chase was also a member of the Committee during 2003 and was
replaced on the Committee by Mr. Croweak on February 23, 2004.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No Director of UIL Holdings who served as a member of the Compensation and
Executive Development Committee during 2003 was, during 2003 or at any time
prior thereto, an officer or employee of UIL Holdings. During 2003, no Director
of UIL Holdings was an executive officer of any other entity on whose Board of
Directors an executive officer of UIL Holdings served.

DIRECTOR COMPENSATION

Directors who are employees receive no compensation for their service as
Directors.

The remuneration of non-employee Directors includes an annual retainer fee of
$21,000, payable $9,000 for service during the first quarter of the year and
$4,000 each for service during the second, third and fourth quarters of the year
(the $9,000 retainer fee payable for service during the first quarter of the
year is payable in shares of UIL Holdings' common stock or by credit to a stock
account under the Non-Employee Directors' Common Stock and Deferred Compensation
Plan described below), plus a fee of $1,000 for each meeting of the Board of
Directors or Committee of the Board of Directors attended. The Lead Director and
Committee chairpersons (other than the chairs of the Audit Committee and the
Compensation and Executive Development Committee) receive an additional fee of
$750 per quarter each year. The additional fees of the chairs of the Audit
Committee and the Compensation and Executive Development Committee are $2,250
per quarter each year and $1,500 per quarter each year, respectively.
Non-employee Directors are also provided travel/accident insurance coverage in
the amount of $200,000.

The Non-Employee Directors' Common Stock and Deferred Compensation Plan has two
features: a mandatory common stock feature; and an optional deferred
compensation feature. Each non-employee Director has two accounts in the plan: a
stock account for the accumulation of units that are equivalent to shares of
common stock, and on which amounts equal to cash dividends on the shares of UIL
Holdings' common stock represented by stock units in the account accrue as
additional stock units; and a cash account for accumulation of the Director's
fees payable in cash that the Director elects to defer, and on which interest
accrues at the prime rate in effect at the beginning of each month at Citibank,
N.A.

Under the common stock feature of the plan, a credit of stock units to each
non-employee Director's stock account in the plan is made on or about the first
day of March in each year, unless the Director elects to receive shares of
common stock in lieu of having an equivalent number of stock units credited to
his or her stock account. Each annual stock account credit consists of a number
of whole and fractional stock units equal to the sum of 200 plus the quotient
resulting from dividing the retainer fee for the first quarter of the year by
the market value of UIL Holdings' common stock on the date of the credit.

Under the deferred compensation feature of the plan, a non-employee Director may
elect to defer receipt of all or part of (i) his or her retainer fee for service
during the second, third and fourth quarters of each year, (ii) his or her
committee chairperson fees, and/or (iii) his or her meeting fees, that are
payable in cash. All amounts deferred are credited when payable, at the
Director's election, to either the Director's cash account or to the Director's
stock account (in a number of whole and fractional stock units based on the
market value of UIL Holdings' common stock on the date the fee is payable) in
the plan.

All amounts credited to a non-employee Director's cash account or stock account
in the plan are at all times fully vested and nonforfeitable, and are payable
only upon termination of the Director's service on the Board of Directors. At
that time, the cash account is payable in cash and the stock account is payable
in an equivalent number of shares of UIL Holdings' common stock.

Under the 1999 Amended and Restated Stock Plan, each non-employee Director was
granted 1,200 shares of restricted stock on March 25, 2003. These restricted
shares vest on the third anniversary of the grant.

SHAREOWNER RETURN PRESENTATION

The line graph appearing below compares the yearly change in UIL Holdings'
cumulative total shareowner return on its common stock with the cumulative total
return on the S and P Composite-500 Stock Index, the S and P Public Utility
Index and the S and P Electric Power Companies Index for the period of five
fiscal years commencing 1999 and ending 2003.


                    1998       1999        2000       2001       2002      2003
                    ----       ----        ----       ----       ----      ----
 UIL                $100       $105        $108       $118        $90     $122
 S and P 500         100        120         107         93         72       90
 S and P Pub. Uty.   100         87         132         89         60       72
 S and P El. Co.     100         80         117         94         77       91

---------------------------

*  Assumes that the value of the investment in UIL Holdings' common stock and
   each index was $100 on December 31, 1998 and that all dividends were
   reinvested. For purposes of this graph, the yearly change in cumulative
   shareowner return is measured by dividing (i) the sum of (A) the cumulative
   amount of dividends for the year, assuming dividend reinvestment, and (B) the
   difference in the fair market value at the end and the beginning of the year,
   by (ii) the fair market value at the beginning of the year. The changes
   displayed are not necessarily indicative of future returns measured by this
   or any method.


                               BOARD OF DIRECTORS
                          REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors (Committee) is responsible for
providing independent, objective oversight of UIL Holdings' accounting functions
and internal controls. The Committee is comprised of six independent Directors,
and acts under a written charter adopted by the Board of Directors. On February
23, 2004, the Board of Directors adopted an Audit Committee Charter that meets
the current requirements of the Securities and Exchange Commission and New York
Stock Exchange and is attached to this Proxy Statement as Exhibit A and is
posted on the Corporation's website, www.uil.com.



                                       23




UIL Holdings' management, including its internal audit staff, is responsible for
UIL Holdings' internal financial controls and the financial reporting process.
UIL Holdings' independent public accountants are responsible for performing an
independent audit of UIL Holdings' consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.

The Committee's meetings are structured and conducted to facilitate and
encourage open communications between the Committee and UIL Holdings' internal
audit staff, between the Committee and UIL Holdings' independent public
accountants, PricewaterhouseCoopers LLP, and between the Committee and UIL
Holdings' executive management. During these meetings, the Committee has
reviewed and discussed with management and PricewaterhouseCoopers the quarterly
financial statements included in quarterly reports on Form 10-Q filed with the
Securities and Exchange Commission during the year ended December 31, 2003 and
audited financial statements for the year ended December 31, 2003. Discussions
with PricewaterhouseCoopers have also included the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees). PricewaterhouseCoopers has also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee has
discussed with PricewaterhouseCoopers that firm's independence. The Committee
received and reviewed a report from PricewaterhouseCoopers related to the firm's
quality control procedures and reviews, and inquiries or investigations by
government or professional authorities.

Based on its reviews and discussions with UIL Holdings' management, including
its internal audit staff, and with PricewaterhouseCoopers, the Committee
recommended to the Board of Directors that UIL Holdings' audited financial
statements for the year ended December 31, 2003 be approved and included in UIL
Holdings' Annual Report on Form 10-K filed with the Securities and Exchange
Commission.

For the years ended December 31, 2003 and December 31, 2002,
PricewaterhouseCoopers billed UIL Holdings the following fees for services
rendered:


                                           2003                     2002
                                          -----                    -------
         Audit Fees (1)                  $569,000                 $448,800

         Audit-Related Services Fees       71,560                  166,913

         Tax Fees                         149,887                  157,546

         All Other Fees                         0                        0
                                         --------                 ---------
         Total Fees Billed               $790,447                 $773,259
                                         ========                 =========


         ---------------------------

         (1)  For the audit of UIL Holdings' annual financial statements for the
              year ended December 31, 2003 and 2002, for review of the quarterly
              financial statements included in UIL Holdings' Quarterly Reports
              on Form 10-Q, and for comfort or consent letters in connection
              with financing transactions.


Included in the category "Audit-Related Services Fees" were fees billed for
employee benefit plan audits, internal control reviews, and due diligence
investigations performed in connection with proposed acquisitions of other
businesses. Included in the "Tax Fees" category were fees billed for personal
property tax filings and other tax compliance work. After review and discussion,
the Committee has concluded that PricewaterhouseCoopers' provision of non-audit
services to UIL Holdings is compatible with maintaining PricewaterhouseCoopers'
auditor independence. The Committee has adopted a policy requiring pre-approval
by the Committee before PricewaterhouseCoopers is engaged for any non-audit
services and all of the fees noted in the chart above were approved by the
Committee.



                                       24




                                 AUDIT COMMITTEE

                           David E. A. Carson (Chair)
                                 John F. Croweak
                                Betsy Henley-Cohn
                                Daniel J. Miglio
                                William F. Murdy
                                 James A. Thomas

   PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee of the Board of Directors, at a meeting held on February 13,
2004, voted to employ the firm of PricewaterhouseCoopers LLP to perform an audit
of the books and affairs of UIL Holdings for the fiscal year 2004. One or more
representatives of PricewaterhouseCoopers LLP will attend the annual meeting,
will be afforded the opportunity to make a statement if they desire to do so,
and will be available to answer questions that may be asked by shareowners.

