ATTACHMENT BAPPLICANTS PROPOSED COMMITMENTSDocket 15-03-45

The Applicants Commitments from LF-25 Supplement[footnoteRef:2] [2: These additional commitments are based upon the supplement to LF-25 that were proposed on May 28, 2015.]

1. Renewables Study Within one year following closing of the Proposed Transaction, the Applicants will submit to the Authority the results of a study (conducted by Iberdrolas engineering subsidiary) on efficient mechanisms to integrate renewable generation with transmission and distribution facilities in Connecticut. The costs of such a study would not be passed through to Connecticut customers. This study is worth approximately $400,000.2. Scholarship Programs For each year for two years following closing of the Proposed Transaction, one local student that resides in Connecticut (two for the two years) will be eligible to receive financial assistance through the Iberdrola Scholarship Program. Additionally, three existing UIL employees will be eligible to receive a Global Energy MBA scholarship sponsored by Iberdrola. In total, the scholarship program and the Global Energy MBA are worth over $300,000. 3. Additional Charitable Contributions In addition to maintaining the UIL and UIL Utilities level of charitable contributions for at least four years following closing (based upon historical annual contribution levels in recent years of between $500,000 to $800,000), IUSA will dedicate an additional $500,000 from its charitable foundation following the closing of the Proposed Transaction to be allocated to charities located in the service territories of the UIL Utilities in Connecticut over a three-year period following closing (i.e., a one-time $500,000 amount allocated over a three-year period).4. Storm Coordination Within six months following closing of the Proposed Transaction, the Networks emergency response team will coordinate with the UIL storm response team to develop plans that optimize resources in the event of an emergency.5. Distribution Base Rate Freeze Each of the UIL Utilities agrees not to initiate a rate case to increase distribution base rates for at least one calendar year from the date of closing of the Proposed Transaction, and distribution rates shall be frozen through that date, absent extraordinary circumstances.[footnoteRef:3] [3: Addresses AG Condition 1 and CIEC Condition 4.]

6. Rate Credits The UIL Utilities in Connecticut will provide a rate credit in the amount of $5 million in total, allocated among all three UIL Utilities, to offset existing arrearages (subject to low-income verification and review of accounts receivables).[footnoteRef:4] [4: Addresses OCC Condition 73(a), AG 1 and CIEC 2.]

7. Economic Development Fund The Applicants commit to contribute $2 million to a new economic development fund that focuses on economic development in the service territories of the UIL Utilities in Connecticut.[footnoteRef:5] [5: Addresses OCC Condition 73(b).]

No Recovery of Transaction-Related Costs

8. Iberdrola, IUSA, UI, CNG, and SCG and their affiliates shall not seek recovery in rates of transaction costs incurred in connection with the Proposed Transaction by the Applicants, their affiliates or their subsidiaries: a) consultant, investment banker, and legal fees;b) change in control or retention payments;c) costs associated with the shareholder meetings and proxy statement/registration statements related to the Proposed Transaction;d) costs for UIL Restricted Stock Units and other stock-based compensation that is triggered by the Proposed Transaction including but not limited to Change in Control Plan payments;e) UIL, UI, CNG, and SCG executive severance costs, if any, associated with the transaction; andf) costs associated with shareholder litigation related to the Proposed Transaction.[footnoteRef:6] [6: Addresses OCC condition 53. ]

9. Iberdrola, IUSA, UI, CNG, and SCG and their affiliates shall not seek recovery in UI, CNG, and SCGs rates of any acquisition premium or goodwill associated with the Proposed Transaction.[footnoteRef:7] [7: Addresses OCC conditions 52 and 53; CIEC condition 6. ]

10. No tax elections or accounting methods shall be employed related to the acquisition that would in any way result in any reduction to UI, CNG, and SCGs net Accumulated Deferred Income Tax balances that are used to reduce rate base in UI, CNG, and SCGs rate cases through an Internal Revenue Code 338(h)(10) election.[footnoteRef:8] [8: Addresses OCC condition 56. ]

11. UIL, UI, CNG and SCG accounting of the Proposed Transaction shall be rate-neutral for UI, CNG and SCG customers. No Networks, IUSA, or UIL, or UI, CNG or SCG accounting associated with the Proposed Transaction shall result in higher rates charged to UI, CNG, or SCG customers.[footnoteRef:9] [9: Addresses OCC conditions 52 and 77; CIEC condition 6.]

12. UIL, UI, CNG, and SCG shall not record goodwill resulting from the Proposed Transaction on UIL, UI, CNG, or SCGs books unless required to do so by the SEC. If the SEC requires that goodwill be recorded on UIL, UI, CNG, or SCGs books, then Iberdrola, IUSA, UIL, UI, CNG, and SCG shall ensure that such goodwill does not impact rates charged to UI, CNG, and SCGs customers, or the capital structures of these Connecticut Utilities.[footnoteRef:10] [10: Addresses original OCC condition 51 and 52; CIEC condition 6. ]

13. Under no circumstances will customers be responsible for any portion of the termination fee if one is to be paid.[footnoteRef:11] [11: Addresses OCC condition 54. ]

Ring-Fencing

14. The UIL Utilities will not incur or assume any debt, including the provision of guarantees or collateral support, related to this Proposed Transaction or any future IUSA or Iberdrola acquisition.[footnoteRef:12] [12: Addresses OCC condition 7; AG condition 2; CIEC condition 8.]

