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NEW HAVEN, Conn.–(BUSINESS WIRE)–UIL Holdings Corporation (NYSE: UIL) today reported consolidated net
income of $54.3 million, or $1.94 per share in 2009, an increase of $6.2
million, or $0.02 per share, compared to 2008. For the fourth quarter of
2009, earnings were $6.7 million, or $0.22 per share, compared to net
income of $8.7 million, or $0.35 per share, for the same period in 2008.
The dilutive effect from UIL’s May 2009 issuance of an additional 4.6
million shares of common stock for the full year and fourth quarter 2009
was $0.21 per share and $0.07 per share, respectively.

“In addition, the
decoupling of distribution revenues from electricity sales provided us
with revenue stability in 2009.”

“2009 was a challenging year, but we successfully achieved
year-over-year earnings growth by controlling our operating costs,”
commented James P. Torgerson, UIL’s President and CEO. “In addition, the
decoupling of distribution revenues from electricity sales provided us
with revenue stability in 2009.”

“Looking forward, 2010 will be an exciting year. The first peaking
generation project of GenConn Energy, a 50-50 joint venture between NRG
Energy, Inc. and The United Illuminating Company, located in Devon,
Connecticut, is scheduled to be on-line in June 2010. Major construction
is also getting underway at the second project located in Middletown,
Connecticut. Operationally, we will focus on the execution of our
10-year capital expenditure plan while continuing to control our
operating costs.”

Net income for the fourth quarter and full year 2009, compared to the
same periods in 2008, for continuing operations and discontinued
operations and by line of business, are as follows:

The table below provides the distribution, competitive transition
assessment (CTA) and other net income variances for the fourth quarter
and full year 2009, compared to the same periods in 2008. Full year
earnings from the distribution business have grown primarily due to an
approved rate increase, reduced operation and maintenance (O&M) expenses
and the allocation of certain expenses in 2009 to other rate components.

The decoupling adjustment reflects an accrual to reconcile actual
revenues to the Department of Public Utility Control (DPUC) allowed
revenue requirements in accordance with the decoupling mechanism
approved in the February 2009 final decision in UI’s 2008 distribution
rate case. The favorable variances in regulatory true up items were
mainly due to the absence in 2009 of unfavorable adjustments recorded in
2008 to certain regulatory liabilities. The favorable variance in
distribution rates and pricing was primarily due to increased rates as
approved in the rate case final decision. The unfavorable variance in
sales volume was due to the reduction in kilowatt-hour sales usage
resulting from milder weather and reduction in customer demand.

Regarding O&M expense, UI allocates customer service expense to
transmission in accordance with a Federal Energy Regulatory Commission
(FERC) order. For the year, this allocation provided a favorable
variance due to the timing of the FERC order, which was granted in May
2008. In the fourth quarter, this allocation resulted in an unfavorable
variance due to the favorable variance in uncollectible expense, which
caused a reduction of the allocation. The quarterly and full year
favorable variances in uncollectibles were primarily due to decreased
customer account write-offs and the DPUC-authorized allocation of a
portion of the uncollectible expense to the Generation Services Charge,
effective in February 2009. The favorable variance in outside services
and other expense resulted from the implementation of cost control
measures with the unfavorable variance in the fourth quarter being
attributable to timing differences. The unfavorable variances in pension
and postretirement expenses were primarily due to the negative impact of
the financial markets on the value of pension and postretirement assets
in 2008. However, the distribution rate case final decision provided for
recovery of the increase in pension and postretirement expense for 2009
either in rates or as a regulatory asset for future recovery. The
unfavorable variance noted above is net of those amounts recorded as a
regulatory asset.

In 2009, the transmission business earnings experienced underlying
growth from higher rate base and equity capitalization with
approximately the same allowed return compared to 2008. The unfavorable
variance in the fourth quarter was primarily attributable to a positive
true up in 2008 related to the return on equity. This was partially
offset by the underlying growth in rate base and equity capitalization
on a quarter-over-quarter basis. As previously reported, the
Middletown-to-Norwalk transmission project went into service in December
2008.