Shareowner ratification of the selection of PricewaterhouseCoopers LLP as UIL
Holdings' independent auditors is not required by UIL Holdings' bylaws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the shareowners for ratification as a matter of
good corporate practice. If the shareowners fail to ratify the selection, the
Audit Committee will reconsider the selection of that firm. The Audit Committee
in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if it determines that such a change
would be in the best interests of UIL Holdings and its shareowners.

VOTE REQUIRED FOR APPROVAL

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, the proposal to ratify the Audit Committee's selection
of PricewaterhouseCoopers LLP as UIL Holdings' independent public accountants
will be approved if the votes cast in favor of this action exceed the votes cast
against it. Proxies marked to abstain from voting with respect to this action
will not have the legal effect of voting against it.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL
CONCERNING THE RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS.

PROPOSAL NO. 3 - APPROVAL OF THE UIL HOLDINGS CORPORATION SENIOR EXECUTIVE
                  INCENTIVE COMPENSATION PROGRAM

The Board of Directors recommends that shareowners vote to approve the UIL
Holdings Corporation (UIL Holdings or the Company) Senior Executive Incentive
Compensation Program (the Incentive Program). Such shareowner approval will
enable UIL Holdings to claim tax deductions for incentive awards earned and paid
under the Incentive Program without limitation under Section 162(m) of the
Internal Revenue Code.

If approved by shareowners, the Incentive Program will provide to senior members
of the UIL Holdings' management team the opportunity to earn cash incentive
awards for annual and long-term performance. The Board of Directors regards the
Incentive Program as an important means by which the Company can link executive
pay to performance. By providing for competitive levels of annual and long-term
incentive compensation in a program that is fully tax deductible by the Company,
the Incentive Program can help to attract and retain senior management of high
ability.

The Incentive Program authorizes annual incentive awards on terms similar to
those of the Company's existing Executive Incentive Compensation Program. The
Board determined to create a separate program, however, that would meet the
requirements for performance-based compensation under Section 162(m), with the
intent that executive officers would be authorized to receive annual incentive
awards under the new Incentive Program while other members of senior management
of UIL Holdings would continue to participate in the existing program. The new
Incentive Program also authorizes long-term incentive awards that can qualify as
performance-based compensation under Section 162(m).



                                       25




The Compensation and Executive Development Committee of the Board of Directors
(the CEDC) will select the participants in the Incentive Program, with persons
who are or may become executive officers of UIL Holdings being eligible for
selection. Currently, UIL Holdings has five executive officers.

DESCRIPTION OF THE INCENTIVE PROGRAM

The following description of the Incentive Program is qualified in its entirety
by the provisions of the Incentive Program, a copy of which is attached as
Appendix B to this Proxy Statement. The Incentive Program authorizes the CEDC to
select participants and authorizes cash-based performance awards that may be
earned by achievement of performance goals measured over a designated
performance period, and set the other terms of performance awards. The CEDC can
set the length of the performance period, which can be for one year or any
period longer or shorter than one year. All awards are intended to qualify as
"performance-based compensation" under Section 162(m). Therefore, the CEDC must
set objective performance goals and related terms of awards during the first 90
days of a performance period, and in any event before more than 25% of the
performance period has elapsed.

The Incentive Program permits the CEDC to measure performance using a variety of
business criteria, including the following:

o   net income;
o   earnings, before or after income taxes;
o   earnings per share;
o   pre-tax operating income;
o   expense management;
o   profitability, including profitability of an identifiable business unit or
    product revenue;
o   shareowner value creation measures, including but not limited
    to stock price or total shareowner return;
o   return measures, including return on assets (gross or net), return on
    investment, return on capital, or return on equity;
o   cash flow, free cash flow, cash flow return on investment (discounted
    or otherwise), net cash provided by operations, or cash flow in
    excess of cost of capital;
o   net economic profit (operating earnings minus a charge for capital) or
    economic value created;
o   strategic innovation;
o   dividend levels; or
o   strategic business criteria, consisting of one or more objectives based on
    meeting specified market penetration,  geographic business expansion goals,
    cost targets,  completion of capital and debt  transactions,  customer
    satisfaction, employee satisfaction, management of employment practices and
    employee benefits, supervision  of litigation  and  information  technology,
    and goals relating to acquisitions or divestitures of subsidiaries,
    affiliates or joint ventures.

The CEDC can base a performance goal on a combination of these criteria, and may
specify the goal based on Company-wide performance or performance of a business
unit or subsidiary. The targeted level of performance may be established in any
objective manner the CEDC may select, including in absolute terms, as a goal
relative to performance in prior periods, or as a goal compared to the
performance of comparable companies or an index covering multiple companies.

The Incentive Program provides that a participant may potentially earn incentive
awards not exceeding his or her "Annual Limit" in any calendar year. The Annual
Limit is $2.5 million, plus the amount of the participant's unused cumulative
Annual Limits as of the close of the previous calendar year. Any unused Annual
Limit that is not used within five years of the original opportunity ceases to
be available for use. For purposes of determining the extent to which a
participant has used an Annual Limit plus any carryover limit, the participant's
Incentive Award Opportunity is deemed paid at the maximum level, even though the
participant may receive less than the maximum level of payout.

For annual incentive awards, the CEDC will consider the recommendations of the
Chief Executive Officer regarding the eligible employees other than himself. It
then will set, for each participant, a target incentive award payable for target
level performance for the year and a maximum incentive award, not exceeding 200%
of the target incentive award, payable for achievement of the performance goals
at a designated maximum level. The CEDC may also designate a portion of the
target incentive award amount as payable for achievement of a designated

                                       26


threshold level of performance. The CEDC will establish the specific performance
goal(s) for the year and a range, grid, or formula that specifies the level of
achievement of the performance goal(s) that will result in the participant
potentially earning an incentive award at the threshold, target, maximum levels
or prorated amount between two levels. Failure to achieve a minimum level of
performance will result in no incentive award being earned. The CEDC can specify
goals, performance levels and other award terms for an individual participant or
for groups of participants.

The Incentive Program preserves the ability of the CEDC to consider more
subjective measures of performance, which have been a basis for determining
annual incentive awards under the Company's existing annual incentive program.
In order to consider any non-objective performance measure, the Incentive
Program requires that the CEDC specify an objective performance goal that must
first be met. Meeting the objective performance requirement will authorize the
payment of up to a specified amount, subject to the Incentive Program's limits,
with the CEDC permitted to evaluate a participant's performance against
subjective measures to determine the portion of this specified amount, if any,
that will be paid as an incentive award. The CEDC believes that the business
success of UIL Holdings depends on leadership and other accomplishments that can
involve subjective judgment, and therefore, have sought to preserve flexibility
in the Incentive Program while preserving the Company's ability to take tax
deductions for incentive awards under the Program.

Long-term incentive awards can be authorized under the Incentive Program in
generally the same manner as annual incentive awards, as described above. The
CEDC will determine the participants, the performance period (which generally
will extend over more than one year), the performance goals, the target and
maximum incentive awards and other amounts of the incentive award that may be
earned, and the corresponding levels of performance that must be achieved in
order for those amounts to be earned. Failure to achieve a minimum level of
performance will result in no incentive award being earned. As in the case of
annual incentive awards, the CEDC can consider subjective measures of
performance in addition to the objective performance goals, so long as an
objective performance goal has been met as a condition to payment of the
incentive award or a designated portion of the award. The assessment of
subjective measures in this way constitutes an exercise of discretion on the
part of the CEDC to reduce the incentive award earned.

Upon completion of a performance period, the CEDC must determine the level of
attainment of the pre-set performance goals and that other material requirements
have been met before any incentive award may be paid out. In determining the
final incentive award that will be paid to a participant, the CEDC has no
discretion to adjust the incentive award upward to the extent that the pre-set
objective performance goals were not achieved. As stated above, the CEDC retains
discretion to adjust incentive awards downward, which may be based in part on
the CEDC's evaluation of subjective performance measures if a mandatory
objective performance goal has been met.

The CEDC can determine for the Chief Executive Officer and recommend to the
Board for the other participating executives the circumstances in which awards
will be paid or forfeited in the event of a change in control, termination of
employment by the Company or other events. The CEDC may pay out an incentive
award in shares or share-based awards if it provided for such a payout at the
time it established a given performance goal and if the shares of common stock
or share-based awards are authorized under and drawn from an equity compensation
plan of the Company. The CEDC may also permit a participant to elect to defer
receipt of any portion of an incentive award into a deferred compensation
program of the Company.

