Susan Allen - Vice President, Investor Relations Jim Torgerson - President and Chief Executive Officer Rich Nicholas - Executive Vice President and Chief Financial Officer

Caroline Bone - Deutsche Bank

Welcome to the UIL Holdings Third Quarter 2015 Earnings Call. I will turn the call over to your host, Susan Allen.

Thank you, Nicky and good afternoon to everyone. Thank you for joining us to discuss UIL Holdings third quarter 2015 earnings results. I'm Susan 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 filings with the SEC. With that said, I will turn the call over to Jim Torgerson.

Thanks Susan, and good afternoon, everybody. In the third quarter we made considerable progress on our merger with Iberdrola and our quarterly results were actually reasonably good. When you look at the quarter we had consolidated net income of $15.6 million or $0.27 per diluted share that was up about $0.05 a share from the third quarter of 2014 and year-to-date we were $89.1 million or $1.55 compared to $1.35 a share in 2014 now. Obviously there were a lot of onetime items or non-recurring items and we enumerated those on page four of the earnings presentation. There were merger related expenses and actually in both years one for the UIL Iberdrola USA merger, but also on 2014 with the now terminated proposed acquisition of the asset from some liabilities of the Philadelphia gas works. And also we had the transmission return on equity reserves which we set up and there were impacts in both years from that. So if you look at the table you can see the consolidated earnings excluding those non-recurring items show basically a flat quarter and we were down $0.5 million or $0.01 a share and year-to-date we are actually up $2.5 million or about $0.04 a share and one thing to keep in mind that you know had we not entered into those merger with Iberdrola we would have filed a record distribution ratecase already by now because of their impact distribution spending has had on our return. But Rich can talk about that when he gets to the returns and you can see where we are at. On page six, we want to go through quickly the timeline transaction. A number of things have already been accomplished the Hart-Scott-Rodino process was completed back early on, the SCC gave their approval in May. FERC was -- approved the transaction in June, the committee on foreign investments also their review was completed. The Connecticut Public Utility Regulatory Authority actually as most of you or all of you recall their graph decision back in July, end of June would have denied the proposed change of control, we called that filing and then re-filed and then we worked out a settlement agreement with the Public Utility actually with the consumer counsel which we filed with PURA in mid-September. The briefs that came in all came in with support from the Attorney General’s office, the power of energy environment protection, the consumer counsel, the only one who was actually provider where they wanted more information data requirements was TASC which is the solar people. In Massachusetts, we made our filing in March and we reached the settlement with the Attorney General and the Department of Energy Resources in October and that was filed with the DPU in mid-October. We also requested the DPU approve the change of control by December 18. The SEC S-4 registration amendment number two was filed in October, we’re expecting something soon whether it’s no comments and we can go effective or further comments that we’ll have to address and that will dictate the timing. We still would expect to be able to close by the end of the year the last round of comments we have from the SEC over fairly limited and but we did respond to them but we’ll see if there are any further comments and then we can go from there hopefully get the shareholder meeting scheduled and then move to closing by the end of the year. On page seven, I want to highlight some of the components of the settlement agreement with the consumer counsel in Connecticut; we would be providing the customer rate credits of $20 million in the aggregate to customers of the three companies in Connecticut, United Illuminating Connecticut Natural Gas and Southern Connecticut Gas. In addition, and those would be spread and paid in the third month following the closing at the beginning of that and on our ratepayer faces. The addition ratepayer benefits, the $12.5 million for CNG customers extended over a 10-year period starting in a couple of years. It runs from 2018 to 2028 I believe and it could be modified by the commission, we’ll see what happens there. The additional Ratepayer benefits for CNG or SGC, Southern Connecticut Gas would be $7.5 million in rate credits over a 10-year period, again ratably applied. We also agreed to increase the bare steel and cast iron replacements over a 3-year period with what we are characterizing as delayed recovery, really we wouldn’t recover had the cost until we filed a ratecase which is anticipated to be rates wouldn’t go into effect until 2018 and so that benefits the customers with about $1.6 million. We have a base rate freeze as I said for UI and distribution; it wouldn’t be until rates can go into effect until January 1st of 2017 when you think about it 14 months from now. And then the gas companies would be January 1st of 2018. We also agreed that we would provide within the first six months following the closing of our transaction projects that would improve the resiliency for the customers of the electric distribution company and that the first 50 million of distribution related expenditures we would delay the recovery of the return on equity -- difference between the debt component and the equity component and delay that recovery until after the next ratecase gets filed which is probably if we file one that gets rates in 2017 depending on the extent of that and that after all these projects are done which is probably 2018 or 2019 for the next ratecase after that. So that’s kind of the timeframe we get, so that’s how we calculated the $5 million benefit. Hirings we committed to hire 150 people in Connecticut over the three year period. Now keep in mind this is replacements -- could be for people that retire, it’s just actually hiring 150 people not new jobs necessarily, there may be a few, but the commitment was really to meet the jobs would be in Connecticut and not in let’s say New York or Maine or probably in Oregon or Houston or anywhere else. It was really to make the commitment to hiring people in Connecticut. We also agreed to provide $2 million a year for a three year period, so a total of $6 million to the department of energy and environment or protections clean energy funds and that could be used for energy efficiency clean energy, other projects that the department would like to investigate. We would also put $1 million into a disaster relief fund for Connecticut residents and we agreed to certain customer service quality requirements that for some customer service metrics we would improve them by 5% over a three year period and they really relate to things such as average speed answer for the call center, making commitments on times when we go out to meet customers meeting those time requirements, those type of things. And then we would also maintain the high level of safe -- of reliability that we have right now. Also as part of the settlement, English Station which is a plant that we sold and UI sold 15 years ago actually we gave it to the people and put -- gave them money to take it and put money in escrow to clean it up, it never really got cleaned up, so part of the transaction would be that we would take on the responsibility to clean up the -- everything within the perimeter inside the plant, inside the area of the land because its’ on an island in a river that we would clean that up, up to $30 million. If it goes over that then we think we’ll be responsible for cleaning up beyond that but the estimates we’ve received for the department of energy environment protection say would be less than that, any difference between the amount of cost assuming it’s less than the $30 million the remaining amount would then go to the state and when the governor and the attorney general and commissioner of department of energy would then determine where the money would be spent. We also eliminated several litigation activities going on appeals, one related to the generally some service charge and the FMCC which is the Federally Mandated Congestion Charges they are on the bill payment appeal that we have there that we believe very strongly that we wouldn’t prevail but we are withdrawing that appeal and then also it will resolve all the issues related to the 2010 change of control docket for Connecticut Natural Gas and Southern Connecticut Gas. And then the OCC would also withdraw all their appeals related to the 2013 Connecticut Natural Gas ratecase. So we have a very broad settlement that not only has financial terms but also ends quite a bit of litigation that's been going on. Maintaining local management was very important from the draft decision that Commission felt that they wanted to see. So, we've determined there'll be no involuntary termination of employees for at least three years. Now, we can still terminate people for cause or poor performance. And then also long term commitment to maintain headquarters and the operations of the UIL utilities in Connecticut. As part of this, we're also going to be implementing our very comprehensive set of ring-fencing mechanisms that would protect the UIL utilities and UIL itself for any long term potential changes in the financial circumstance of Iberdrola USA or any of their affiliates. And it really limit the amount that could cause a bankruptcy proceeding from effects of those affiliates of Iberdrola USA should there ever be any, which we don't anticipate, but it does set it up, so UIL and its utilities will be separated from them. Our settlement agreement on page nine, with Massachusetts Attorney General and the Department of Energy Resources track along the same lines as the Connecticut settlement it was design to do that. The customer rate credits are $4 million and the aggregate to the customers of Berkshire Gas, and then an additional benefit of a $1 million allocated for a number of activities, which would go the department and they would determine where the money gets spent and it has a whole list of things that they could spend the money on. Our base rate freeze, the distribution rates would be frozen for Berkshire Gas until our June 1st of 2018. We would make an additional $80,000 in Charitable Contributions in the first year above and beyond $50,000 to $75,000 we do today and also maintaining local management, so, there would be again, no involuntary terminations, same terms of three years in Massachusetts. Obviously we're honored the collective bargaining agreement, we're doing that in Connecticut for the Unions and maintain the Berkshire Gas company headquarters in Connecticut. And the ring-fencing are similar because since it’s a structural mechanism that gets put in place at the UIL Holding Company level, it will automatically apply to Berkshire Gas Company. Now moving on to things happening currently with gas heating customers, our 2015 target was, is to convert at least 12,000 households and businesses. Through the end of September we had converted 6,754. Natural gas still is very cost effective more so than home heating oil. The price of heating oil has moved downward quite a bit. So, the differential between the benefit – for the benefits of natural gas have narrowed, but we still see it that of advantageous and we still getting customers to switch. And with that, I'm going hand it over Rich Nicholas, who is going to talk about the financial results.

