FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS [Abstract]

Fair Value of Financial Assets and Liabilities

The following tables set forth UIL Holdings’ financial assets and liabilities, other than pension benefits and other postretirement benefits, at fair value on a recurring basis as of June 30, 2013 and December 31, 2012.

	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, 2013	(In Thousands)
Assets:
Derivative assets	$	-	$	-		$	58,700		$	58,700
Noncurrent investments available for sale		10,322		-			-			10,322
Deferred Compensation Plan		3,516		-			-			3,516
Supplemental retirement benefit trust life insurance policies		-		6,953			-			6,953
	$	13,838	$	6,953		$	58,700		$	79,491
Liabilities:
Derivative liabilities	$	-	$	-		$	212,042		$	212,042
Long-term debt		-		1,790,907			-			1,790,907
	$	-	$	1,790,907		$	212,042		$	2,002,949
Net fair value assets/(liabilities), June 30, 2013	$	13,838	$	(1,783,954	)	$	(153,342	)	$	(1,923,458	)

December 31, 2012
Assets:
Derivative assets	$	-	$	-		$	79,838		$	79,838
Noncurrent investments available for sale		9,902		-			-			9,902
Deferred Compensation Plan		3,745		-			-			3,745
Supplemental retirement benefit trust life insurance policies		-		6,438			-			6,438
	$	13,647	$	6,438		$	79,838		$	99,923
Liabilities:
Derivative liabilities	$	-	$	-		$	255,443		$	255,443
Long-term debt		-		1,886,440			-			1,886,440
	$	-	$	1,886,440		$	255,443		$	2,141,883
Net fair value assets/(liabilities), December 31, 2012	$	13,647	$	(1,880,002	)	$	(175,605	)	$	(2,041,960	)

Additional quantitative information about Level 3 fair value measurements

The derivative assets and liabilities consist primarily of CfDs and weather insurance contracts.  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, 2013 or December 31, 2012 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	0.00% - 1.03%
	Discount rate	1.96% - 2.70%
	Forward pricing ($ per MW)	$1.40 - $9.83

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, 2013.

	Six Months Ended
	June 30, 2013
Net fair value assets/(liabilities), December 31, 2012	$	(175,605	)
Unrealized gains and (losses), net Included in regulatory assets/(liabilities)		23,263
Settlements		(1,000	)
Net fair value assets/(liabilities), June 30, 2013	$	(153,342	)
Change in unrealized gains (losses), net relating to net fair value assets/(liabilities), still held as of June 30, 2013	$	23,263

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, 2013.  The amounts offset the net CfDs liabilities included in the derivative liabilities detailed above.

	Six Months Ended
	June 30, 2013
	(In Thousands)
Net regulatory assets/(liabilities), December 31, 2012	$	176,605
Unrealized (gains) and losses, net		(23,263	)
Net regulatory assets/(liabilities), June 30, 2013	$	153,342