The Board has authority to amend, suspend, or terminate the Incentive Program.
An amendment or modification must be approved by shareowners if such approval is
required to preserve the qualification of the Incentive Program under Section
162(m). Under this standard, however, amendments that might increase the cost of
the Incentive Program to the Company would not necessarily require shareowner
approval. The CEDC retains authority to adjust award terms and performance goals
to respond to changes in the Company's capital structure, acquisitions and other
extraordinary corporate events, but generally adjustments must be made in a
manner that preserves the qualification of awards under Section 162(m). The
adoption or shareowner approval of the Incentive Program does not limit the
authority of the CEDC to grant bonuses or pay other compensation apart from the
Incentive Program, which could include payment of other bonuses tied to annual
or long-term performance.



                                       27




SECTION 162(M) AND TAX TREATMENT OF AWARDS

Under Section 162(m), the Company's ability to claim a tax deduction for
compensation paid or accrued with respect to the executive officers named in the
table under Executive Compensation and serving as such on the final day of the
fiscal year is limited to $1 million per year, unless certain conditions are
satisfied. The Company prefers to preserve the deductibility when possible,
unless it is in the Company's best interest to pay compensation that may not be
fully deductible.

Certain types of compensation are exempted from this deductibility limitation,
however, including performance-based compensation. "Performance-based
compensation" is compensation paid (1) upon the attainment of an objective
performance goal or goals, (2) upon approval by the compensation committee or
its equivalent, which committee must be composed of independent Directors, and
(3) pursuant to a plan as to which shareowners have approved certain material
terms, specifically the eligibility, per-person limits, and the business
criteria upon which the performance goals are based. The Company intends that
awards under the Incentive Program to named executives should qualify as
"performance-based compensation" so that these awards will not count against the
$1 million threshold amount or otherwise be subject to the limitation on
deductibility under Section 162(m). Accordingly, shareowner approval of the
Incentive Program will be deemed to include approval of the Incentive Program's
terms relating to eligibility, annual per-person limitations on incentive
awards, and the business criteria upon which performance goals may be based.

Notwithstanding the foregoing, as stated above, a number of requirements must be
met in order for compensation to qualify as performance-based under Section
162(m), and there can be no assurance that compensation under the Incentive
Program will be fully deductible by the Company under all circumstances.

Participants in the Incentive Program will recognize income taxable at ordinary
income rates at the time an incentive award is paid out in cash. If the Company
permits deferrals of incentive awards, the taxation of the participant and the
Company's right to claim a tax deduction will be deferred until payout.


NEW PLAN BENEFITS UNDER THE INCENTIVE PROGRAM


Awards under the Incentive Program will be granted in the discretion of the
CEDC. Except as described below, the recipients and other terms of such awards
cannot be determined at this time. Information regarding the Company's recent
practices and actual payouts with respect to annual incentive awards under UIL
Holdings' existing Executive Incentive Compensation Program is presented in the
table under Executive Compensation and the "Board of Directors Compensation and
Executive Development Committee Report on Executive Compensation" above in this
Proxy Statement.

The CEDC has authorized annual incentive awards to executive officers for 2004
under the Incentive Program, subject to shareowner approval of the Incentive
Program, in order that those awards can qualify for full deductibility if they
are earned and paid out. The annual incentive awards will become payable for
2004 performance if corporate performance goals relating to earnings per share,
cash flow and other goals are achieved. Earnings per share and cash flow are to
be determined in accordance with pre-set, objective standards adopted by the
CEDC. If a specified level of earnings per share is achieved, the level of
achievement of certain individual goals will also be considered by the CEDC in
determining one component of the annual incentive award. The individual goals
include an assessment of leadership and an assessment of the level of
achievement of strategic opportunities goals by the Chief Executive Officer and
Chief Financial Officer and, in the case of other executive officers,
achievement of a variety of performance measures applicable to the business
units for which the executive officer has principal responsibility. The target
amounts shown below represent the approximate median levels for comparable-sized
companies. No amount will be payable unless a specified minimum performance
level is reached, and the award is payable at a designated maximum rate if
performance is achieved at a designated maximum level. This maximum payout will
require performance substantially in excess of the target performance level.



                                       28




The table below shows the amounts payable as authorized for achievement of
specified levels of performance for 2004:


                                New Plan Benefits
                 Senior Executive Incentive Compensation Program
                 -----------------------------------------------
                       2004 Annual Incentive Compensation

                                                      Payout for Performance at Specified Level
                                                      -----------------------------------------
          Name and Position                           Threshold         Target          Maximum
          -----------------                           ---------         ------          -------

Nathaniel D. Woodson                                   $210,000         $420,000       $840,000
   Chairman of the Board of Directors,
   President and Chief Executive
   Officer

Louis J. Paglia                                          76,350          152,700        305,400
   Executive Vice President and
   Chief Financial Officer

Susan E. Allen                                           23,100           46,200         92,400
   Vice President Investor Relations, Corporate
   Secretary and Assistant Treasurer

Gregory W. Buckis                                        26,520           53,040        106,080
   Controller


Charles J. Pepe                                          25,395           50,790        101,580
   Treasurer and Assistant Secretary                   --------         --------     ----------

Executive Officers as a Group (5 in number)            $361,365         $722,730     $1,445,460
                                                       ========         ========     ==========


In the event shareowners disapprove the proposed Incentive Program, incentive
awards will not be granted or paid out under its terms.

VOTE REQUIRED FOR APPROVAL

Under Connecticut law and UIL Holdings' bylaws, assuming that a quorum is
present at the meeting, the proposal to approve the UIL Holdings Corporation
Senior Executive Incentive Compensation Program will be approved if the votes
cast in favor of this action exceed the votes cast against it. Proxies marked to
abstain from voting with respect to this action will not have the legal effect
of voting against it.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL
CONCERNING THE APPROVAL OF THE UIL HOLDINGS CORPORATION SENIOR EXECUTIVE
INCENTIVE COMPENSATION PROGRAM.


DATE FOR SUBMISSION OF PROPOSALS BY SECURITY HOLDERS

Shareowners who intend to present proposals for action at the 2005 Annual
Meeting of the Shareowners are advised that such proposals must be received at
the principal executive offices of UIL Holdings by December 6, 2004 in order to
be included in the proxy statement and form of proxy for that meeting.

                                       29


UIL HOLDINGS HAS FILED AN ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2003 WITH THE SECURITIES AND EXCHANGE COMMISSION. UIL HOLDINGS WILL
PROVIDE YOU WITH A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS INCLUDED IN THE ANNUAL REPORT, WITHOUT CHARGE, IF YOU
REQUEST IT IN WRITING. PLEASE DIRECT YOUR WRITTEN REQUESTS TO SUSAN E. ALLEN,
VICE PRESIDENT INVESTOR RELATIONS AND CORPORATE SECRETARY, UIL HOLDINGS
CORPORATION, 157 CHURCH STREET, P.O. BOX 1564, NEW HAVEN, CONNECTICUT 06506.
COPIES OF THE ANNUAL REPORT ON FORM 10-K THAT ARE SENT TO YOU WILL NOT INCLUDE
EXHIBITS UNLESS YOU SPECIFICALLY REQUEST EXHIBITS AND AGREE TO PAY A FEE TO
DEFRAY THE COPYING AND POSTAGE COSTS (10 CENTS PER PAGE, PLUS POSTAGE).


                                By Order of the Board of Directors,

April 9, 2004                   SUSAN E. ALLEN
                                Vice President Investor Relations
                                and Corporate Secretary





                                       30














                                   APPENDIX A

                            UIL HOLDINGS CORPORATION
                             AUDIT COMMITTEE CHARTER















                      [THIS PAGE INTENTIONALLY LEFT BLANK]




                            UIL HOLDINGS CORPORATION
            CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
                     (AMENDED NOVEMBER, 1989; OCTOBER, 1992;
                 MARCH, 2000; 2001; MAY 7, 2003; FEBRUARY, 2004)



I.       AUDIT COMMITTEE MISSION

       The Audit Committee is appointed by the Board of Directors to assist the
       Board in fulfilling its oversight responsibilities. The Audit Committee's
       primary responsibilities and duties are to:

       o   Monitor the integrity of UIL Holdings' financial statements,
           financial reporting process and systems of internal controls
           regarding finance, accounting, and compliance with applicable laws,
           regulations and company policies.

       o   Monitor the independence, qualifications, and performance of UIL
           Holdings' independent auditors and Internal Audit Department.

       o   Provide an open avenue of communication among the independent
           auditors, financial and senior management, the Internal Audit
           Department, and the Board of Directors.