Well, thank you, Jim and good morning everyone. Thanks for joining us today. And we do look forward seeing many of you next week at the EEI Financial Conference. On slide 12 and 13 at this time, I'll go through the segment by segment operating results for the third quarter and year to-date. The tabular formats on slide 12, but then beginning on slide 13 looking at electric distribution, again earnings essentially flat there quarter over quarter, up $200,000 in net income $0.31 a share for each quarter. And if we look year to-date earnings, $0.70 a share this year versus $0.75 last year and that decrease we'd actually already talked about on our first quarter and second quarter calls. As we've seen, the higher unemployment – higher employment-related expenses for wage increases and some additional employees, depreciation and amortization expense as well as the completion of four-year IRS routine audit, which closed out tax years 2009 to 2012, but that IRS audit was about $1 million in tax adjustment that resulted. Looking at GenConn earnings of $3.4 million for the quarter this year versus $3.5 million last year as the rate base continues to depreciate over time. And so, when we look at the achieved return on equity at the distribution segment, we're right now at 8.6% on a rolling 12 months basis, 8.6% and that compares to the allowed of 9.15%. And as the rate base continues to grow as we make investments in the infrastructure, we would expect to be going in for ratecase sometime next year as Jim mentioned earlier. Turning to the electric transmission segment, earnings this year of $8.4 million for the quarter compared to $5.5 million last year primarily due to the booking of reserves last year. If you look excluding the reserves which is on slide 14, you can see that earnings again just down slightly basically flat for the quarter – this year versus the quarter 2014 excluding the reserve adjustments. And we have also last year the order from FERC that reduced the ROE going forward. And we have the pending complaints 2 and 3 that have been consolidated, that are continuing to work their way through the litigation process at FERC. Overall, the transmission ROE 12-month rolling number of 11.35% excluding those reserves that we mentioned. Looking now to gas distribution business at the bottom of slide 14, in the third quarter of 2015 seasonal loss of $7.4 million compared to a loss of $6.5 million in the third quarter of last year, the net loss is primarily due to higher uncollectible expense of about $1 million after tax, again, employee related expenses, and some of those were partially offset by usage from new gas customers. Moving to slide 15, looking at the gas business year to-date, up at $35.2 million for the nine months ended September compared to $30.3 million last year, and do in part to colder weather as well as usage from new gas heating customers. And actually for the nine months our uncollectible expense is down slightly at the gas company, although it was up in third quarter. And again, employee-related expenses as mentioned earlier. As you can see on the table, the middle of the page, we did have a significant benefit from weather year to-date. However normalized use per customers down a little bit compared to last year. And at Connecticut Natural Gas we now have full revenue decoupling, and so the benefit of weather at CNG is offset by the decoupling adjustment. However, we still do get weather variances at both Southern Connecticut Gas and Berkshire Gas. Looking at the achieved ROEs, for SCG in the range of 9.51 to 9.71 and at CNG 8.54 to 8.74, SCG's allowed returns 9.36 and that really benefited from the weather, CNG with the coupling, there is no difference due to weather and that return compares to a 9.18% allowed return. But the corporate level where we do retain certain financing cost as well as any assets that are shared across all four utilities primarily information technology assets. Those costs for the quarter were $3.5 million after tax as compared to $4.4 million after tax for the same quarter last year, that's primarily due to higher shared asset returns as we charge the subsidiaries, a capital carrying charge associated with those. If we exclude the non-recurring merger related cost, you can see the corporate was actually quarter over quarter by 400,000 and year-over-year for the nine months at $2.1 million. So, as we look forward for the rest of the year, on slide 17, we affirmed our earnings guidance both in total and for the sub-segments, no changes there. We're excluding non-recurring items. We're looking at $2.30 a share to $2.45 a share for the full year. If you were to include the merger related expenses and the regulatory reserves, that would be $2.19 to $2.34, than this assumes more than weather in the fourth quarter. So now, we'll turn it back to our operator, Nike [ph] for the question and answer session.

