OVERVIEW

Unitil Corporation (Unitil or the Company) is a public utility holding company headquartered in Hampton, New Hampshire. Unitil is subject to regulation as a holding company system by the Federal Energy Regulatory Commission (the "FERC") under the Energy Policy Act of 2005.

Unitil's principal business is the local distribution of electricity and natural gas throughout its service territory in the states of New Hampshire, Massachusetts and Maine. Unitil is the parent company of three wholly owned distribution utilities: (i) Unitil Energy Systems, Inc. (Unitil Energy), which provides electric service in the southeastern seacoast and state capital regions of New Hampshire, including the city of Concord, New Hampshire; (ii) Fitchburg Gas and Electric Light Company (Fitchburg), which provides both electric and natural gas service in the greater Fitchburg area of north central Massachusetts; and (iii) Northern Utilities, Inc. (Northern Utilities), which provides natural gas service in southeastern New Hampshire, including the city of Portsmouth, and portions of southern and central Maine, including the city of Portland. In addition, Unitil is the parent company of Granite State Gas Transmission, Inc. (Granite State), an interstate natural gas transmission pipeline company that principally provides interstate natural gas pipeline access and transportation services to Northern Utilities in its New Hampshire and Maine service territory.

The Company's distribution utilities serve approximately 100,300 electric customers and 69,300 natural gas customers in their service territory. The Company's distribution utilities are local "pipes and wires" operating companies and, combined with Granite State, had an investment in Net Utility Plant of $428.5 million at March 31, 2009. The Company does not own or operate electric generating facilities or major transmission facilities and substantially all of the Company's utility assets are dedicated to the local delivery of electricity and natural gas to its customers. Substantially all of Unitil's revenue and earnings are derived from regulated utility operations.

Unitil's business strategy is to be a leader in the reliable and cost effective management of a growing level of local electric and natural gas distribution assets. The Company's growth initiatives include evaluation of organic growth opportunities as well as strategic acquisitions. As part of this growth strategy, on December 1, 2008, Unitil purchased (i) all of the outstanding capital stock of Northern Utilities from Bay State Gas Company (Bay State) and
(ii) all of the outstanding capital stock of Granite State from NiSource Inc. (NiSource) pursuant to the Stock Purchase Agreement dated as of February 15, 2008 by and among NiSource, Bay State and Unitil (the "Acquisitions"). Bay State is a wholly owned subsidiary of NiSource. The aggregate purchase price for the Acquisitions was $160 million in cash, plus an additional working capital adjustment of $49.2 million, including approximately $30.0 million of natural gas storage inventory. To finance the Acquisitions and recapitalize Northern Utilities and Granite State, the Company issued additional equity and debt.

A fifth wholly owned subsidiary, Unitil Power Corp. (Unitil Power), formerly functioned as the full requirements wholesale power supply provider for Unitil Energy. In connection with the implementation of electric industry restructuring in New Hampshire, Unitil Power ceased being the wholesale supplier of Unitil Energy on May 1, 2003 and divested of substantially all of its long-term power supply contracts through the sale of the entitlements to the electricity associated with those contracts.

The Company also has three other wholly owned subsidiaries: Unitil Service Corp. (Unitil Service); Unitil Realty Corp. (Unitil Realty); and Unitil Resources, Inc. (Unitil Resources). Unitil Service provides, at cost, a variety of administrative and professional services, including regulatory, financial, accounting, human resources, engineering, operations, technology and energy supply management services on a centralized basis to its affiliated Unitil companies. Unitil Realty owns and manages the Company's corporate office in Hampton, New Hampshire. Unitil Resources is the Company's wholly owned non-regulated subsidiary. Usource, Inc. and Usource L.L.C. (collectively, "Usource") are indirect subsidiaries that are wholly owned by Unitil Resources. Usource provides energy brokering and advisory services to large commercial and industrial customers in the northeastern United States.

RATES AND REGULATION

Unitil is subject to comprehensive regulation by federal and state regulatory authorities. Unitil and its subsidiaries are subject to regulation as a holding company system by the FERC under the Energy Policy Act of 2005 in regards to certain bookkeeping, accounting and reporting requirements. Unitil's utility operations related to wholesale and interstate energy business activities are also regulated by FERC. Unitil's distribution utilities are subject to regulation by the applicable state public utility commissions, in regards to their rates, issuance of securities and other accounting and operational matters: Unitil Energy is subject to regulation by the New Hampshire Public Utilities Commission (NHPUC); Fitchburg is subject to regulation by the Massachusetts Department of Public Utilities (MDPU); and Northern Utilities is regulated by the NHPUC and the Maine Public Utilities Commission (MPUC). Because Unitil's primary operations are subject to rate regulation, the regulatory treatment of various matters could significantly affect the Company's operations and financial position.