       The Audit Committee has authority to conduct any investigation
       appropriate to fulfilling its responsibilities, and it has direct access
       to the independent auditors, to any person in UIL Holdings, and to its
       outside legal counsel or other consultants or advisors. The Board and the
       Chief Executive Officer of the Company shall provide the Audit Committee
       with all of the resources, both internal and external, which the Audit
       Committee deems necessary or advisable to meet its duties and
       responsibilities and carry out its function. Without limiting the
       generality of the foregoing, the Audit Committee is empowered to retain,
       at UIL Holdings' expense, such special legal, accounting, or other
       consultants or experts as it deems necessary in the performance of its
       responsibilities and duties as set forth in this charter and as required
       by law, regulation or the rules of the New York Stock Exchange (NYSE).

II.    AUDIT COMMITTEE COMPOSITION AND MEETINGS

       The Audit Committee shall be comprised of five or more directors as
       determined by the Board of Directors, each of whom shall be an
       independent director (as defined by applicable law, regulation or rules
       of the NYSE), free from any relationship that would interfere with the
       exercise of his or her independent judgment as a member of the Committee.
       Without limiting the generality of the foregoing, committee members may
       not (i) receive any consulting, advisory or other compensatory fee from
       UIL Holdings or any of its subsidiaries other than in the member's
       capacity as a member of the Audit Committee, the Board, or any other
       Board committee or (ii) be an "affiliated person" of UIL Holdings or any
       of its subsidiaries (as defined in Rule 10A-3 under the Securities
       Exchange Act of 1934, as amended, as such rule may be amended from time
       to time).

       All members of the Audit Committee shall satisfy the applicable listing
       standards of the NYSE, including the financial literacy requirements,
       which the Board is permitted to interpret in its business judgment. At
       least one member of the Committee shall meet the definition of, and be
       designated, as an "audit committee financial expert" (as defined under
       applicable law, regulation or rules of the NYSE, as applicable).

       Audit Committee members shall be appointed by the Board of Directors on
       recommendation of the Corporate Governance/Nominating Committee of the
       Board of Directors, shall serve at the will of the Board and may be
       removed with or without cause by the affirmative vote of a majority of
       the members of the Board. Committee members may not serve on audit
       committees of more than two other public companies.

       The Audit Committee shall meet at least four times annually, or more
       frequently as circumstances dictate. The Committee may meet in person or
       telephonically, and may act by unanimous written consent. The Audit
       Committee Chair shall prepare and/or approve an agenda in advance of each
       meeting. The Audit Committee Chair will regularly report the Audit



                                       1


       Committee's findings, conclusions and recommendations to the Board. If an
       Audit Committee Chair is not designated or present, the members of the
       Committee may designate a Chair by majority vote of the Committee
       membership.

       The Audit Committee shall meet periodically in separate executive
       sessions with financial and senior management, the director of the
       Internal Audit Department, the independent auditors, and as a committee,
       to discuss any matters that the Committee or any of these persons believe
       should be discussed privately. In addition, the Committee, or at least
       its Chair, shall meet with financial and senior management and the
       independent auditors quarterly to review UIL Holdings' financial
       statements consistent with III.4. below.


III.   AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES

       Review Procedures
       -----------------
       The Audit Committee shall:

       1.    Review and reassess the adequacy of this Charter at least annually.
             Submit the Charter, and any recommended changes therein, to the
             Board of Directors for adoption. Have the Charter published in the
             proxy statement for the Annual Meeting of the Shareowners at least
             once in every three years, in accordance with Securities and
             Exchange Commission (SEC) regulations.

       2.    Review and discuss with financial and senior management and the
             independent auditor, UIL Holdings' annual audited financial
             statements and quarterly financial statements prior to their filing
             with the SEC or distribution, including UIL Holdings disclosures
             under "Management's Discussion and Analysis of Financial Condition
             and Results of Operation." This review and discussion shall include
             discussion with financial and senior management, the Internal Audit
             Department, and the independent auditors of:

             a. major issues regarding accounting principles and financial
                statement preparations, including any significant changes in UIL
                Holdings selection or application of accounting principles, and
                major issues as to the adequacy of the internal controls and any
                special audit steps adopted in light of material control
                deficiencies,

             b. analyses prepared by management or the independent auditor
                setting forth significant financial reporting issues and
                judgments made in connection with the preparation of the
                financial statements, including analysis of the effects of
                alternative GAAP methods on the financial statements practices
                and judgments,

             c. the effect of regulatory and accounting initiatives, as well as
                off-balance sheet structures, if any, on the financial
                statements of UIL Holdings, and

             d. matters covered in Statement of Auditing Standards (SAS) No. 61,
                and, following the Committee's receipt from the independent
                auditors of the written independence information called for in
                Independence Standards Board Standard No. 1, all significant
                relationships they have with UIL Holdings that could impair
                their independence.

       3.    Based on the review and discussion described in III.2. above,
             recommend to the Board of Directors that the annual audited
             financial statements be included in UIL Holdings' Annual Report on
             Form 10-K filed with the SEC and recommend to the Board the
             acceptance of such audits that are accompanied by certification.

                                       2


       4.    Review UIL Holdings' quarterly financial results prior to the
             release of earnings. The Chair of the Audit Committee or another
             member of the Audit Committee designated by the Chairman may
             represent the entire Committee for purposes of this review. Discuss
             generally the types of information to be disclosed in earnings
             press releases, as well as financial information and earnings
             guidance provided to analysts and rating agencies.

       5.    In consultation with financial and senior management, the
             independent auditors and the Internal Audit Department, consider
             the integrity of UIL Holdings' financial reporting processes and
             controls. Discuss significant financial risk exposures and the
             steps management has taken to monitor, control and report such
             exposures. Review significant findings of the independent auditors
             and the Internal Audit Department, together with management's
             responses to these findings.

       Independent Auditors
       --------------------

       6.    The Audit Committee shall be responsible for the appointment,
             compensation, retention and oversight of the work of the
             independent auditors and such independent auditors shall be
             accountable to the Audit Committee. The Audit Committee shall
             appoint the independent auditors on an annual basis, subject to
             ratification by the shareowners. The Audit Committee shall evaluate
             the independence and performance of the independent auditors, and
             discharge and replace the independent auditors if and when
             circumstances warrant.

       7.    The Audit Committee shall pre-approve any audit and non-audit
             services and relationships with the independent auditors,
             consistent with procedures adopted by the Committee, which shall be
             in compliance with applicable law, regulations and rules of the
             NYSE.

       8.    The Audit Committee shall review the independent auditors' proposed
             audit plan for the current year, the estimated fees therefore, and
             discuss with the independent auditors its scope, staffing,
             locations, reliance upon management and internal audit, and general
             audit approach.

       9.    The Audit Committee shall review with the independent auditors any
             audit problems or difficulties and management's response.

       10.   At least annually, the Audit Committee shall receive and review a
             report by the independent auditor describing: the independent
             auditor's quality-control procedures; any material issues raised by
             the most recent internal quality-control review, or peer review, of
             the firm, or by any inquiry or investigation by governmental or
             professional authorities, within the preceding five years,
             respecting one or more independent audits carried out by the firm,
             and any steps taken to deal with such issues; and (to assess the
             auditor's independence) all relationships between the independent
             auditor and UIL Holdings. In connection with such review, the Audit
             Committee shall review and evaluate the lead audit partner of the
             independent auditor and assure that such partner is rotated as
             required by applicable law, regulation or rules of the NYSE, and
             consider whether, in order to assure continuing auditor
             independence, there should be regular rotation of the audit firm
             itself.

       11.   The Audit Committee shall set clear hiring policies for employees
             or former employees of its independent auditors, which shall be in
             compliance with applicable law, regulations and rules of the NYSE.

       Internal Audit Department
       -------------------------

       The Audit Committee shall, periodically:

       12.   Review the budget, plan, changes in plan, activities,
             organizational structure, and qualifications of the Internal Audit
             Department, including the procedure for assuring the implementation
             of accepted recommendations made by the independent and internal
             auditors.

                                       3


       13.   Review the performance, and recommend to the Board of Directors,
             the appointment and replacement of the Director of Internal Audit.

       14.   Review significant reports prepared by the Internal Audit
             Department, together with management's response and follow-up to
             these reports.

       15.   Discuss the responsibilities, budget, and staffing of the Internal
             Audit Department with the independent auditors.

