questions and answers

Jim Torgerson and Rich Nicholas offer concise answers to questions you may have about 2007 and UIL’s plans for the year to come.

When and why does UI have to do a rate filing?

Under state statute and rate-making principles, utility companies like UI file a request with state regulators to adjust distribution rates to cover costs, including a reasonable rate of return, and to meet our public service responsibilities. The Company’s commitment to replacing and improving its infrastructure to meet system reliability goals has progressed. In addition, the focus on energy efficiency as well as new distributed generation projects in our service territory have contributed to reduced electricity sales. The Company is considering making a rate filing in 2008. UI is very aware of the impact rising electricity prices has had on customers and we are working closely with state and local business officials to help mitigate the impacts on Connecticut’s economy and quality of life.

In addition to the Middletown/Norwalk project, what other transmission projects will UIL be investing in?
Connecticut’s transmission system is an important part of the greater interconnected regional electric grid. We need to be capable of handling energy demands of the 21st century. UI, through the work of its Transmission Business Unit, is currently capturing opportunities, including those not as large as the Middletown/Norwalk Project, that are cost-efficient, time-efficient and effective.

What are some of the components of the 10-year capital expenditure plan?

The Company has recognized a number of notable challenges to satisfy the growing electricity needs of our residential and business customers. The Plan is forward-looking and far-reaching for a company of our size and is the largest infrastructure project UI has ever undertaken. Carrying out the Plan will ensure electricity is as safe and reliable years from now while minimizing the economic impact on individual customers and the region. Having a rolling 10-year plan provides reasonable lead time for planning, permitting, and actual construction of the projects. Currently the spending breakdown of the $1.75 billion includes $887 million on distribution and $866 million on transmission projects. Components of the Plan include: the upgrading and replacing of aging electric infrastructure, such as transformers and underground cable, and the building of new substations and transmission lines as necessary to increase the capacity of the system to meet customers’ increased demand for electricity. Most importantly, the Company looks forward to keeping everyone – from local residents and businesses to state and federal officials – informed of the Plan’s projects and progress.

What benefits will customerS see as a result of the UI/NRG partnership?

The UI/NRG partnership could be a model for the future. Even though decisions will not be issued by the Department of Public Utility Control (DPUC) until this summer, the process by which UI/NRG and others responded to the state’s call for more peaking generation may already prove beneficial. Through this application process, there is better knowledge of the state’s requirements and the cost-of-service model, which promotes fairness in pricing and will benefit the state’s electricity customers in the future.

What is UIL doing to lower customers’ electric rates?

The Company shares the public’s concerns about the increases in energy costs. UI recognizes the need to be at the forefront of the discussion to keep electric rates at a reasonable level. UI will continue to work with federal and state legislative agencies to craft intelligent and responsible energy policies. While we cannot control fuel and generation costs that have escalated over the past few years, UI will work closely with the DPUC and Office of Consumer Counsel to procure power in a way that meets the standards set forth by state statutes. In addition, the Company has managed its operating costs, and through various projects, like the Middletown/Norwalk 345 kV transmission line should reduce statewide congestion costs on customer bills. In the short term, the Company has facilitated the process for customers to switch suppliers of the electricity they use and UI delivers. UI is proud of its many conservation and energy efficiency programs, which are designed to help customers better control their electricity usage.