BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2011

BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES [Abstract]

Regulatory Assets And Liabilities

UIL Holdings’ regulatory assets and liabilities as of June 30, 2011 and December 31, 2010 included the following:

	Remaining	June 30,		December 31,
	Period	2011		2010
		(In Thousands)
Regulatory Assets:
Nuclear plant investments – above market	(a)	$	283,165	$	293,388
Income taxes due principally to book-tax differences	(b)		7,562		11,910
Connecticut Yankee	5 years		15,759		17,175
Unamortized redemption costs	11 to 23 years		13,307		13,708
Pension and other post-retirement benefit plans	(c)		335,740		351,610
Environmental remediation costs	4 to 5 years		2,441		17,285
Customer rate surcharge	(g)		17,118		12,816
Low income program	(h)		35,331		40,674
Debt premium	1 to 27 years		52,361		56,865
Deferred purchased gas	(i)		-		26,650
Deferred income taxes	(j)		12,349		5,859
Unfunded future income taxes	(j)		35,675		25,684
Contracts for differences	(d)		185,244		114,662
Excess generation service charge	(e)		6,520		8,711
Other	(b)		41,921		44,740
Total regulatory assets			1,044,493		1,041,737
Less current portion of regulatory assets			81,257		115,848
Regulatory Assets, Net		$	963,236	$	925,889
Regulatory Liabilities:
Accumulated deferred investment tax credits	33 years	$	4,831	$	4,905
Deferred gain on sale of property	(a)		37,798		37,798
Middletown/Norwalk local transmission network service collections	39 years		22,835		23,121
Pension and other post-retirement benefit plans	4 to 7 years		24,379		33,685
Deferred income taxes	(j)		16,228		29,793
Asset retirement obligation	(k)		7,979		8,451
Deferred purchased gas	< 1 year		24,721		15,275
Asset removal costs	(b)		223,611		219,121
Deferred transmission expense	(f)		38,494		27,036
Other	(b)		44,355		36,782
Total regulatory liabilities			445,231		435,967
Less current portion of regulatory liabilities			78,315		53,601
Regulatory Liabilities, Net		$	366,916	$	382,366

(a) Asset/Liability relates to the Competitive Transition Assessment (CTA).  Total CTA costs recovery is currently projected to be completed in 2015, with stranded cost amortization expected to end in 2013.

(b) Amortization period and/or balance vary depending on the nature, cost of removal and/or remaining life of the underlying assets/liabilities.

(c) Asset life is dependent upon timing of final pension plan distribution; balance is recalculated each year in accordance with ASC 715 "Compensation-Retirement Benefits" (Note G).

(d) Asset life is equal to delivery term of related contracts (which vary from approximately 9 - 16 years); balance fluctuates based upon quarterly market analysis performed on the related derivatives (Note K).

(e) Working capital allowance for generation service charge; this amount fluctuates based upon cash inflows and outflows in a given period.

(f) Regulatory asset or liability which defers transmission income or expense and fluctuates based upon actual revenues and revenue requirements.

(g) Deferral of revenue received for excess refund of overearnings. If the July 19, 2011 draft PURA decision discussed in Note C is adopted as final, recovery would be 2 -3 years.

(h) Various hardship and payment plan programs approved for recovery.

(i) Deferred purchase gas costs balances at the end of the rate year are normally recorded/returned in the next year.

(j) The balance will be extinguished when the asset or liability has been realized or settled, respectively.

(k) The liability will be extinguished simultaneous with the retirement of the assets and settlement of the corresponding asset retirement obligation.

Fair Value of Gross Derivative Assets and Liabilities

The fair value of the gross derivative assets and liabilities as of June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011
	(In Thousands)
			Deferred Charges		Current			Noncurrent
	Current Assets		and Other Assets		Liabilities			Liabilities
Derivative assets/(liabilities), gross	$	10,615	$	73,679	$	(28,905	)	$	(240,601	)
	December 31, 2010
	(In Thousands)
			Deferred Charges		Current			Noncurrent
	Current Assets		and Other Assets		Liabilities			Liabilities
Derivative assets/(liabilities), gross	$	6,057	$	28,131	$	(13,246	)	$	(129,560	)

Contracts for Differences (CfDs)

Unrealized Gains and Losses From Mark-To-Market Adjustments

The unrealized gains and losses from mark-to-market adjustments to derivatives recorded in regulatory assets or regulatory liabilities for the three and six month periods ended June 30, 2011 and 2010 were as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
	(In Thousands)					(In Thousands)
Regulatory Assets - Derivative liabilities	$	29,722	$	4,905		$	70,536	$	(57,552	)
Regulatory Liabilities - Derivative assets	$	68	$	(192	)	$	5,748	$	(93	)

Reconciliation of Basic and Diluted Earnings Per Share

The following table presents a reconciliation of the basic and diluted earnings per share calculations for the three and six month periods ended June 30, 2011 and 2010:

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Numerator:
Net income	$	14,156	$	11,489	$	66,200	$	27,404
Less:  Net income allocated to unvested units		29		41		143		103
Net income attributable to common shareholders	$	14,127	$	11,448	$	66,057	$	27,301
Denominator:
Basic average number of shares outstanding		50,628		30,093		50,574		30,037
Effect of dilutive securities		244		220		250		280
Diluted average number of shares outstanding		50,872		30,313		50,824		30,317
Earnings per share:
Basic	$	0.28	$	0.38	$	1.31	$	0.91
Diluted	$	0.28	$	0.38	$	1.30	$	0.90