       Other Audit Committee Responsibilities
       --------------------------------------

       The Audit Committee shall:

       16.   Make or cause to be made, from time to time, other such
             examinations or reviews as the Committee may deem advisable with
             respect to the adequacy of the systems of internal control and
             accounting practices of UIL Holdings and its subsidiaries and with
             respect to current accounting trends and developments, and take
             such action with respect thereto as may be deemed appropriate.

       17.   Prepare a report to shareowners to be included in the proxy
             statement for the Annual Meeting of the Shareowners, as required by
             the SEC.

       18.   Perform such other activities consistent with this Charter, UIL
             Holdings' bylaws and governing law, as the Audit Committee or the
             Board of Directors deems necessary or appropriate, such as review
             of contingent liabilities and risks that may be material to UIL
             Holdings and discussion of policies with respect to risk assessment
             and risk management.

       19.   Establish procedures for the receipt and handling of complaints
             received by UIL Holdings regarding accounting, internal accounting
             controls, or auditing matters; and the confidential anonymous
             submission by employees of UIL Holdings and its affiliates of
             concerns regarding accounting, internal control or auditing
             matters.

       20.   Conduct or authorize investigations into any matters within the
             Committee's scope of responsibility, consistent with procedures
             adopted by the Committee.

       21.   Keep minutes of meetings of the Audit Committee, which will be
             maintained by the Corporate Secretary and submitted to the Board of
             Directors for approval.

       22.   Report to the Board of Directors periodically regarding the
             activities of the Audit Committee and make such recommendations
             with respect such matters as the Committee may deem necessary or
             appropriate. This report shall include a review of any issues that
             arise with respect to the quality or integrity of the financial
             statements, compliance with legal or regulatory requirements, the
             performance and independence of the independent auditors, or the
             performance of the internal audit function.

       23.   Conduct an annual performance evaluation of the Committee.

       24.   Review and recommend necessary changes to the Code of Business
             Conduct for UIL Holdings, and review management's system for
             enforcing this Code.

IV.    DISCLAIMER

       Although the Audit Committee has the responsibilities, duties and
       authority set forth in this Charter, it is not the responsibility or duty
       of the Committee to plan or conduct audits or to determine that UIL
       Holdings' financial statements are complete and accurate, or that they
       have been prepared in accordance with accepted accounting principles.
       These functions are the responsibility of financial and senior management
       and the independent auditors. Members of the Audit Committee shall not be
       deemed to have accepted a duty of care that is greater than the duty of
       the Directors generally.




                                       4




                                   APPENDIX B
                                   ----------

                            UIL HOLDINGS CORPORATION
                 SENIOR EXECUTIVE INCENTIVE COMPENSATION PROGRAM






                            UIL HOLDINGS CORPORATION
                 SENIOR EXECUTIVE INCENTIVE COMPENSATION PROGRAM


I.       PURPOSE

The purpose of the UIL Holdings Corporation Senior Executive Incentive
Compensation Program (the "Program") is to promote the interests of UIL Holdings
Corporation ("UIL" or the "Company"), its customers, and its shareowners by (i)
helping to attract and retain executives and key managers of high ability, (ii)
heightening the motivation of those executives and key managers to attain goals
that are in the interests of shareowners and customers, and (iii) encouraging
effective management teamwork among the executives and key managers. The Program
is intended to permit Incentive Awards to qualify as "performance-based"
compensation under Section 162(m) of the Internal Revenue Code.

II.      DEFINITIONS

In addition to the defined terms defined in Section I, the following shall be
defined terms under the Program and have the meaning set forth below unless a
different meaning is plainly required by the context in which a term is used:

         A.       "Board" shall mean the Board of Directors of the Company.

         B.       "Challenge Goals" shall mean one or more performance goals, in
                  addition to the Performance Goals, established by the
                  Committee at any time as a basis for the Committee's
                  permissible exercise of discretion in determining the amount
                  of the Incentive Award earned by a Participant.

         C.       "Chief Executive Officer" shall mean the chief executive
                  officer of the Company.

         D.       "Committee" shall mean the Compensation and Executive
                  Development Committee of the Board, or such other committee as
                  the Board may designate.

         E.       "Compensation" shall mean the annual base salary of a
                  Participant as of the date on which the Committee establishes
                  Performance Goals in the applicable Year.

         F.       "Incentive Award Opportunity" means the Participant's
                  opportunity to earn specified amounts based on performance
                  during a Performance Period. An Incentive Award Opportunity
                  constitutes a conditional right to receive settlement of an
                  Award.

         G.       "Incentive Award" shall mean an award earned by a Participant
                  pursuant to the Program. An "Annual Incentive Award" shall
                  mean an award earned based on performance over a Performance
                  Period not exceeding one year, and a "Long-Term Incentive
                  Award" shall mean an award earned based on performance over a
                  Performance Period exceeding one year.

         H.       "Maximum Incentive Award" shall mean an amount, specified by
                  the Committee, up to 200% (two hundred percent) of the
                  Participant's Target Incentive Award. The amount of the
                  Maximum Incentive Award shall be determined by the Committee.

         I.       "Participant" shall mean an eligible person who is selected by
                  the Committee as eligible to earn an Incentive Award for a
                  particular Performance Period.

         J.       "Performance Goal" shall mean one or more objective performance
                  goals, established by the Committee at the time an Incentive
                  Award Opportunity is authorized, and based upon the attainment
                  of specified performance levels with respect to one or any
                  combination of the following criteria, which may be determined
                  by reference to the Company's performance or the performance
                  of a Subsidiary (or any business unit): (i) net income; (ii)
                  earnings, before or after income taxes; (iii) earnings per
                  share; (iv) pre-tax operating income; (v) expense management;
                  (vi) profitability, including profitability of an identifiable
                  business unit or product; (vii) revenue; (viii) shareowner
                  value creation measures, including but not limited to stock
                  price or total shareowner return; (ix) return measures,
                  including return on assets (gross or net), return on
                  investment, return on capital, or return on equity; (x) cash
                  flow, free cash flow, cash flow return on investment
                  (discounted or otherwise), net cash provided by operations,
                  or cash flow in excess of cost of capital; (xi) net economic
                  profit (operating earnings minus a charge for capital) or
                  economic value created; (xii) strategic innovation; (xiii)
                  dividend levels; (xiv) strategic business criteria, consisting
                  of one or more objectives based on meeting specified market
                  penetration, geographic business expansion goals, cost
                  targets, completion of capital and debt transactions, customer
                  satisfaction, employee satisfaction, management of employment
                  practices and employee benefits, supervision of litigation and
                  information technology, and goals relating to acquisitions or
                  divestitures of subsidiaries, affiliates or joint ventures;
                  or (xv) any combination of the foregoing. The targeted level
                  or levels of performance with respect to such business
                  criteria may be established at such levels and in such terms
                  as the Committee may determine, in its discretion, including
                  in absolute terms, as a goal relative to performance in prior
                  periods, or as a goal compared to the performance of one or
                  more comparable companies or an index covering multiple
                  companies.

                                       1


         K.       "Performance Period" shall mean the period, specified by the
                  Committee, over which an Incentive Award may be earned.

         L.       "Subsidiary" shall mean one or more corporations, a majority
                  of the outstanding shares of voting stock of which is owned
                  directly or indirectly by the Company. An employee of a
                  Subsidiary shall only be eligible to participate in the
                  Program if selected for participation by the Committee in
                  accordance with Section IV hereof.

         M.       "Target Incentive Award" shall mean the Incentive Award
                  Opportunity that may be earned by a Participant for
                  achievement of the Target Level of Performance in a given
                  Performance Period.

         N.       "Year" shall mean a calendar year.

III.     ADMINISTRATION OF THE PROGRAM

         A.       COMMITTEE AUTHORITY. The Program shall be administered by the
                  Committee, which shall have full and final authority to take
                  all actions hereunder, subject to and consistent with the
                  provisions of the Program. The composition and governance of
                  the Committee shall be established in the Committee's Charter,
                  as approved from time to time by the Board, and other
                  corporate governance documents of the Company. No action of
                  the Committee shall be void or deemed to be without authority
                  due to the failure of any member to meet any qualification
                  standard set forth in the Committee Charter or this Program.

         B.       COMMITTEE PROCEDURES. The Committee may adopt rules and
                  practices for carrying out the Program and may take such
                  action in the administration of the Program not
                  inconsistent with the terms hereof as it shall deem
                  appropriate. Such rules and practices shall be
                  considered as incorporated into this Program by
                  reference. All questions of interpretation and
                  construction of the Program, of any rights arising by
                  reason of the Program, or of the provisions of any instrument
                  or document used in connection with the Program shall be
                  determined by the Committee. The Committee may delegate
                  authority with respect to such aspects of the administration
                  of the Program to such individuals, who may be employees of
                  the Company or its Subsidiaries, as the Committee may
                  determine, to the fullest extent permitted by applicable law
                  and under the listing standards of the New York Stock
                  Exchange. Decisions of the Committee on all matters relating
                  to the Program shall be conclusive and binding upon all
                  persons.

