BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2014

BUSINESS ORGANIZATION AND STATEMENT OF ACCOUNTING POLICIES [Abstract]

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, 2014 and 2013 were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
	(In Thousands)					(In Thousands)

Regulatory Assets - Derivative liabilities	$	393	$	(5,585	)	$	(81,623	)	$	(28,849	)

Regulatory Liabilities - Derivative assets	$	5,077	$	-		$	(6,616	)	$	-

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, 2014 and 2013:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In Thousands, except per share amounts)

Numerator:
Net income attributable to UIL Holdings	$	12,498	$	5,144	$	77,293	$	74,859
Less: Net income allocated to unvested units		7		5		45		83
Net income attributable to common shareholders	$	12,491	$	5,139	$	77,248	$	74,776

Denominator:
Basic average number of shares outstanding		56,855		50,989		56,827		50,956
Effect of dilutive securities (1)		278		242		287		281
Diluted average number of shares outstanding		57,133		51,231		57,114		51,237

Earnings per share:
Basic	$	0.22	$	0.10	$	1.36	$	1.47
Diluted	$	0.22	$	0.10	$	1.35	$	1.46

(1)

Includes unvested restricted stock and performance shares.

Regulatory Assets and Liabilities

Unless otherwise stated below, all of our regulatory assets earn a return. Our regulatory assets and liabilities as of September 30, 2014 and December 31, 2013 included the following:

	Remaining Period	September 30, 2014		December 31, 2013
		(In Thousands)
Regulatory Assets:
Nuclear plant investments – above market	(a)	$	-	$	238,868
Unamortized redemption costs	7 to 19 years		10,700		11,301
Pension and other post-retirement benefit plans	(b)		311,033		316,076
Environmental remediation costs	6 years		14,757		14,953
Hardship programs	(c)		27,119		25,019
Debt premium	1 to 24 years		28,763		34,178
Deferred purchased gas	(d)		-		2,556
Income taxes due principally to book-tax differences	(m)		155,191		149,015
Deferred income taxes	(e)		46,734		32,517
Contracts for differences	(f)		61,163		142,743
Excess generation service charge	(g)		-		6,909
Deferred transmission expense	(h)		3,272		9,615
Storm Costs	(i)		-		14,752
Other	(j)		32,594		37,628
Total regulatory assets			691,326		1,036,130
Less current portion of regulatory assets			69,721		332,391
Regulatory Assets, Net		$	621,605	$	703,739

Regulatory Liabilities:
Accumulated deferred investment tax credits	29 years	$	4,355	$	4,465
Income taxes due principally to book-tax differences	(m)		-		200,673
Deferred gain on sale of property	(a)		-		37,933
Excess generation service charge	(g)		25,296		-
Middletown/Norwalk local transmission network service collections	35 years		20,972		21,402
Pension and other post-retirement benefit plans	6 years		24,465		27,686
Asset retirement obligation	(k)		6,604		5,593
Low income programs	(l)		30,158		25,300
Asset removal costs	(j)		333,712		319,530
Deferred income taxes	(e)		26,247		43,421
Contracts for differences	(f)		6,608		-
Deferred purchased gas	(d)		6,596		-
Non-firm margin sharing credits	10 years		29,339		-
Other	(j)		29,413		20,818
Total regulatory liabilities			543,765		706,821
Less current portion of regulatory liabilities			30,043		261,729
Regulatory Liabilities, Net		$	513,722	$	445,092

(a) Asset/Liability relates to the Competitive Transition Assessment (CTA). Balances are fully offset by amounts primarily included in income taxes, due principally to book-tax differences. Total CTA costs recovery and stranded cost amortization are complete. 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 ended. The remaining balances were eliminated. See Note (C) “Regulatory Proceedings – Electric Distribution and Transmission – Other Proceedings” for additional information.

(b) Life is dependent upon timing of final pension plan distribution; balance, which is fully offset by a corresponding asset/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 6 - 13 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) Regulatory asset or liability which defers generation-related and nonbypassable federally mandated congestion costs or revenues for future recovery from or return to customers. Amount fluctuates based upon timing differences between revenues collected from rates and actual costs incurred.

(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 ($5.5 million) and certain other amounts that are not currently earning a return. See Note (C) “Regulatory Proceedings 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.

(m) Amortization period and/or balance vary depending on the nature and/or remaining life of the underlying assets/liabilities; balances contain regulatory liabilities related to the CTA as well as regulatory assets not related to the CTA. Due to the end of the CTA charge, the CTA regulatory liabilities are classified as current regulatory liabilities as of December 31, 2013 and the regulatory assets not related to the CTA are reclassified as long-term regulatory assets.