Where do you see most of the Corporation’s growth coming from this year?

The United Illuminating Company (UI) has been the flagship of UIL and, in the past, has accounted for the majority of UIL’s earnings. The major sources of earnings in 2003 were from the Transmission and Distribution divisions and the recovery of stranded costs. Even though we are increasing spending in 2004 for operations and maintenance of the electric system, earnings from the Distribution division are expected to increase in 2004 compared to 2003. The increase is a result of regulatory-approved financial incentives for the administration of UI’s Conservation and Load Management programs and relief for increased pension and post-retirement expenses, as well as the Transitional Standard Offer power procurement fee, and an expected decrease in interest charges. Transmission investments, like the Middletown to Norwalk Project, should increase future years’ earnings from the Transmission division. The Transmission division’s increases in earnings at the utility, however, will be mitigated by the anticipated decline in earnings from the competitive transition assessment.

UIL does expect earnings growth in Xcelecom as the economy recovers. A rebounding economy should translate into growth and a return to profitability at Xcelecom, as its markets recover and the manufacturing and construction industries expand. Already, we are seeing a backlog in work orders for Xcelecom, which is an increase of 36 percent over year-end 2002.

We expect, also, to see greater returns from our passive investments as they, too, benefit from a strengthening economy.

What is the Middletown to Norwalk Project and why is it important to Connecticut and the region?

The Middletown to Norwalk Project is a significant upgrade to the network of power lines that supplies electricity to Southwest Connecticut. The United Illuminating Company and The Connecticut Light and Power Company are proposing a plan to extend the existing 345,000 volt (345 kV) transmission system from Middletown, Connecticut to Norwalk, Connecticut. Southwest Connecticut is the only part of the state not upgraded to 345 kV and has been listed by the Federal Energy Regulatory Commission as among the top ten reliability risk areas in the nation.

Connecticut’s transmission system is an important part of the greater interconnected regional electric grid. Extending the 345 kV transmission system into Southwest Connecticut will relieve electricity congestion where help is needed most, thereby improving transmission system reliability in Connecticut and the surrounding region.

As we learned from last summer’s Northeast – Midwest blackout, ensuring a reliable electric infrastructure, capable of handling the high energy demands of the 21st century, is in the interests of us all.