[Operator Instructions] Our first question comes from Caroline Bone. Your line is live. Your line is live, Ms. Bone.

Sorry about that mute button. Assuming the deal with IB closes by year end when should we expect an update to your pro forma outlook for the business?

I would expect, we'd probably be looking at something like we have done in the past, we should probably be in the first quarter some time consistent with the whatever earnings release we come out with for the full year for 2015 knowing full well that it’s going to be a little different looking at that point, but I would it’s in that time frame.

And then, sorry – then also I guess just could you comment on how the commitments in Connecticut and Massachusetts impact your outlook for the pro forma business?

Yes. Caroline, quite a few of those, probably just about all of them I would expect would get booked between the time we closed and the end of the fiscal year for 2015, which could and there would be just a few minutes, but we would expect to book everything before the start of 2016 actually begins particularly when look at the rate credits those are fixed, those are known, the commitment for English Station is known. How much we'd have to put in at the minimum. So, we have a good handle on it. They are all contingent on closing the transaction, so we would not book any of it till the transaction closes then we – but we think there's going to – we will be get it done before the end of the fiscal year of 2015. So it shouldn't have much of – it won't have any impact really when you get 2016. There maybe a few charges that will occur that we didn't accrue for whatever reason that occur after the fact, but those should be fairly minimal.

Okay. That's helpful. And then just with regard to the oil and gas conversion. Can you remind us how many customers you added in Q4 last year?

I don't have the number right off the top. But we can find that.

I guess just maybe what gives you confidence in your ability to achieve the 12,000 this year?

It's going to be tight, but we think that we're going to be able to get there. When we look at the leads that we have for the rest of the year that we're sitting on right now, we think it's going to be close, but we think we can get there. I don't remember the number from last year, but…

That's all right. I can follow-up with IR.

Yes. We're actually through the end of October up to 8600. So we added – I think it was about 1800 in the month of October. So we're making good progress.

Okay. That's helpful. Thank you.

[Operator Instructions] There are currently no questions in queue at this time.

Okay. Well, thank you everybody for participating and listening. And we will see you next week. I presume most of you at the EEI Conference. And thanks a lot. And we'll talk to you soon

Thank you. This concludes today's teleconference. You may now disconnect your line.