         C.       COMMITTEE DISCRETION NOT TO AUTHORIZE INCENTIVE AWARD
                  OPPORTUNITIES. The Committee, in its sole discretion, may
                  determine not to put the Program into effect for a given Year
                  or other Performance Period.

                                       2


IV.      ELIGIBILITY AND SELECTION OF PARTICIPANTS

Employees of the Company or any Subsidiary who are or may become executive
officers of the Company may be selected by the Committee to participate in this
Program. Prior to, or within the first 90 days of, each Performance Period, the
Committee may, in its sole discretion, select persons to be Participants in the
Program for the Performance Period (but such selection shall not occur after
more than 25% of the Performance Period has elapsed). No person shall at any
time have a right to be selected as a Participant for any Performance Period
nor, having been selected as a Participant for any one Performance Period, shall
have a right to be selected as a Participant for any other Performance Period.
The fact that a person is selected as a Participant for any Performance Period
shall not mean that such person will necessarily receive an Incentive Award for
that Performance Period.

V.       PER-PERSON AWARD LIMITATION

Incentive Award Opportunities granted to any one eligible Employee shall be
limited such that the amount potentially earnable for performance completed in
any one Year shall not exceed the Participant's Annual Limit. For this purpose,
the Annual Limit shall equal $2.5 million plus the amount of the Participant's
cumulative unused Annual Limits as of the close of the previous fiscal year;
provided, however, that any unused Annual Limit that is not used within five
years of the original opportunity shall cease to be carried forward to a
subsequent year. For this purpose, (i) "earning" means satisfying performance
conditions so that an Award Opportunity becomes payable, without regard to
whether it is to be paid currently or on a deferred basis or continues to be
subject to any service requirement or other non-performance condition, and (ii)
for purposes of determining the extent to which a Participant has used an Annual
Limit plus any carryover limit, the Participant's Award Opportunity is deemed
paid at the maximum level, even though the Participant may receive less than the
maximum level of payout.

VI.      ANNUAL INCENTIVE AWARDS

         A.  DETERMINATION OF PARTICIPANT'S TARGET ANNUAL  INCENTIVE AWARD AND
             RELATED TERMS

             (1)      Prior to, or within the first 90 days of, each Year
                      for which Annual Incentive Award Opportunities are to
                      be authorized, the Committee shall determine the
                      amount of the Target Annual Incentive Award for each
                      Participant for that Year. For this purpose, the
                      Committee shall assign a Target Annual Incentive
                      Award Percentage for each Participant, by specifying
                      a percentage of Compensation for Participants' Salary
                      Grades or by otherwise assigning a Target Annual
                      Incentive Award Percentage to each Participant. The
                      product of the Target Annual Incentive Award
                      Percentage and the Participant's Compensation (a
                      dollar amount) shall constitute the Participant's
                      Target Annual Incentive Award. The Committee shall at
                      the same time specify the Maximum Incentive Award for
                      that Year for each Participant.

             (2)      At the time it takes the actions specified in (1)
                      above, the Committee shall specify the Maximum Annual
                      Incentive Award, which is the maximum amount which
                      may be awarded to each Participant with respect to
                      any annual Performance Period.

         B.   ESTABLISHMENT OF PERFORMANCE GOALS AND CHALLENGE GOALS, AND
              CORRESPONDING LEVELS OF EARNING OF TARGET ANNUAL INCENTIVE
              AWARDS

             (1)      Prior to, or within the first 90 days of, each Year
                      for which Annual Incentive Award Opportunities are to
                      be authorized, and after having received the
                      recommendations of the Chief Executive Officer with
                      respect to eligible employees other than himself, the
                      Committee shall, in its sole discretion, establish in
                      writing a specific Performance Goal for each person
                      selected to be a Participant in the Program for that
                      Year. Performance Goals may apply to an individual
                      Participant or to groups of Participants. The
                      Committee shall also establish in writing a range,
                      grid, formula or other information that specifies the
                      level of achievement of the Performance Goal that
                      will result in a Participant potentially earning the
                      Target Annual Incentive Award, and, in the
                      Committee's discretion, other specified levels of
                      achievement of the Performance Goal that will result
                      in the Participant potentially earning varying
                      proportions of the Target Annual Incentive Award
                      ranging from 0% of the Target Annual Incentive Award
                      up to the Maximum Annual Incentive Award. The
                      Committee must establish a Performance Goal such that
                      some level of achievement (or non-achievement) will
                      result in the Participant earning no Annual Incentive
                      Award, and the Committee may not authorize the
                      earning of an Incentive Award exceeding the Maximum
                      Incentive Award.


                                       3


             (2)      The Committee may at any time, in its discretion,
                      specify Challenge Goals applicable to a Participant
                      or group of Participants for a given annual
                      Performance Period. Achievement of a Challenge Goal
                      may not result in the potential earning of any
                      portion of the Target Annual Incentive Award unless a
                      specific Performance Goal has also been met with
                      respect to that portion of the Target Annual
                      Incentive Award. The achievement of the Performance
                      Goal will be deemed to authorize the Committee to pay
                      out the Maximum Annual Incentive Award or a pre-set
                      percentage of the Maximum Annual Incentive Award
                      established by the Committee in accordance with
                      Section VI.B(1), with the level of achievement of the
                      Challenge Goal, as specified by the Committee, to
                      determine whether that full amount or a reduced
                      amount will be paid out as an Annual Incentive Award.
                      Thus, for purposes of Section 162(m) of the Internal
                      Revenue Code, Challenge Goals, the corresponding
                      Annual Incentive Award amounts that will be paid out
                      upon achievement of the Challenge Goals and related
                      terms will represent an exercise of negative
                      discretion by the Committee.

VII.     OTHER INCENTIVE AWARDS

         A.  DESIGNATION OF INCENTIVE AWARD OPPORTUNITIES AND PERFORMANCE
             GOALS. The Committee is authorized to designate Incentive
             Award Opportunities in addition to the Annual Incentive Award
             Opportunities authorized under Section VI, subject to the
             following terms:

             (1)      The Committee will designate the terms of Incentive
                      Award Opportunities under this Section VII prior to,
                      or during the first 90 days of , the Performance
                      Period, but in no event after more than 25% of the
                      Performance Period has elapsed, to the extent
                      required in order that the Incentive Award can
                      qualify as performance-based under Section 162(m) of
                      the Internal Revenue Code. Such designations shall be
                      in writing.

             (2)      The Committee will designate the Performance Period
                      for the Incentive Award Opportunity.

             (3)      The Committee will designate, for each Participant,
                      the Incentive Award Opportunity such Participant may
                      earn for such Performance Period, including a Target
                      Incentive Award Opportunity and a Maximum Incentive
                      Award that the Participant may earn for such
                      Performance Period. Unless otherwise determined by
                      the Committee, the Incentive Award Opportunity
                      earnable by each Participant shall range from 0% to
                      the Maximum Incentive Award as designated by the
                      Committee, such percentage to be applied to the
                      Target Incentive Award Opportunity.

             (4)      The Committee will designate the Performance Goal the
                      achievement of which will result in the earning of
                      the Incentive Award Opportunity, and the levels of
                      earning of the Incentive Award Opportunity
                      corresponding to the levels of achievement of the
                      Performance Goal. The Committee shall specify a
                      table, grid, formula, or other information that sets
                      forth the amount of a Participant's Award Opportunity
                      that will be earned corresponding to the level of
                      achievement of a specified Performance Goal. The
                      Committee must establish a Performance Goal such that
                      some level of achievement (or non-achievement) will
                      result in the Participant earning no Incentive Award
                      for the Performance Period, and the Committee may not
                      authorize the earning of an Incentive Award exceeding
                      the Maximum Incentive Award for the Performance
                      Period or exceeding the limit specified in Section V.

