FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value of Financial Assets and Liabilities

The following tables set forth UIL Holdings' financial assets and liabilities, other than pension benefits and OPEB, at fair value on a recurring basis as of June 30, 2012 and December 31, 2011.

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total
June 30, 2012	(In Thousands)
Assets:
Contracts for differences	$	-	$	-		$	81,571		$	81,571
Weather insurance contracts		-		-			1,000			1,000
Noncurrent investments available for sale		9,618		-			-			9,618
Deferred Compensation Plan		3,601		-			-			3,601
Supplemental retirement benefit trust life insurance policies		-		6,035			-			6,035
	$	13,219	$	6,035		$	82,571		$	101,825

Liabilities:
Contracts for differences	$	-	$	-		$	259,895		$	259,895
Long-term debt		-		1,878,780			-			1,878,780
	$	-	$	1,878,780		$	259,895		$	2,138,675

Net fair value assets/(liabilities), June 30, 2012	$	13,219	$	(1,872,745	)	$	(177,324	)	$	(2,036,850	)

December 31, 2011
Assets:
Contracts for differences	$	-	$	-		$	83,942		$	83,942
Weather insurance contracts		-		-			3,512			3,512
Noncurrent investments available for sale		9,152		-			-			9,152
Deferred Compensation Plan		3,739		-			-			3,739
Supplemental retirement benefit trust life insurance policies		-		5,655			-			5,655
	$	12,891	$	5,655		$	87,454		$	106,000

Liabilities:
Contracts for differences	$	-	$	-		$	268,035		$	268,035
Long-term debt		-		1,715,724			-			1,715,724
	$	-	$	1,715,724		$	268,035		$	1,983,759

Net fair value assets/(liabilities), December 31, 2011	$	12,891	$	(1,710,069	)	$	(180,581	)	$	(1,877,759	)

Additional quantitative information about Level 3 fair value measurements

The determination of fair value of the CfDs was based on a probability-based expected cash flow analysis that was discounted at the June 30, 2012 or December 31, 2011 risk-free interest rates, as applicable, and an adjustment for non-performance risk using credit default swap rates. Certain management assumptions were required, including development of pricing that extended over the term of the contracts. For information regarding the determination of the fair value of the weather insurance contracts, see Note (A) "Business Organization and Statement of Accounting Policies - Derivatives." Additional quantitative information about Level 3 fair value measurements is as follows:

	Unobservable Input	Range

Contracts for differences	Risk of non-performance		1.09% - 1.62	%
	Discount rate		1.67% - 2.03	%
	Forward pricing ($ per MW)	$	1.40 - $9.83

Weather insurance contracts	Heating degree days		4,976

Changes in Fair Value of Assets and Liabilities Classified as level 3

The following tables set forth a reconciliation of changes in the fair value of the assets and liabilities above that are classified as Level 3 in the fair value hierarchy for the six month period ended June 30, 2012.

	Six Months Ended
	June 30, 2012
	(In Thousands)

Net fair value assets/(liabilities), December 31, 2011	$	(180,581	)
Unrealized gains and (losses), net
Included in earnings		3,488
Included in regulatory assets/(liabilities)		5,769
Settlements		(6,000	)
Net fair value assets/(liabilities), June 30, 2012	$	(177,324	)

Change in unrealized gains (losses), net relating to net fair value assets/(liabilities), still held as of June 30, 2012	$	5,769

Change in Regulatory Asset/(Liability) Balance

The following table sets forth a reconciliation of changes in the net regulatory asset/(liability) balances that were established to recover any unrealized gains/(losses) associated with the CfDs for the six month period ended June 30, 2012. The amounts offset the net contract for differences liabilities included in the derivative liabilities detailed above.

	Six Months Ended
	June 30, 2012
	(In Thousands)

Net regulatory assets/(liabilities), December 31, 2011	$	184,093
Unrealized (gains) and losses, net		(5,769	)
Net regulatory assets/(liabilities), June 30, 2012	$	178,324

- Definition

This element represents the disclosure related to assets and liabilities by class, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition (for example, impaired assets). The disclosures that may be required or desired include: (a) the fair value measurements recorded during the period and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a),(b)

-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19190-110258

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 5

-Subparagraph (a),(b)

-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details