Looking Forward

UIL’s consolidated earnings estimate for 2010 is $1.87-$2.02 per share.
Details of the 2010 earnings estimates are summarized as follows:

Factors impacting the earnings per share estimates for 2010 when
compared to 2009 earnings are as follows:

• UIL’s 2010 earnings per share estimates take into account a full year
  of earnings dilution from the May 2009 equity issuance of 4.6 millions
  shares. Earnings per share dilution in 2010 is $0.15 per share, when
  compared to 2009.
• CTA earnings are expected to decline by $0.06-$0.08 per share in 2010,
  as rate base continues to amortize.
• UI’s investment in GenConn’s peaking generation project in Devon,
  Connecticut is scheduled to be on-line in June 2010 and is expected to
  contribute $0.07-$0.09 per share in 2010.
• The distribution and CTA allowed return on equity of 8.75% is slightly
  down in 2010, compared to the allowed composite return on equity of
  8.84% in 2009, resulting from the rate year beginning February 4,
  2009. Expected earnings are based upon the assumption that in 2010
  distribution will earn close to its allowed return on equity.
• The full revenue decoupling, pension tracker and cost of debt tracking
  mechanisms, approved in the 2008 distribution rate decision, will
  continue in 2010.
• The transmission business is expected to earn a weighted average
  return on equity of 12.3% to 12.5% in 2010.

Fourth Quarter and Year-end Earnings
Conference Call

In conjunction with this earnings release, UIL will conduct a webcast
conference call with financial analysts on Thursday, February 18, 2010,
beginning at 10:00 a.m. eastern time. UIL’s executive management will
present an overview of the financial results followed by a question and
answer session. Interested parties, including analysts, investors and
the media, may listen live via the internet by logging onto the
Investors section of UIL’s website at http://www.uil.com.
Institutional investors can access the call via Thomson Street Events (www.streetevents.com),
a password-protected event management site.

UIL Holdings Corporation (NYSE:UIL), headquartered in New Haven,
Connecticut, is the holding company for The United Illuminating Company,
a regulated utility providing electricity and energy related services to
325,000 customers in the Greater New Haven and Bridgeport areas. For
more information on UIL Holdings, visit us at http://www.uil.com.

Use of Non-GAAP Measures for 2010 Earnings Guidance

UIL Holdings believes earnings per share (EPS) information as
presented in its earnings guidance is useful in understanding the
earnings expectations for the business, as a whole. The amounts
presented in the earnings guidance show the EPS for each of UIL
Holdings’ lines of business. EPS is calculated by dividing the
projected 2010 net income for each line of business by the projected
average number of shares of UIL Holdings common stock outstanding for
2010. Total consolidated EPS is a generally accepted accounting
principles (GAAP)-basis presentation.

Certain statements contained herein, regarding matters that are not
historical facts, are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995). These include
statements regarding management’s intentions, plans, beliefs,
expectations or forecasts for the future. Such forward-looking
statements are based on UIL Holdings’ expectations and involve risks and
uncertainties; consequently, actual results may differ materially from
those expressed or implied in the statements. Such risks and
uncertainties include, but are not limited to, general economic
conditions, legislative and regulatory changes, changes in demand for
electricity and other products and services, unanticipated weather
conditions, changes in accounting principles, policies or guidelines,
and other economic, competitive, governmental, and technological factors
affecting the operations, markets, products and services of UIL
Holdings’ subsidiary, The United Illuminating Company. The
foregoing and other factors are discussed and should be reviewed in UIL
Holdings’ most recent Annual Report on Form 10-K and other subsequent
periodic filings with the Securities and Exchange Commission. Forward-looking
statements included herein speak only as of the date hereof and UIL
Holdings undertakes no obligation to revise or update such statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events or circumstances.

The following are summaries of UIL Holdings’ unaudited consolidated
financial information for the fourth quarter and full years of 2009 and
2008: