Susan Allen - VP Investor Relations Jim Torgerson - President and CEO Rich Nicholas - EVP and Chief Financial Officer

Caroline Bone - Deutsche Bank John Apgar - BofA Merrill Lynch

Welcome to the UIL Holdings Second Quarter 2014 Earnings Conference Call. I will now turn the call over to your host, Susan Allen.

Thank you, Maggie and good morning to everyone. Thank you for joining us to discuss UIL Holdings' second quarter 2014 earnings results. I am Su Allen, Vice President of Investor Relations. Participating on the call today is Jim Torgerson, UIL's President and Chief Executive Officer; and Rich Nicholas, UIL's Executive Vice President and Chief Financial Officer. If you do not have a copy of our press release or presentation for today's call, they are on our website at www.uil.com. During today's call, we will make various forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Significant factors that could cause results to differ from those anticipated, are described in our earnings release and our filings with the SEC. With that said, I will turn the call over to Jim Torgerson.

Thanks Su and good morning everybody. Our second quarter net income really came in just above right on our expectations and we are reaffirming our guidance excluding the PGW acquisition, but the guidance is going to be the same as $2.15, $2.35 per share. Now, excluding the expenses related to the pending acquisition of Philadelphia Gas Works second quarter net income was $14.3 million or $0.25 per share compared to $17.9 million or $0.35 per share in 2013. If you include the acquisition cost of $5 million then we have $0.09 a share in consolidate income of $9.3 million. Now there a couple items causing the second quarter of 2014 to be less than 2013 which we have somewhat backed in, but one is the tax adjustment, as we talked about in the first quarter Rich will give you the details on that, but that was a negative in the second quarter and that was positive in the first quarter of '14 and neither one of which was included in 2013. The second item, we actually booked earnings sharing for the electric distribution business and for Connecticut Natural Gas. Our analysis indicates that probably we will be over earning this year on both of those so we have to start booking for earning sharing. And if you recall we share $0.50 on a dollar for anything over the allowed ROE. So, we didn't book that and that was about $1.5 million in the ballpark. So those two items would really kind of show the difference between 2013, 2014. And consolidated income was actually up 10% for the year-to-date, again excluding the acquisition related expenses. And the earnings per share obviously is down a little bit, but keep in mind, we do have a number of greater number of shares outstanding versus the first six months of 2013, including the after-tax acquisition expenses which are now $11.9 million or about $0.21 a share. So for the year-to-date, income would have been $64.8 million or $1.13 including the acquisition costs. Good news also we added 5,901 new gas heating customers through June, and we fully expect to meet our full year goal of about 16,000 conversions when all of a sudden done for the year. The growth -- and we're following along in the packets on page four. Growth through the investment in Electric & Gas Infrastructure, we'll talk a little bit about that in a minute. The addition of new natural gas heating customers which is clearly supported by Connecticut legislation and we’re pursuing investment opportunities, renewable generation and some other projects and the construction of the renewal project will begin later this year and this was the fuel cells in both New Haven in Bridgeport and solar array down in Bridgeport. We're also continuing to leverage our internal systems in support of the enterprise and then we have the PGW acquisition, which talk to right now. Now to remind everybody, we announced this in early March and we're acquiring the assets and certain liabilities to pull off gas works operations. Total consideration was 1,860 million acquired cash free and debt free. And we’re going to issue long-term debt and equity in combination with equity like securities to keep our investment grade credit rating as they are. We also have 1.9 billion fully committed facilities in support of the transaction. Now, we still need approval from the Philadelphia City Council, Pennsylvania Public Utility Commission and no shareholder vote and we still expect holding could occur by the end of the first quarter in 2015. Now, the status of City Council, council is still awaiting the results of their independent consultant. As of July 16th, UIL had the ability under the terms of asset purchase agreement to terminate the agreement if City Council had enacted. And we still have that option all the way through until either City Council acts or until end of December. We did decide to continue our effort to pursue this acquisition and really we want to become a new business partner in Philadelphia. We are enthused about the opportunity there and we still believe it’s going to be a great strategic asset for us assuming we didn’t get the approvals. And we are going to work with City Council in the assessment of the sale. The City Council majority obviously has to approve it and the next scheduled meeting is September 11, and then the application to the Public Utility Commission for issuance of a certificate of public convenience to whatever the UIL subsidiary that will be the one buying PGW and we’ll make that application at some point. Now on page seven, I want to make sure everybody understand this; we are not ignoring our current business in pursuit of PGW acquisition. We have a very good long-term organic growth plan with 10 year capital spending of about $4.2 billion, $1.5 billion on electric distribution which does include the renewable generation project of about $47 million, about a four year time horizon, nearly $600 million for our transmission and then the gas distribution was a $1.8 billion and the corporate is about another $300 million, which is mainly software and facilities activities. Our rate base is going to continue to grow and you can see that's growing at a 8.3% compound annual growth rate for the five year period. Gas about 7.5%, transmission 6% and electric distribution just a little under 11%. This does not include anything for the PGW acquisition. So, obviously that will be, will impact us as we hopefully close on that transaction. On page nine, the gas heating customers were at 5,900 through June, we fully expect to meet our goal of 16,000 in 2014, you can see we're running a little bit behind through June from our projection and behind last year. Now keep in mind a couple of things, when we had a big backlog going into 2013, this is the backlog wasn't quite as big and then we had a very cold winter which precluded us from doing much dating in the ground, the ground was frozen until pretty much through March. So, it's kind of limited what all the things we could have done. But on the plus side, we still see many opportunities to continue to grow that business and we feel very optimistic that we'll meet our target for this year. Page 10 gives the projection and this was part of the comprehensive energy strategy that was proven by the state to add for us a little over 200,000 new gas heating customers. And you can see the trajectory they would do that over the ten years. We also have in Berkshire Gas, now keep in mind the 200,000 was in Connecticut, then we're adding roughly a 1,000, 1,500 per year at Berkshire. And that actually the growth there has actually been going just as well as in Connecticut. So, let me talk about the FERC ROE complaint. The challenge to the regional transmission base ROE filed at FERC by a number of entities originally back in September 2011. FERC issued an order in June determining that the base ROE for New England transmission order should be 10.57 versus 11.14 base ROE that we have been working on off of. So, FERC established the paper hearing to determine whether the GDP is an appropriate measure of long-term growth and they moved from a single step discount and cash flow analysis to a two-step discount and cash flow analysis all that means is that two thirds of it is determined by short-term rates and growth and also then the long-term growth is determined by the GDP increase. And the paper hearing is determined is that the appropriate measure, so that paper hearing is going to be have to happening right now and we will be making our filings shortly. There was a second complaint that went in at the end of 2012 because of the first refund period would end in December of 2012 and it was some other parties, so second complaint was and then FERC has instituted a hearing and settlement judge procedures for the second complaint. And we filed a request to all the New England transmission has filed the request for clarification on ROE hearing. One some of the orders in the initial complaint and the second complaint other parties have also filed request for hearing on initial compliant, the biggest issue is the high end of the range of reasonable with that sets the limit in FERC’s order and it also includes incentive. Now, one of the issues at stake here is in the aggregate or per year transmission business or as a project by project, they weren’t very clear on that in the foreclosure. So, that's one the things that we're looking for clarification and obviously want it by in the aggregate. There is then a new complaint filed at the end of July, arguing that the marketing conditions are not anomalous which is the reason (inaudible) taking the what would be the 75th percentile, the point between the midpoint and the top-end as a range of reasonable. And they request a new 15 months refund period beginning July 31st and seeks to cap the ROE for any project at the top of its own reasonable. But there is not a reasonable 12, I think it was 12.54%, so changes the dynamics for that. Now, and there was a footnote we put in here that should through June 30th if we lose on pretty much all if the arguments then through the end of June we would have approximately another $7 million charge [that would then] incur. Obviously we're not expecting to lose on all the arguments. Regulatory update on page 12 gas distribution rate case for CNG a final decision was ordered on the end of January. They also ordered a private letter ruling on the request on a 338 (h)(10) issue and this is when we bought the company, the three gas utilities from the withdrawal in 2010 we used the 338 (h)(10) to write up those assets. What it does, it eliminates the accumulative deferred income tax which then has the effect of increasing rate base. We made the case that should the commission do anything to not traded as those that was the full rate based but that would be a normalization violation. The consumer counsel is challenging that and as when the commission ordered us to filed request a private letter ruling to that for the effect that any change would in effect the normalization violation. The OCC filed an appeal in court challenged that decision of the commission to request the private letter ruling and also challenged the PURA’s ability to approve the cast iron bare steel replacement program tracker, saying they couldn't implement a tracker. Obviously we have had other trackers in the past, so again, we believe that it's something that (inaudible). So we have actually dropped the appeal are request, private letter request, it was filed and PURA issued some revisions and we expect to respond to those revisions in the near future. And Connecticut’s Comprehensive Energy Strategy, we actually have a regulatory reopen around that now to look at using a non-firm margin credit directly on project. And what the legislation got changed that would allow us to do that, this is in front of PURA now so that we can then -- and this would be in the case where jobs mainly main expense in jobs don't mean the hurdle rates on for the return requirement and customer would have to pay a contribution area construction. So then we would be able to use the non-firm margin credit, this is basically off system sales capacity release dollars that we get and use those at least 50% of those for supplementing what the customer might have to pay or truly offsetting what our customer may have to pay. So that’s in front of the PURA right now, we believe that we have asked for an interim order that should come out in the very near future it would allow us to use above 2 million per year for each company which is the request we have in there. And PURA is monitoring as a docket for the acquisition of PGW, that's an ongoing activity for them. In the Massachusetts DPU issued a service quality order which had some changes in the objectives of the standards that would apply though our gas utility or Berkshire Gas on service quality standards and it some penalties associated with that if those standards aren’t met. In the past we have always met the standards that have been in place but those will be changing as a result of this. So I will now turn it over to Rich Nicholas who is going fill you on the financial aspects.