         B.  DESIGNATION  OF CHALLENGE  GOALS AND  COMMITTEE  DISCRETION.  As
             specified in Section VII(A) above, an Incentive Award Opportunity
             authorized under this Section VII must require that a Performance
             Goal be attained as a condition to the earning of an Incentive
             Award. The Committee may at any time, in its discretion, specify

                                       4


            Challenge Goals applicable to a Participant or group of Participants
            for a given Performance Period. The achievement of the Performance
            Goal will be deemed to authorize the Committee to pay out the
            Maximum Incentive Award or a percentage of the Maximum Incentive
            Award established by the Committee, with the level of achievement of
            the Challenge Goal, as specified by the Committee, to determine
            whether that full amount or a reduced amount will be paid out as an
            Incentive Award for the Performance Period. Thus, for purposes of
            Section 162(m) of the Internal Revenue Code, Challenge Goals,
            the corresponding Incentive Award amounts that will be paid out
            upon achievement of the Challenge Goals and related terms will
            represent an exercise of negative discretion by the Committee.
            Likewise, even if the Committee has not specified Challenge Goals,
            it retains discretion to assess other measures of performance or
            other factors to determine whether the final Incentive Award for a
            Performance Period will be paid out at the level that would apply
            based solely on the achievement of the Performance Goal or at a
            reduced level.

VIII.    TERMS APPLICABLE TO ALL INCENTIVE AWARDS

         A.  TERMINATION AND RELATED PROVISIONS. Subject to the terms of this
             Program, the Committee may specify the circumstances in which
             Incentive Awards shall be paid or forfeited in the event of a
             change in control, termination of employment in specified
             circumstances, or other event prior to payment in settlement of
             an Incentive Award; provided, however, that any payments resulting
             from a change in control or termination of employment need not
             qualify as performance-based compensation under Section 162(m) if
             the authorization of such non-qualifying payments would not
             otherwise disqualify the Incentive Award or authorization thereof
             from Section 162(m) qualification in cases in which no change in
             control or termination of employment occurred.

         B.  ADJUSTMENTS.  The Committee is authorized to make adjustments in
             the terms and  conditions  of, and the criteria included in,
             authorization of an Incentive Award and related Performance Goals
             in recognition of unusual or nonrecurring events, including stock
             splits, stock dividends, reorganizations, mergers, consolidations,
             large, special and non-recurring dividends, and acquisitions and
             dispositions of businesses and assets, affecting the Company and
             its subsidiaries or other business unit, or the financial
             statements of the Company or any subsidiary, or in response to
             changes in applicable laws, regulations, accounting principles,
             tax rates and regulations or business conditions or in view of the
             Committee's assessment of the business strategy of the Company, any
             subsidiary or affiliate or business unit thereof, performance of
             comparable organizations, economic and business conditions,
             personal performance of a Participant, and any other circumstances
             deemed relevant; provided, however, that no such adjustment shall
             be authorized or made if and to the extent that the existence or
             exercise of such authority (i) would cause an authorization of an
             Incentive Award hereunder to fail to qualify as performance-based
             compensation under Section 162(m) of the Internal Revenue Code and
             regulations thereunder, or (ii) would cause the Committee to be
             deemed to have authority to change the targets, within the meaning
             of Treasury Regulation 1.162-27(e)(4)(vi), under the Performance
             Goals relating to an authorized Incentive Award. In addition, the
             Committee shall not adjust an Incentive Award to a Participant to
             reflect his or her adjusted Compensation during the Performance
             Period.

         C.  OTHER TERMS OF INCENTIVE AWARD OPPORTUNITIES.

             (1)      The amount of the Participant's Target Incentive
                      Award for any Performance Period for which no
                      Incentive Award Opportunity is authorized by the
                      Committee shall be zero.

             (2)      The Committee retains discretion to reduce a
                      Participant's Target Incentive Award during a
                      Performance Period, including in any case in which
                      the Company reduces or omits a dividend on its common
                      stock during the Performance Period.

         D.  DETERMINATION OF INCENTIVE AWARDS.

             (1)      Promptly following each Performance Period as to
                      which Incentive Award Opportunities have been
                      authorized, and after audited financial results for
                      the Performance Period are available to the Committee
                      if the Performance Goal calls for performance to be



                                       5


                      measured based on such audited financial results, the
                      Committee, after having received the recommendations
                      of the Chief Executive Officer with respect to
                      Participants other than himself or herself, shall
                      determine the level of achievement of Performance
                      Goals and the corresponding amount of the Incentive
                      Award potentially earned by each Participant for such
                      Performance Period (the "Potential Incentive Award").
                      If a Challenge Goal has also been specified for a
                      Participant and the related Performance Goal was met,
                      the Committee shall also determine the level of
                      achievement of the Challenge Goal and any resulting
                      adjustment that would reduce the amount of the
                      Incentive Award to be paid from the Potential
                      Incentive Award amount. The Committee retains
                      authority to exercise negative discretion to reduce
                      the amount of the final Incentive Award to be paid
                      below the Potential Incentive Award amount. The
                      Committee may not exercise positive discretion to
                      increase the amount of the final Incentive Award
                      above the Potential Incentive Award amount, but it
                      retains discretion to not make an adjustment relating
                      to a Challenge Award.

             (2)      The Committee, in its sole discretion, may grant an
                      adjusted Incentive Award to a Participant to reflect
                      his or her shorter period of participation during the
                      Performance Period due to termination by reason of
                      death, permanent disability, retirement, or for other
                      good cause. In the event a Participant's employment
                      with the Company or its Subsidiaries terminates
                      during the Performance Period for reasons other than
                      death, permanent disability or retirement, no
                      Incentive Award shall be payable with respect to such
                      Participant, unless the Committee determines
                      otherwise. The Committee shall have no authority to
                      make payments under this Section VIII(D)(2) if the
                      existence of such authority would cause the
                      authorization of an Incentive Award under this
                      Program to fail to qualify as performance-based
                      compensation under Code Section 162(m).

             (3)      Determinations by the Committee as to the level of
                      actual achievement of the Performance Goals and the
                      amount of any final Incentive Award earned shall be
                      recorded in writing in accordance with applicable
                      Treasury Regulations under Section 162(m).
                      Specifically, the Committee shall certify in writing,
                      in a manner conforming to applicable regulations
                      under Section 162(m), prior to payment each such
                      Incentive Award, that the Performance Goal relating
                      to the Award and other material terms of the Award
                      upon which settlement was conditioned have been
                      satisfied.

IX.      PAYMENT OF INCENTIVE AWARDS

Any non-deferred Incentive Award shall be paid and settled by the Company
promptly after the date of determination by the Committee under Section VIII(D)
hereof. A Participant may elect to defer receipt of any portion of his or her
Incentive Award into the Company's Executive Deferred Compensation Program or
any other deferred compensation program of the Company, if the terms of such
program then permit such deferrals. Incentive Awards shall be paid by the
Company to Participants in cash; provided, however, that the Committee may pay
out an Incentive Award in shares or share-based awards if the Committee provided
for such a payout at the time it established the Performance Goal and if the
shares of Common Stock or share-based awards are authorized under and drawn from
an equity compensation plan of the Company. The Company may deduct from any
Incentive Award the amount of taxes, if any, which the Company is required to
withhold with respect to the Award.

X.       MISCELLANEOUS

         A.  ASSIGNMENTS AND TRANSFERS

             The rights and interests of a Participant under the Program
             may not be assigned, encumbered, or transferred; provided
             however, that in the event of the Participant's death, any
             Incentive Award payable hereunder shall be paid to the
             executor or administrator of the Participant's estate.

         B.  PROGRAM CREATES NO EMPLOYMENT RIGHTS

             Neither the establishment of the Program, eligibility to
             participate nor any action taken hereunder shall be construed
             as creating a contract of employment, or as a term or
             provision of any such contract, or as giving any employee any
             right to be retained in the employ of the Company or a
             Subsidiary.



                                       6


         C.  NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS

             Neither the establishment of the Program, the approval thereof
             (or approval of specific terms of the Program) by shareowners
             nor any provision of the Program shall prevent the Company
             from adopting or continuing in effect other or additional
             compensation arrangements, and such arrangements maybe either
             generally applicable or applicable only in specific cases.

         D. NATURE OF PARTICIPANT'S INTEREST

            Any amounts payable to a Participant under the Program shall
            constitute solely a general, unsecured liability of the
            Company, payable exclusively out of the Company's general
            assets and in no event shall the Company or any Subsidiary be
            obligated to segregate any funds or assets to secure the
            payment of any such amount. No action pursuant to the Program
            shall confer upon any Participant any right, title, or
            interest in any assets of the Company or a Subsidiary.

         E. AMENDMENT, SUSPENSION, OR TERMINATION OF PROGRAM

            The Board may amend, suspend, or terminate the Program at any
            time, provided, however, that any such amendment or
            modification shall be subject to the approval of the
            shareowners of the Company if such shareowner approval is
            required to preserve the Company's federal income tax
            deduction for Incentive Awards under the Program pursuant to
            the "other performance-based compensation" exception in
            Section 162(m)(4)(C) of the Internal Revenue Code.

