1082510--2/21/2006--UIL_HOLDINGS

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The structure and operations of UIL Holdings utility line of business can be significantly affected by legislation and regulation. Weather conditions may cause fluctuations in the results of operations of the utility line of business. The loss of key personnel or the inability to hire and retain qualified employees could have an adverse affect on the business, financial condition and results of operations of UIL Holdings and its operating subsidiaries, UI and Xcelecom. The inability of management to effectively negotiate collective bargaining agreements and maintain good relations with the respective bargaining units could have a material adverse impact on either UI s or Xcelecom s financial condition and results of operations. The ability of UIL Holdings to maintain future cash dividends at the level currently paid to shareholders is dependent upon the ability of its subsidiaries to pay dividends to UIL Holdings. UIL Holdings ability to fund its capital requirements may be limited by its ability to obtain external financing. Financial results may be affected by economic conditions. Xcelecom s operating results could be significantly impacted by variations from estimated project costs. Xcelecom s operating results could be adversely impacted if it cannot obtain bonding for projects. Xcelecom s operating results could be adversely impacted by competitive conditions. UIL Holdings may be required to make payments under its indemnification agreements with Xcelecom s sureties, which could adversely impact UIL Holdings financial condition. UIL Holdings and its subsidiaries may incur substantial capital expenditures and operating expenses in complying with environmental regulations which could have an adverse impact on the results of operations and financial condition of UIL Holdings. UIL Holdings and its subsidiaries may incur substantial capital expenditures and operating expenses in complying with environmental regulations which could have an adverse impact on the results of operations and financial condition of UIL Holdings. Increases in interest rates could have an adverse impact on the results of operations of UIL Holdings.

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1082510--2/21/2006--UIL_HOLDINGS_CORP