BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2013

BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES [Abstract]

Fair Value of Gross Derivative Assets and Liabilities

UIL Holdings’ regulated subsidiaries are parties to contracts, and involved in transactions, that are derivatives. The fair values of the gross derivative assets and liabilities as of September 30, 2013 and December 31, 2012 were as follows:

	September 30, 2013		December 31, 2012
	(In Thousands)
Gross derivative assets:
Current Assets	$	9,063	$	12,671
Deferred Charges and Other Assets	$	45,759	$	67,167

Gross derivative liabilties:
Current Liabilities	$	26,915	$	30,804
Noncurrent Liabilities	$	175,662	$	224,639

Unrealized Gains and Losses From Mark-To-Market Adjustments

The unrealized gains and losses from fair value adjustments to these derivatives recorded in regulatory assets or regulatory liabilities for the three- and nine-month periods ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In Thousands)						(In Thousands)

Regulatory Assets - Derivative liabilities	$	(5,585	)	$	(1,832	)	$	(28,849	)	$	(7,613	)

Regulatory Liabilities - Derivative assets	$	-		$	(27	)	$	-		$	(15	)

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 nine‑month periods ended September 30, 2013 and 2012:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In Thousands, except per share amounts)
Numerator:
Net income	$	5,144	$	15,749	$	74,859	$	74,798
Less: Net income allocated to unvested units		5		23		83		126
Net income attributable to common shareholders	$	5,139	$	15,726	$	74,776	$	74,672

Denominator:
Basic average number of shares outstanding		50,989		50,799		50,956		50,760
Effect of dilutive securities		242		233		281		244
Diluted average number of shares outstanding		51,231		51,032		51,237		51,004

Earnings per share:
Basic	$	0.10	$	0.31	$	1.47	$	1.47
Diluted	$	0.10	$	0.31	$	1.46	$	1.46

Regulatory Assets and Liabilities

Unless otherwise stated below, all of UIL Holdings’ regulatory assets earn a return. UIL Holdings’ regulatory assets and liabilities as of September 30, 2013 and December 31, 2012 included the following:

Remaining Period		September 30, 2013		December 31, 2012
		(In Thousands)
Regulatory Assets:
Nuclear plant investments – above market	(a)	$	238,868	$	252,498
Connecticut Yankee	Not applicable		-		11,129
Unamortized redemption costs	8 to 20 years		11,502		12,103
Pension and other post-retirement benefit plans	(b)		444,038		458,019
Environmental remediation costs	4 to 5 years		16,754		14,772
Hardship programs	(c)		23,833		29,852
Debt premium	1 to 24 years		35,671		41,016
Deferred purchased gas	(d)		-		12,444
Unfunded future income taxes	(e)		27,201		17,319
Contracts for differences	(f)		147,726		176,597
Excess generation service charge	(g)		8,228		8,864
Deferred transmission income/expense	(h)		10,744		21,379
Storm costs	(i)		15,797		52,009
Other	(j)		27,825		27,449
Total regulatory assets			1,008,187		1,135,450
Less current portion of regulatory assets			98,323		120,935
Regulatory Assets, Net		$	909,864	$	1,014,515

Regulatory Liabilities:
Accumulated deferred investment tax credits	30 years	$	4,502	$	4,612
Income taxes due principally to book-tax differences	(j)		57,828		41,928
Deferred gain on sale of property	(a)		37,933		37,933
Middletown/Norwalk local transmission network service collections	36 years		21,545		21,975
Pension and other post-retirement benefit plans	1 to 7 years		11,985		15,016
Deferred income taxes	(e)		44,522		41,816
Asset retirement obligation	(k)		4,254		4,995
Deferred purchased gas	(d)		11,893		-
Low income programs	(l)		23,509		17,651
Asset removal costs	(j)		254,131		243,854
Other	(j)		22,203		36,660
Total regulatory liabilities			494,305		466,440
Less current portion of regulatory liabilities			7,135		21,284
Regulatory Liabilities, Net		$	487,170	$	445,156

(a) Asset/Liability relates to the Competitive Transition Assessment (CTA). Total CTA costs recovery and stranded cost amortization were substantially completed in the third quarter of 2013. The remaining balances are fully offset by amounts primarily included in income taxes, due principally to book-tax differences. As a result of the outcome of UI’s 2013 distribution rate request, PURA approved UI’s proposed rate treatment to leave CTA rates unchanged until January 1, 2014 at which point the charge will end and the remaining balances will be extinguished.

(b) Asset life is dependent upon timing of final pension plan distribution; balance, which is fully offset by a corresponding liability, is recalculated each year in accordance with ASC 715 "Compensation-Retirement Benefits." See Note (G) “Pension and Other Benefits” for additional information.

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

(e) The balance will be extinguished when the asset, which is fully offset by a corresponding liability, or liability has been realized or settled, respectively.

(f) Asset life is equal to delivery term of related contracts (which vary from approximately 7 - 14 years); balance fluctuates based upon quarterly market analysis performed on the related derivatives (Note K); amount, which does not earn a return, is fully offset by corresponding derivative asset/liability. See “-Contracts for Differences” discussion above for additional information.

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

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

(i) Storm costs include accumulated costs for major storms occurring from January 2009 forward. See Note (C) “Regulatory Proceedings – Electric Distribution and Transmission – Rates” for a discussion of the recovery of these costs.

(j) Amortization period and/or balance vary depending on the nature, cost of removal and/or remaining life of the underlying assets/liabilities; asset amount includes decoupling ($12.4 million) and certain other amounts that are not currently earning a return. See Note (C) “Regulatory Proceedings – Electric Distribution and Transmission – Rates” for a discussion of the decoupling recovery period.

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

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