Unitil's distribution utilities deliver electricity and/or natural gas to all customers in their service territory, at rates established under traditional cost of service regulation. Under this regulatory structure, Unitil's distribution utilities recover the cost of providing distribution service to their customers based on a historical test year, in addition to earning a return on their capital investment in utility assets. As a result of a restructuring of the utility industry in New Hampshire, Massachusetts and Maine, Unitil's customers have the opportunity to purchase their electricity or natural gas supplies from third party suppliers. A majority of Unitil's largest commercial and industrial (C&I) customers purchase their electric and natural gas supplies from third party suppliers. However, most residential and small customers continue to purchase their electric and natural gas supplies through Unitil's distribution utilities. Unitil's distribution utilities purchase electricity or natural gas from unaffiliated wholesale suppliers and recover the actual costs of these supplies on a pass-through basis, as well as certain costs associated with industry restructuring, through reconciling rate mechanisms that are periodically adjusted.

The regulatory process in both New Hampshire and Maine, in connection with those states' approvals of the Acquisitions, included the negotiation and filing of settlement agreements reflecting commitments by Unitil with respect to Northern Utilities' rates, customer service and operations. The settlement agreements were separately negotiated and filed in each state but reflect a number of common features. For additional discussion, please refer to Unitil's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 18, 2009.

CAUTIONARY STATEMENT

This report and the documents the Company incorporates by reference into this report contain statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included or incorporated by reference into this report, including, without limitation, statements regarding the financial position, business strategy and other plans and objectives for the Company's future operations, are forward-looking statements.

These statements include declarations regarding the Company's and its management's beliefs and current expectations. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. These forward-looking statements are subject to inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements. Some, but not all, of the risks and uncertainties include those described in Part II, Item 1A (Risk Factors) and the following:

• The Company's ability to integrate the business, operations and personnel of Northern Utilities and Granite State and to achieve the estimated potential synergy savings attributable to the Acquisitions;

• The Company's ability to retain existing customers and gain new customers;

• Variations in weather;

• Major storms;

• Changes in the regulatory environment;

• Customers' preferences on energy sources;

• Interest rate fluctuation and credit market concerns;

• Fluctuations in supply, demand, transmission capacity and prices for energy commodities;

• Increased competition; and

• Customers' performance under multi-year energy brokering contracts.

Many of these risks are beyond the Company's control. Any forward-looking statements speak only as of the date of this report, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors, nor can the Company assess the impact of any such factor on its business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements.

RESULTS OF OPERATIONS

The following section of MD&A compares the results of operations for each of the two fiscal periods ended March 31, 2009 and March 31, 2008 and should be read in conjunction with the accompanying Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part I, Item 1 of this report.

As a result of the acquisitions of Northern Utilities and Granite State on December 1, 2008, consolidated results for the Company in the current period may not be directly comparable to prior period results until such time as the acquisitions are fully reflected in both reporting periods. In particular, the Company expects that consolidated results of operations in future reporting periods will reflect to a greater degree the seasonal nature of natural gas sales. Specifically, the Company expects consolidated results of operations will be positively affected during the first and fourth quarters, and negatively affected during the second and third quarters of future reporting years.

Earnings Overview

The Company's Earnings Applicable to Common Shareholders was $9.1 million for the first quarter of 2009, an increase of $5.8 million over 2008 first quarter earnings of $3.3 million. Earnings per common share (EPS) were $1.14 for the three months ended March 31, 2009, an improvement of $0.57 per share over the first quarter of 2008. Earnings in the first quarter of 2009 reflect the acquisition, on December 1, 2008, of Northern Utilities and Granite State.

Natural gas sales margin increased $18.1 million in the three months ended March 31, 2009 compared to the same period in 2008. This increase primarily reflects the contribution by Northern Utilities, the Company's recently acquired local gas distribution utility. Excluding the contribution to sales by Northern Utilities, total therm sales of natural gas increased 6.0% in the three months ended March 31, 2009 compared to the same period in 2008, reflecting increases of 6.3% and 5.9% in sales to residential and C&I customers, respectively. Sales in the first three months of 2009 reflect a colder winter heating season this year and increased usage of natural gas by C&I customers for production operations. Average winter temperatures in the Company's service territories were 6.4% colder than last year.

Electric sales margin increased $1.3 million in the three months ended March 31, 2009 compared to the same period in 2008, reflecting higher electric base rates in the current quarter, partially offset by lower sales volumes. Total electric kilowatt-hour (kWh) sales decreased 4.7% in the three months ended March 31, 2009 compared to the same period in 2008 driven by lower average usage per customer reflecting the continued economic slowdown and energy conservation.

Total Operation & Maintenance (O&M) expenses increased $5.7 million in the three months ended March 31, 2009 compared to the same period in 2008. The addition of Northern Utilities and Granite State to consolidated operating results in 2009 accounted for $2.1 million of the increase. In addition, higher year over year compensation and employee benefit expenses of $0.7 million and higher utility operating costs of $0.4 million, partially offset by lower professional fees of $0.3 million, contributed to the increase in O&M expenses. The increase in O&M expenses also reflects higher insurance costs in 2009 compared to 2008, due to the receipt of a $2.8 million insurance settlement in 2008.