15. Each UIL Utility will maintain separate debt, and, for CNG, separate preferred stock, so that none will be responsible for the debts or preferred stock of affiliated companies.[footnoteRef:13] [13: Addresses OCC condition 23; AG condition 2.]

16. The UIL Utilities will not assume liability for the debts of IUSA, UIL, the other UIL subsidiaries, or any other affiliate of IUSA. The UIL Utilities will not guarantee the debt or credit instruments of IUSA, UIL, or any other IUSA affiliate.[footnoteRef:14] [14: Addresses OCC condition 24; AG condition 2.]

17. The UIL Utilities will not pledge or use as collateral, or grant a mortgage or other lien on any asset or cash flow, or otherwise pledge such assets or cash flow as security for repayment of the principal or interest of any loan or credit instrument of, or otherwise for the benefit of, IUSA, UIL Holdings Corporation, or any other affiliate.[footnoteRef:15] [15: Addresses OCC condition 25; AG condition 2; CIEC condition 9.]

18. The UIL Utilities will not include a condition in their debt agreements that would cause a default as a result of the default of an affiliates debt, other than the existing limited provisions as required by bondholders related to ERISA compliance.[footnoteRef:16] [16: Addresses OCC condition 26; AG condition 2; CIEC condition 9; see May 28 Tr. 174:15-24 (Nicholas). ]

19. The UIL Utilities may only participate in money pools where the other participants in such money pools are other regulated utility affiliates in the United States unless otherwise authorized by the Authority. Notwithstanding the foregoing, UIL may participate in such money pool as a lender but not as a borrower.[footnoteRef:17] [17: Addresses OCC condition 31; AG condition 2; CIEC condition 9.]

20. The UIL Utilities shall not incur long-term debt except to the extent consistent with Conn. Gen. Stat. 16-43.[footnoteRef:18] [18: Addresses OCC condition 59; AG condition 2. ]

21. The UIL Utilities will obtain ratings from two out of the three major nationally and internationally recognized bond rating agencies, such as Standard & Poors, Moodys Investor Service, and Fitch Ratings, and intend to maintain at least an investment grade credit rating for both corporate credit ratings as well as ratings for long-term debt.[footnoteRef:19] [19: Addresses OCC conditions 23 and 37; AG condition 2; CIEC condition 7.]

22. If a UIL Utilitys credit rating from any of the three major credit rating agencies falls below investment grade, the UIL Utility must file a plan with the Authority within 60 days explaining the actions that are planned to address and rectify the situation, to the extent that the reason for the downgrade is reasonably within the control of UIL or the UIL Utilities.[footnoteRef:20] [20: Addresses OCC conditions 40 and 81; AG condition 2 CIEC condition 7.]

23. No UIL Utility shall issue any dividend to its parent if such UIL Utilitys corporate issuer or senior unsecured credit rating, or its equivalent, is rated by two of the three major credit rating agencies below investment grade. This restriction ends when the relevant credit rating is restored above investment grade by one of the credit rating agencies. The UIL Utilities retain the right to petition the Authority for the ability to issue a dividend if such a ratings event occurs.[footnoteRef:21] [21: Addresses OCC conditions 35, 36, 38, 39 and 42; AG condition 2 CIEC conditions 7 and 8. Note that this is the only commitment that has been altered from what was provided in the Applicants initial brief. The second sentence is new and clarifies the duration of the restriction. This new language corresponds to language in OCC condition 40. ]

24. If a UIL Utilitys corporate issuer or senior unsecured credit rating, or its equivalent, is rated by two of the three major credit rating agencies below investment grade, then such UIL Utility may not transfer, lease, or lend any moneys, assets, rights or other items of value to any affiliate without first obtaining PURA approval. These provisions exclude payments for goods, services, and assets related to reasonable commitments made 180 days or more before the triggering event, routine transactions required in the regular course of business pursuant to contracts or other arrangements in existence 180 days or more before the triggering event, corporate taxes, and payments, if not accelerated, of principal or interest on loans.[footnoteRef:22] [22: Addresses OCC condition 39; AG condition 2 CIEC condition 7.]

25. Copies of all presentations made to credit rating agencies by the UIL Utilities must be provided, within ten business days of the presentation, to Authority Staff, and under a protective order to protect the confidentiality of this information, on a continuing basis.[footnoteRef:23] [23: Addresses OCC condition 41; AG condition 2 CIEC condition 7.]

26. The UIL Utilities will participate in a tax sharing agreement with IUSA and other IUSA subsidiaries under which the UIL Utilities will not be liable for more than their respective standalone liability for federal, state or local income taxes (including interest and penalties related thereto, if any) for any period during which UI, CNG, and SCG is included in a consolidated group with Iberdrola.[footnoteRef:24] [24: Addresses OCC condition 55; AG condition 2.]

