EXHIBIT 10.29


                         THE UNITED ILLUMINATING COMPANY
                         PHANTOM STOCK OPTION AGREEMENT


         THIS AGREEMENT, made as of February 23, 1998, by and between THE UNITED
ILLUMINATING COMPANY (the Company), a Connecticut corporation,  and NATHANIEL D.
WOODSON (the Executive), an individual,

                          W I T N E S S E T H    T H A T,

         Whereas,  the Company and the Executive have entered into an Employment
Agreement as of the date hereof (the Employment Agreement),  whereby the Company
has employed the  Executive,  and the Executive has agreed to serve the Company,
as its President; and

         Whereas, in Section (4)(b) of the Employment Agreement, the Company has
agreed to award the Executive eighty thousand  (80,000) phantom stock options on
shares of the Company's  Common Stock,  under which the option price is $45.1563
(the Exercise  Price),  which was the average of the high and low per share sale
prices of said  Common  Stock on the New York Stock  Exchange  on  February  20,
1998),  vesting at the rate of sixteen thousand  (16,000) options on each of the
first five  anniversaries  of February 23, 1998 occurring during the term of the
Employment  Agreement,  and  exercisable  by the  Executive  and/or his personal
representative  only during a period  ending on the earlier of (A) 2400 hours on
the first anniversary of the Date of Termination of the Employment Agreement (as
defined in Section  (5)(e) of the  Employment  Agreement),  or (B) 2400 hours on
February 23, 2008;

         Whereas,  the  Company  and the  Executive  desire  to enter  into this
Agreement  evidencing the terms and provisions  governing the aforesaid  phantom
stock options,

         NOW THEREFORE, the parties hereby agree as follows:

1.  Options.  This  Agreement  evidences  the grant to the  Executive  of eighty
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thousand  (80,000)  Phantom  Common  Stock  Options  (the  Options,  and each an
Option).

2.  Exercisability and Duration.
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     a. Generally.  None of the Options shall be exercisable  until February 23,
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1999. On that date, sixteen


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thousand (16,000) of the Options shall first become exercisable.  Thereafter, an
additional  sixteen thousand (16,000) Options shall first become  exercisable on
each of February 23, 2000, February 23, 2001, February 23, 2002 and February 23,
2003.  Once  exercisable,  each Option shall remain  exercisable,  unless sooner
terminated  pursuant to the terms and provisions of this  Agreement,  until 2400
hours on February 23, 2008.

     b.  Upon A Change of  Control.  In the  event of a Change  in  Control  (as
         -------------------------
defined in Section (7) of the Employment  Agreement) of the Company, the Options
shall become  exercisable  pursuant to and in accordance  with Section (8)(a) of
the Employment Agreement.

     c.  Upon  Certain  Other  Events.  Upon  the  Date  of  Termination  of the
         ----------------------------
Employment Agreement (as defined in Section (5)(e) of the Employment Agreement),
all of the Options that are not then exercisable shall automatically expire, and
all of the Options that are then  exercisable  shall remain  exercisable  by the
Executive and/or his personal representative until the earlier of (A) 2400 hours
on the  first  anniversary  of said  Date of  Termination  or (B) 2400  hours on
February 23, 2008.

3.  Payment  Upon  Exercise.  On each date that the  Executive  or his  personal
    -----------------------
representative exercises one or more Options, the Company shall become obligated
to pay the Executive or his personal representative, in cash, an amount equal to
the excess of the fair market value of the  Company's  Common Stock on that date
over the Exercise Price,  multiplied by the number of Options  exercised.  "Fair
market  value"  shall be the  average of a high and low sale prices of shares of
the Company's Common Stock on the New York Stock Exchange  composite tape on the
exercise  date or, if there is no sale on such date,  then such average price on
the last previous day on which at least one sale shall have been  reported.  The
Company shall discharge each payment obligation to the Executive or his personal
representative on or before the second business day following the exercise date.

4.  Documentation of Exercise.  In order to exercise an Option, the Executive or
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his  personal  representative  shall  deliver to the  Secretary of the Company a
signed notice of exercise;  and the Option shall be deemed exercised on the date
when such notice is received by the Secretary of the Company. During the life of
the  Executive,  the  Options  may be  exercised  only by the  Executive  or his
guardian or legal representative.


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5.  Transferability.  The  Options may not be  assigned  or  transferred  by the
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Executive,  except by will or the laws of descent  and  distribution.  Any other
purported transfer or assignment of an Option shall automatically terminate it.

6.  Adjustments.  In the event of a  recapitalization,  reclassification,  stock
    -----------
split, stock dividend, combination of shares, or any other similar change in the
Company's  capital  structure,  an appropriate  adjustment  shall be made in the
number  and/or  kind of shares of the  Company's  stock  covered by the  Options
and/or  in the  Exercise  Price of the  Options.  In the  event  of any  merger,
consolidation or other  reorganization in which the Company is not the surviving
or  continuing  corporation,  all Options  shall be assumed by the  surviving or
continuing corporation.

7. Funding; Right to Assets. Except as provided in Section (6) of the Employment
   ------------------------
Agreement, the Company's obligations under this Agreement shall be unfunded; and
the Company is not,  under any  circumstances  except those  referred to in said
Section (6), required to fund its obligations hereunder. The Company may, in its
sole  discretion,  set aside or invest funds to meet its obligations  under this
Agreement, in whole or in part, in circumstances other than those referred to in
said Section (6); but if the Company  determines to take such action, the method
and manner thereof and the continuance or discontinuance thereof shall be within
the sole discretion of the Company.  This Agreement  confers on the Executive no
right,  title or interest  whatsoever in or to any shares of the Company's stock
or any  specific  funds or assets  of the  Company.  If any funds or assets  are
acquired by the Company in connection with its obligations under this Agreement,
they shall be and remain  subject to the claims of all of the  creditors  of the
Company.

8. Non-expansion of Rights. Nothing contained in this Agreement shall afford the
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Executive any right to be employed by the Company.

9. Binding  Effect.  The provisions of this Agreement  shall be binding upon and
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inure to the  benefit  of the  Company,  its  successors  and  assigns,  and the
Executive and his guardians, legal representatives and personal representatives.


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                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
as of the date first above written.


THE UNITED ILLUMINATING COMPANY



By     /s/ Richard J. Grossi
  ---------------------------------------
    Its Chairman of the Board of
    Directors and Chief Executive Officer



      /s/ Nathaniel D. Woodson
  ---------------------------------------
          Nathaniel D. Woodson

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