         F. EFFECTIVE DATE

            The Program is effective for the fiscal year beginning January
            1, 2004, subject to approval by the shareowners of the Company
            at the 2004 Annual Meeting of Shareowners.

         G. LONG-TERM INCENTIVES NOT ANNUAL BONUS FOR PURPOSES OF OTHER PLANS

            Amounts earned or payable under the Plan in connection with
            Incentive Awards not designated by the Committee as "Annual
            Incentive Awards" shall not be deemed to be annual incentive
            or annual bonus compensation (regardless of whether an
            Incentive Award is earned by performance in Performance Period
            of one year or less) for purposes of any retirement or
            supplemental pension plan of the Company, any employment
            agreement or change of control agreement between the Company
            and any Employee, or for purposes of any other plan, unless
            the Company shall enter into a written agreement that
            specifically identifies this Plan by name and specifies that
            amounts earned or payable in respect of such Incentive Award
            shall be considered to be annual incentive or annual bonus
            compensation.

        H.  APPLICABLE LAW

            The interpretation of the provisions hereof and the
            administration of the Program shall be governed by the laws of
            Connecticut.



                                       7


                       DIRECTIONS TO QUINNIPIAC UNIVERSITY
                       -----------------------------------

FROM NEW LONDON VIA I-95:
-------------------------

Take I-95 to New Haven. Then take I-91 North to Exit 10 (Route 40). Follow Route
40 approximately 3 miles to its end (at Whitney Avenue). Turn right onto Whitney
Avenue (Route 10) and proceed North for 1.4 miles. Turn right onto Mount Carmel
Avenue and go 0.3 miles to campus.

FROM NEW YORK CITY VIA I-95:
----------------------------

Take I-95 to New Haven. Then take I-91 North to Exit 10 (Route 40). Follow Route
40 approximately 3 miles to its end (at Whitney Avenue). Turn right onto Whitney
Avenue (Route 10) and proceed North for 1.4 miles. Turn right onto Mount Carmel
Avenue and go 0.3 miles to campus.

FROM NEW YORK CITY VIA THE WILBUR CROSS PARKWAY (MERRITT PARKWAY):
------------------------------------------------------------------

Take the Parkway (Route 15) to Exit 61. Turn right onto Whitney Avenue (Route
10) and proceed North 3 miles to Mount Carmel Avenue. Turn right onto Mount
Carmel Avenue and go 0.3 miles to campus.

FROM HARTFORD VIA I-91:
-----------------------

Take I-91 South to Exit 10 (Route 40). Follow Route 40 approximately 3 miles to
its end (at Whitney Avenue). Turn right onto Whitney Avenue (Route 10) and
proceed North for 1.4 miles. Turn right onto Mount Carmel Avenue and go 0.3
miles to campus.






                             ANNUAL MEETING OF SHAREOWNERS OF

                                 UIL HOLDINGS CORPORATION

                                      May 12, 2004
                                    COMMON STOCK PROXY

         -----------------------------------------------------------
                           PROXY VOTING INSTRUCTIONS
         -----------------------------------------------------------


MAIL - Date, sign and mail your proxy card in
---- the envelope provided as soon as possible.
                     - OR -
TELEPHONE - Call toll-free 1-800-776-9437        ------------------ -----------
--------- (1-800-PROXIES) from any touch-tone     COMPANY NUMBER
telephone and follow the instructions. Have      ------------------ -----------
your control number and the proxy card available  ACCOUNT NUMBER
when you call.                                   ------------------ -----------
                     - OR -
INTERNET - Access "www.voteproxy.com" and follow ------------------ -----------
-------- the on-screen instructions. Have your
control number available when you access the web
page.

-------------------------------------------------------------------------------
                               YOUR VOTE IS IMPORTANT
    In order to save UIL Holdings Corporation the expense of further
    solicitation to ensure that a quorum is present at the annual meeting,
    please vote your proxy promptly - regardless of the number of shares you
    own, and regardless of whether you plan to attend the meeting.
-------------------------------------------------------------------------------

Directions to Quinnipiac University appear at the end of the accompanying Proxy
Statement.

Please detach and mail in the envelope provided IF you are not voting via
                                                --
telephone or the Internet.


--------------------------------------------------------------------------------
 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
 "FOR" PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
 ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
--------------------------------------------------------------------------------


(1) ELECTION OF BOARD OF DIRECTORS

                         NOMINEES:

[_] FOR ALL NOMINEES     O Thelma R. Albright
                         O Marc C. Breslawsky
                         O David E. A. Carson
[_] WITHHOLD AUTHORITY   O Arnold L. Chase
    FOR ALL NOMINEES     O John F. Croweak
                         O Betsy Henley-Cohn
                         O John L. Lahey
[_] FOR ALL EXCEPT       O F. Patrick McFadden, Jr.
    (See instructions    O Daniel J. Miglio
     below)              O William F. Murdy
                         O James A. Thomas
                         O Nathaniel D. Woodson
                 and, in their discretion, such other persons as the
                 present Board of Directors shall determine, if one or
                 more of said nominees is unable to serve.

INSTRUCTION:  To withhold authority to vote for any individual nominee(s), mark
-----------   "FOR ALL EXCEPT" and fill in the circle next to each nominee you
              wish to withhold, as shown here:    O
-------------------------------------------------------------------------------





--------------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that   [_]
changes to the registered name(s) on the account may be submitted via
this method.
-------------------------------------------------------------------------------
                                                   FOR    AGAINST    ABSTAIN
(2) RATIFICATION OF THE SELECTION OF               [_]      [_]        [_]
    PRICEWATERHOUSECOOPERS LLP AS
    UIL HOLDINGS CORPORATION'S INDEPENDENT
    PUBLIC ACCOUNTANTS FOR 2004.
    (Proposed by the Board of Directors.)

(3) PROPOSAL TO APPROVE THE UIL HOLDINGS           FOR    AGAINST    ABSTAIN
    CORPORATION SENIOR EXECUTIVE INCENTIVE         [_]      [_]        [_]
    COMPENSATION PROGRAM.


DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING.


THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
SHAREOWNERS AND THE PROXY STATEMENT FURNISHED THEREWITH.



Signature of Shareowner                                  Date:
                       ----------------------------           ----------------

Signature of Shareowner                                  Date:
                       ----------------------------           ----------------

Note: Please sign exactly as your name or names appear on this Proxy. When
      shares are held jointly, each holder should sign. When signing as
      executor, administrator, attorney, trustee or guardian, please give full
      title as such. If the signer is a corporation, please sign full corporate
      name by duly authorized officer, giving full title as such. If signer is
      a partnership, please sign in partnership name by authorized person.





                              UIL HOLDINGS CORPORATION

                                COMMON STOCK PROXY

                 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints John L. Lahey, or F. Patrick McFadden, Jr. (in
the absence of Mr. Lahey), or Betsy Henley-Cohn (in the absence of Messrs. Lahey
and McFadden) as proxy, for and in the name of the undersigned and with all
powers the undersigned would possess if personally present, to vote all shares
of the common stock of UIL Holdings Corporation that the undersigned is entitled
to vote at the Annual Meeting of the Shareowners to be held on Wednesday, May
12, 2004, and at any adjournments thereof. Any and all proxies heretofore given
are hereby revoked.

THIS PROXY CARD, WHEN PROPERLY SIGNED AND RETURNED TO UIL HOLDINGS CORPORATION,
WILL BE VOTED IN THE MANNER INDICATED ON THE REVERSE SIDE. UNLESS OTHERWISE
DIRECTED ON THE REVERSE SIDE, THE UNDERSIGNED'S VOTE WILL BE CAST FOR THE
ELECTION OF ALL NOMINEES LISTED TO THE BOARD OF DIRECTORS AND FOR ITEMS (2) AND
(3).

THIS PROXY COVERS ALL SHARES FOR WHICH THE UNDERSIGNED HAS THE RIGHT TO GIVE
VOTING INSTRUCTIONS TO VANGUARD FIDUCIARY TRUST COMPANY, TRUSTEE OF THE UNITED
ILLUMINATING COMPANY 401(K)/ESOP (KSOP) PLAN (THE PLAN). THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN TO THE
TRUSTEE BY 5:00 PM EST ON MAY 7, 2004, THE PLAN'S TRUSTEE WILL VOTE YOUR SHARES
HELD IN THE PLAN IN THE SAME PROPORTION AS VOTES RECEIVED FROM OTHER
PARTICIPANTS IN THE PLAN.

                   (CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)