27. No later than 30 days following the completion of all accounting for the Proposed Transaction (including the completion of purchase price accounting), Iberdrola shall file with the Authority all journal entries resulting from the Proposed Transaction.[footnoteRef:25] [25: Addresses OCC condition 85; AG condition 2.]

28. The UIL Utilities will maintain separate books and records.[footnoteRef:26] [26: Addresses OCC conditions 6 and 19; AG condition 2.]

29. The Applicants agree to provide the Authority and its Staff, upon request, access in the State of Connecticut to the UIL Utilities original books and records as maintained in the ordinary course of business within twenty working days after such request.[footnoteRef:27] [27: Addresses OCC condition 6; AG condition 2.]

30. The consolidated balance sheets, income statements and cash flow statements of the regulated utilities will be made available to the Authority, on an annual basis and in a format consistent with U.S. Generally Accepted Accounting Principles (GAAP). As long as IUSA and Iberdrola remain publicly traded companies, IUSAs and Iberdrolas consolidated balance sheets, income statements and cash flow statements will be made available to the Authority, in English and in Connecticut, on an annual basis and in a format consistent with what is required under applicable securities reporting standards. As long as IUSA remains a registrant at the SEC and a listed company on the NYSE, audited financials will be in accordance with SEC and NYSE requirements. As long as Iberdrola remains publicly traded, Iberdrola will provide audited financials in Euros and in accordance with International Financial Reporting Standards (IFRS). Additionally, IUSA and Iberdrola agree to provide specific answers to particular questions raised by the Authority and its Staff with respect to their respective audited financials that affect the UIL Utilities.[footnoteRef:28] [28: Addresses OCC condition 82; AG condition 2. ]

31. IUSA will notify the Authority of any final decision of an administrative agency, court or regulatory authority, notwithstanding any appeal, that finds that Iberdrola, IUSA or Networks or any of their subsidiaries has violated a law, rule or regulation that either results in a criminal conviction, or results in a penalty assessed in excess of 5 million Euros per event, and to provide a translation to English of the decision within thirty days following the issuance of such decision.[footnoteRef:29] [29: Addresses OCC condition 83; AG condition 2.]

32. IUSA will report to the Authority any final findings or decision by a regulatory agency or court, notwithstanding any appeal, of anti-competitive behavior committed by Iberdrola, IUSA or Networks or their affiliates in the United States.[footnoteRef:30] [30: Addresses OCC condition 84; AG condition 2.]

33. No later than five business days following the filing of 10-Ks or equivalent annual reports with the SEC, IUSA shall file with the Authority a copy of these reports.[footnoteRef:31] [31: Addresses OCC condition 82; AG condition 2.]

34. Following consummation of the Proposed Transaction, the Applicants will provide the Authority with a letter stating that the Proposed Transaction has been completed together with copies of closing documents.[footnoteRef:32] [32: Addresses OCC condition 82; AG condition 2.]

35. The Applicants shall comply with existing Connecticut law regarding affiliate conduct and contracts.[footnoteRef:33] [33: Addresses OCC conditions 59(e), 60-62, 64 and 70; TASC conditions 1-12; and AG condition 2.]

36. The UIL Utilities will continue to operate within the State of Connecticut as public utilities subject to the continuing jurisdiction of the Authority pursuant to the State of Connecticuts applicable statutes regulating public utilities.[footnoteRef:34] [34: Addresses OCC condition 3; AG condition 2.]

37. IUSA and Networks shall not divest, sell, or spin off or combine the UIL Utilities without the Authoritys prior approval.[footnoteRef:35] [35: Addresses OCC condition 28; AG condition 2; CIEC condition 8.]

38. Iberdrola, IUSA, UI, CNG, and SCG shall create an internal tracking mechanism to ensure compliance with these commitments.[footnoteRef:36] [36: Addresses OCC conditions 43 and 50; AG condition 2. ]

Meetings in Service Territories

39. IUSAs or Networks Board of Directors will include the UIL Utilities service territories among the regular locations of IUSAs or Networks board meetings.[footnoteRef:37] [37: Addresses OCC condition 47.]

40. IUSA or Networks will include the UIL Utilities service territories among the locations of its regular periodic management meetings.[footnoteRef:38] [38: Addresses OCC condition 48.]

Tracking Costs/Savings

41. For the first year following Closing of the Proposed Transaction, any changes to the cost allocation methodology applicable to shared service charges to the UIL Utilities will be provided for informational purposes to the Authority.[footnoteRef:39] [39: Addresses OCC condition 78.]

42. In the first quarter after the first full calendar year following consummation of the Proposed Transaction, the UIL Utilities shall prepare and file with the Authority a side-by-side comparison of (i) shared service charges to the UIL Utilities for the first full calendar year with (ii) 2013 and 2014 shared service charges to the UIL Utilities.[footnoteRef:40] [40: Addresses OCC condition 79.]

43. Within one year from closing of the Proposed Transaction, the UIL Utilities shall submit a report or plan on customer benefits achieved by the Proposed Transaction.[footnoteRef:41] [41: Addresses OCC condition 80; CIEC condition 1.]

2