Exhibit 10.1

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
BETWEEN UIL HOLDINGS CORPORATION
AND
CHARLES J. PEPE

WHEREAS, the Department of the Treasury has issued interim guidance contained in
Notice 2005-1 concerning the implementation of the new non-qualified deferred
compensation rules contained in Section 409A of the Internal Revenue Code; and

WHEREAS, the interim guidance has made it clear that amounts accrued under a
supplemental executive retirement arrangement through December 31, 2004 may be
‘grandfathered’ and not subject to the new, more restrictive rules, provided
that there is no material amendment made to such arrangement after October 3,
2004; and

WHEREAS, in light of the IRS guidance, UIL Holdings Corporation (the “Company”)
and Charles J. Pepe (the “Executive”) wish to clarify the supplemental executive
retirement plan (“SERP”) provisions contained in the employment agreement
between UIL Holdings Corporation and Charles J. Pepe dated November 8, 2004 (the
“Employment Agreement”), to clearly bifurcate SERP accruals before and after
January 1, 2005, and to restrict applicability of the new, more restrictive
rules to post-2004 accruals; and

WHEREAS, the Company and Executive further wish to take advantage of certain
transition rules that allow elections as to time and form of payment to be made
up through December 31, 2005 without running afoul of Section 409A of the Code;

WHEREAS, it is anticipated that this will be the first in a series of such
amendments required to comply with the new non-qualified deferred compensation
rules;

NOW THEREFORE, Section 4(g) of the Employment Agreement is revised in its
entirety to read as follows:

(g) Supplemental Executive Retirement Benefit. 

(i) Benefit Formula.  Upon termination of the Executive's employment with the
Company and all affiliates other than for Cause (as defined in Section 5(b) of
this Agreement), a SERP benefit shall be payable in accordance with the
provisions of this Section (4)(g). The annual supplemental retirement benefit,
expressed in the form of a single life annuity beginning at the Executive's
Normal Retirement
 
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Date as defined in The United Illuminating Company Pension Plan (the “UI Pension
Plan”), shall be the excess, if any, of (A) less (B), where (A) is 1.9% (.019)
of the Executive's highest three-year average Total Compensation times his
number of years of service as an employee of the Company (including any deemed
service and/or deemed age credited under this Agreement or the CIC Plan II) at
termination (not to exceed twenty-five years), plus 0.1% (.001) of the
Executive’s highest three-year average Total Compensation times the number of
years at termination in excess of twenty-five (not to exceed five) of the
Executive’s service as an employee of the Company and all affiliates (including
deemed service), and (B) is the benefit payable under the UI Pension Plan, where
(A) and (B) are both expressed as a single life annuity commencing as of the
Executive’s Normal Retirement Date. For purposes of this Section, Total
Compensation shall mean the Executive’s Base Salary, and any amount paid to the
Executive as short-term incentive compensation pursuant to the Company’s annual
executive incentive compensation plan. The benefits payable under this Section
4(g) shall be calculated using the same definitions of actuarial equivalence,
and the same early retirement reduction factors that are specified in the
Pension Plan in the event that the Executive becomes entitled to payment of the
supplemental retirement benefit prior to what would have been his Normal
Retirement Date, except that, in the event that the Executive is credited with
deemed years of service and/or age, the reductions shall be based on the
Executive's deemed age and years of service. If the form of payment provides for
a death benefit, such benefit shall be payable to the Executive's estate, unless
another beneficiary has been designated by the Executive. If the Executive dies
prior to the commencement of benefit payments, then the pre-retirement death
benefit provisions of the Pension Plan shall apply to the supplemental
retirement benefit payable pursuant to this Section (4)(g).