Thank you, Jim. Good morning everyone. Thanks for joining us today. I am on slide 13 where we have laid out by business segment both the net income and the earnings per share for both the quarter and the six months ended beginning on slide 14 we’ll go through the detailed individual operating segments. So with regard to electric distribution net income of 11.2 million for the quarter just slightly down from 12.1 million last year primarily due to an increase in uncollectible expense, we have one large commercial customer file for bankruptcy. And as we have planned the CTA earning rate base was fully amortized last year so 200,000 reduction there. And then our investment in GenConn is a rate based rate of return and so as at that rate base depreciates overtime each year the GenConn earnings will go down slightly. We also as part of the refinancing on GenConn last year, realigned the capital structure right back to the 50-50 that’s allowed which was down just slightly from the equity component in the prior year. But that is where we'll be now going forward, again 50% equity, 50% debt. Full year, similar types of changes year-to-date in ’14, net income of $25.2 million, down slightly from the $26.6 million last year. Again, the uncollectibles there, absence of CTA and a slight decrease from GenConn. As Jim mentioned earlier, we did record earnings sharing, as you see, excluding the write-offs that came out of UI’s or distribution rate case last year. We’re currently earning 9.6%, project to be slightly over at year end. And so we recorded a prorated amount of sharing of about $500,000 after tax at distribution this quarter. On the electric transmission side, net income up slightly from last year quarter over quarter, a $9 million second quarter ‘14 million versus $8.9 million last year. So, rate base continues to grow, slightly offset by little lower AFUDC and for the six months ended June 30, essentially flat year-over-year, again the same reasons. Year-to-date -- year ending, excuse me, 6/30/14 were 12.2% rate of return and if you include the reserve that we booked last year it's closely to 11.6% to 11.7%. Moving to our gas business on slide 15. As you know due to the seasonality of the business, the second quarter is typically a loss, $2.2 million in 2014 for the second quarter versus $0.9 million last year. We did see warmer weather, about 6.6% less heating degree days second quarter of ‘14 versus second quarter of ‘13 and higher corporate charges of about $900,000, mainly due to the implementation of our new enterprise system, our SAP system that’s supporting the total enterprise, an increase also in uncollectibles on the gas side. The first quarter if you recall was actually significantly colder than normal, so higher bills and we’re starting to see some of that. Our plan is to mitigate that through the rest of the year, however through our collection efforts. And we do continue to see customer growth through our conversions effort and slight increases in normalized use per customer and I’ll go through some of those details on the next slide. When you look at the six months ending June 30, ‘14 for the gas business, net income up little over $6 million six months over six months and they’re primarily due to colder weather where we actually had 10% more heating degree days compared to 2013. We also saw a slight uptick in the usage per customer. So moving to slide 16, when we look at the detailed impact of various thins affecting the top-line weather-normalized use per customer and customer growth, you can see in the second quarter weather was a negative but still full year given the cold weather in the first quarter were up $4.7 million as a result of weather. Normalized use per customer, not a lot of change in the second quarter but still positive and for the six months ending --- $3 million positive. And on a customer growth side the cumulative effect of our continued effort to convert customers, you’re seeing the positive benefits there as well. Now, we do have decoupling at Connecticut Natural Gas and so the effects of weather after January 9th when the rate case went into effect are decoupled away and/or if we have warm weather we get the benefit of decoupling. Similarly the use per customer gets adjusted through decoupling as well. Also on the gas side when we look at CNG, CNG now has sharing and we do project that for the full year we will above the 9.18 return. As you can see, CNG is around 9.3% on average right now and SCG is actually about 9.85%. Adjusting for the weather being the eights, so very close to the allowed returns, even adjusting for weather and slightly above. Moving to slide 17 to look at the corporate segment where we include holding company debt as well as corporate capital charges for investments that are made on behalf of all the enterprises. The main difference there is really the interim tax benefit that Jim mentioned earlier that we booked $3.4 million in the first quarter, that will fully reverse over the course of the year about $2 million of that actual reversed in the second quarter, we see slightly over $1 million of reverse in the third quarter; and at the end of the full year, there will be not a net effect resulting from that seasonality of our differences and different effective tax rates. So, excluding the acquisition related cost, expenses were $5 million for the quarter this year compared to 8.7 million last year and including, excuse me that was including in after-tax acquisition costs. Moving to six months ended, year-to-date 2014 excluding acquisition costs, corporate cost for 2.9 million compared to 5.1 million last year. So turning now to the guidance for the full year 2014, on slide 18. We're reaffirming the core business, so focused on the excluding acquisition costs of $2.15 to $2.35, also reaffirming individual segments, we did not make any changes in the individual components. And it also does not reflect any possible changes that might come out of the FERC rehearing process over the course of the next several months and probably into next year as well. So the core business is really on target for where we expected it to be and we continue to focus on our existing operations as well as getting acquisitions done. So with that, I'll hand it back to our operator Maggie to go through the question-and-answer.