(ii) Grandfathering Pre-2005 Accruals; Time and Form of Payment. SERP accruals
through December 31, 2004 (the ‘grandfathered amount’) shall be subject to the
tax law in effect prior to the enactment of Section 409A of the Internal Revenue
Code, including without limitation requirements as to election of the timing and
form of payment. For purposes of calculating the grandfathered amount, the
grandfathered amount shall be determined to be the actuarially equivalent
present value as of December 31, 2004 of the SERP benefit to which the Executive
would be entitled under this Section 4(g) if the Executive had voluntarily
terminated service as of that date and received, upon his termination of
service, a full payment of benefits from the SERP, including in such calculation
the addition of up to six years of age or service (or any combination) to which
the Executive became entitled under Section 6(c)(B) of this Employment Agreement
by virtue of having been notified in 2004 that he was being terminated without
cause. Early retirement subsidies to which the Executive would not in fact be
entitled as of December 31, 2004 because the Executive had not attained
sufficient service shall not be included in determining the grandfathered
amount. The normal form of benefit
 
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payment for the grandfathered amount shall be an actuarially equivalent lump sum
equal to the present value of the deferred life annuity payable as of the
Executive’s Normal Retirement Date to which the Executive would have been
entitled under this Section 4(g) had he terminated service as of December 31,
2004. The Executive may instead elect to receive the grandfathered amount in any
other one of the actuarially equivalent forms provided for under the Pension
Plan; provided that such election is made in accordance with the law in effect
prior to January 1, 2005 and any transition rules provided in IRS Notice 2005-1.

(iii) Time and Form of Payment for Non-Grandfathered Amounts. Distribution of
the SERP benefit accruals occurring on or after January 1, 2005 (the
“non-grandfathered amount”) shall be shall be paid, or commence, in the month of
January following the Executive’s termination of service with the Company and
its affiliates, but in no event earlier than six months following the
Executive’s termination of service in the event that the Executive is a ‘key
employee’ as defined in Section 416 of the Internal Revenue Code. The
non-grandfathered amount, determined as of the Executive’s termination date,
shall be paid in an actuarially equivalent lump sum equal to the present value
of the deferred life annuity commencing at Normal Retirement Date, unless the
Executive shall have elected at least 12 months in advance of such distribution
date to commence distributions in one of the other actuarially equivalent forms
of benefits permitted under the Company’s Pension Plan, in which case the
commencement of the non-grandfathered amount shall be deferred for a period of
at least five years from the date on which such distribution otherwise would
have been made, unless termination of service is due to death or disability.
Notwithstanding the foregoing to the contrary, on or before December 31, 2005,
the Executive shall be permitted to make an election, pursuant to IRS Notice
2005-1, Question and Answer 19(c) to alter the form of distribution that would
otherwise apply under this Subsection (iii) to the non-grandfathered amount, and
to take the non-grandfathered amount in any actuarially equivalent form of
distribution available under the Pension Plan, without the necessity of making
such election 12 months in advance of such distribution commencement date, and
without being deemed to have violated either the 5 year deferral rule contained
in Sections 409A(4) or the ‘anti-acceleration’ rule of Section 409A(3) of the
Code.

(iv) Payments Conditioned upon Release. All payments under this Section 4(g) are
conditioned upon the Executive executing the release provided for in Section
6(f).

(v) Compliance with Applicable Tax Law. The provisions of this section are
intended to comply in good faith with all laws applicable to the taxation of
non-qualified deferred compensation, and the Company and Executive agree to
revise this subsection as necessary or advisable on or before December 31, 2005
in order to comply with such laws and to incorporate the applicable provisions
of Section 409A
 
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of the Internal Revenue Code (and guidance issued thereon) with respect to
non-grandfathered amounts.

The provisions of the foregoing amendment shall be effective as of January 1,
2005.
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

UIL HOLDINGS CORPORATION

Attest:  June 30, 2005

     /s/ Susan E. Allen             
 
      By: /s/ Nathaniel D. Woodson            
Susan E. Allen, Vice President
Investor Relations, Corporate
Secretary & Assistant Treasurer
 
    Nathaniel D. Woodson
     Chairman and Chief
      Executive Officer

                             /s/ Charles J. Pepe          
                                     Charles J. Pepe
 
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