Your lines are now open for questions. (Operator Instructions). We do have a question from the line of Caroline Bone. Your line is live. Caroline Bone - Deutsche Bank: Hey, good morning, guys.

Good morning.

Good morning. Caroline Bone - Deutsche Bank: And just on the uncollectible expenses, should we expect to see similar increases going forward as a result of this large commercial customer?

It was a one-time event for a single customer who’s got some unique circumstances. So no I would not expect to see that. Caroline Bone - Deutsche Bank: You kind of reserved all for it entirely in the second quarter?

That’s correct. Caroline Bone - Deutsche Bank: Okay. And then, just generally, any thoughts on the upcoming elections in Connecticut and whether that could impact energy policy in the state?

That’s good question. Right now the race for Governor -- well Governor Malloy is running obviously running and the Republican candidate still somewhat up in the air. I think Tom Foley has the lead but that he does have some opposition in the primarily in next week. So I would expect that the energy policy would probably continue regardless but I will have an opportunity to talk with Malloy for certain, Tom Foley I haven’t talk to him about it but I will probably get that opportunity in the next couple of months assuming he is the Republican nominee I don’t expect our efforts in expanding use of natural gas has changed at all. There is such a big opportunity for us to continue that with all of the people who don’t use natural gas from a price differential that even if the support were to weaken somewhat I think our efforts would continue very strongly. So I don’t see that changing our outlook at all. Caroline Bone - Deutsche Bank: Alright, thanks guys. It’s really helpful.

Our next question comes from the line of John Apgar. John Apgar - BofA Merrill Lynch: Good morning.

Good morning. John Apgar - BofA Merrill Lynch: Just a quick question on PGW acquisition. Does it have to get brought up in a committee meeting at the Council before it goes to a Council vote?

No it does not, there are committees but from what we believe, it looks like it’s going to come to the full Council there will be an ordinance for this submitted and then there will be hearings or at least one hearing and probably maybe a couple. Once the ordinance is introduced, so, I haven't heard anything about going through any committees in City Council. John Apgar - BofA Merrill Lynch: Okay. And I was just checking out the agenda, that's not currently on the September 11 agenda, but the thought is it could get added to that depending on whether we get the consultant before them.

Yes, it will be up to the City Council members and particularly the President to see you when it would be introduced so. John Apgar - BofA Merrill Lynch: Okay, fair enough. And then…

And they definitely want to see the Concentric report before that happens. John Apgar - BofA Merrill Lynch: And I think in the last call, you were not sure whether that Concentric report would be made public. Is that still the view or is that still the thought, you're just not sure yet?

I have to presume it will be, but I don't know that for certain. If it's going to be part of City Council's deliberations. I would expect that it would have to come up in the City Council hearings and then it would be public. But that will be up to the City Council as generally whether it's released publicly or not. John Apgar - BofA Merrill Lynch: Okay. And then, the last one on PGW. Are you waiting for the Council to act on this before you file with the Pennsylvania PUC for the certificate of public need?

Well, keep in mind, we have to file within 60 days of when the ordinance is presented. And we will send it to the PUC the application when we think it's a good time. I guess it's the best way to put it. So, whether that means we wait or we get Council action or they enter the ordinance, we just got to work with City Council, make sure that it's not being perceived as precluding any of their action and the ability to that. So, we just got to work with them on the timing. John Apgar - BofA Merrill Lynch: :

Well first off just to make sure I understand, we didn’t book the $7 million that’s just, just in case, that’s just giving you some information as to what it could be. The portfolio approach, it actually has to do with the gas expansion in Connecticut. So that’s a little different issue. But I’ll let Rich talk about what’s in that $7 million.

Sure. If we were to go project-by-project on the cap at the high end of the range, some of the returns on individual projects would have to come down. So that’s embedded in there. If the second refund period was set at the same as the first refund period, that’s included in there but not below the 10.57. It does not include anything for a third refund period. We’ve seen even in the complaints’ filing for the third refund period, their consultant’s estimate was halfway between the midpoint and the high-end of their range was 10.99. Now they’re debating that you shouldn’t use the midpoint between the midpoint and high-end, you should use the real midpoint. We obviously don’t agree with that. I’ve seen other reports out there that would guesstimate something right around 11%, again using the exact same methodology that FERC did in their initial decision. So, there is nothing specific in that 7 million from a period. John Apgar - BofA Merrill Lynch: Okay. Thank you.

You're welcome.

And we have no further questions in queue at this time.

Okay. If there no further questions then I want to thank everybody for participating today and obviously if you do have questions, please don't hesitate to call our folks Su and Michelle and be happy to get whatever you need. So, thank you very much.

That concludes this morning's teleconference. You may now disconnect your lines.

Thanks bye.