Depreciation, Amortization, Taxes and Other expenses increased $5.8 million in the three months ended March 31, 2009 compared to the same period in 2008. The increase primarily reflects the addition of Northern Utilities and Granite State to consolidated operating results in 2009, and higher depreciation on normal utility plant additions partially offset by lower amortization on natural gas inventory carrying costs.

Interest Expense, Net increased $2.2 million in the three months ended March 31, 2009 compared to the same period in 2008. The addition of Northern Utilities and Granite State accounted for $1.7 million of the increase, reflecting the issuance of long-term notes by Northern Utilities and Granite State in December 2008. In addition to this increase in Interest Expense, Net reflects higher average borrowings in the current quarter.

Usource, our non-regulated energy brokering business, recorded revenues of $1.1 million in the first quarter of 2009, an increase of $0.1 million over the first quarter of 2008. Usource's revenues are primarily derived from fees and charges billed to suppliers as customers take delivery of energy from these suppliers under term contracts brokered by Usource.

On December 11 and 12, 2008, a severe ice storm struck the New England region, creating extended power outages for many residents of Massachusetts and New Hampshire, including Unitil's electric customers in New Hampshire and the greater Fitchburg, Massachusetts service territory. Based on its preliminary assessment, the Company has accrued and deferred, excluding capital construction expenditures, approximately $10 million in costs for the repair and replacement of electric distribution systems damaged during the storm. The amount and timing of the cost recovery of these storm restoration expenditures will be determined in future regulatory proceedings. The Company does not believe these storm restoration expenditures and the timing of cost recovery will have a material adverse impact on the Company's financial condition or results of operations.

In December 2008, the Company issued and sold 2,000,000 shares of its common stock at a price of $20.00 per share in a registered public offering. In January 2009, the underwriters exercised the over-allotment option associated with this offering and purchased an additional 270,000 shares of the Company's common stock. The Company used net proceeds of $41.9 million from these issuances to repay a portion of the bank financing for the Company's acquisitions of Northern Utilities and Granite State and to repay other short-term indebtedness. Overall, the positive results of operations and net income are reflected over a higher number of average shares outstanding year over year.

In 2008, Unitil's annual common dividend was $1.38, representing an unbroken record of quarterly dividend payments since trading began in Unitil's common stock. At its January, 2009 and March, 2009 meetings, the Unitil Board of Directors declared quarterly dividends on the Company's common stock of $0.345 per share.

A more detailed discussion of the Company's results of operations for the three months ended March 31, 2009 and a period-to-period comparison of changes in financial position are presented below.

Balance Sheet

The Company's Total Assets increased by $255.6 million as of March 31, 2009 compared to March 31, 2008. The increase in Total Assets was primarily due to the inclusion of the acquisitions of Northern Utilities and Granite State and to capital expenditures related to Unitil Energy's and Fitchburg's electric and gas distribution systems. The Company's Total Capitalization increased by $138.0 million as of March 31, 2009 compared to March 31, 2008 reflecting the issuance of common shares by the Company as part of its financing of the acquisitions of Northern Utilities and Granite State (See Note 3 to the accompanying Consolidated Financial Statements) and the issuance and sale of Senior Unsecured Notes by Northern Utilities and Granite State (See Note 4 to the accompanying Consolidated Financial Statements). The Company's Total Liabilities increased $117.6 million primarily due to the acquisitions of Northern Utilities and Granite State.

Gas Sales, Revenues and Margin

Therm Sales - Overall, Unitil's total therm sales of natural gas increased in the three months ended March 31, 2009 compared to the same period in 2008. This increase primarily reflects the contribution of sales by Northern

Utilities. Excluding the contribution to sales by Northern Utilities, total therm sales of natural gas increased 6.0% in the three months ended March 31, 2009 compared to the same period in 2008, reflecting increases of 6.3% and 5.9% in sales to residential and C&I customers, respectively. The higher sales in the first three months of 2009 reflect a colder winter heating season this year and increased usage of natural gas by C&I customers for production operations. Average winter temperatures in the Company's service territories were 6.4% colder than last year.

The following table details total firm therm sales for the three months ended March 31, 2009 and 2008, by major customer class:

Therm Sales (millions) (a)

                                         Three Months Ended March 31,
                                      2009     2008    Change   % Change
              Residential              19.3      4.8     14.5      302.1 %
              Commercial/Industrial    58.1      6.8     51.3      754.4 %

              Total                    77.4     11.6     65.8      567.2 %

(a) 2009 Therm Sales include Northern Utilities, acquired on December 1, 2008.

Gas Operating Revenues and Sales Margin - The following table details total Gas Operating Revenues and Sales Margin for the three months ended March 31, 2009 and 2008:

Gas Operating Revenues and Sales Margin (millions)

                                               Three Months Ended March 31,
                                         2009     2008     $ Change    % Change(1)
       Gas Operating Revenue:
       Residential                      $ 30.4   $  8.0   $     22.4         156.6 %
       Commercial / Industrial            42.0      6.3         35.7         249.7 %

       Total Gas Operating Revenue      $ 72.4   $ 14.3   $     58.1         406.3 %

       Cost of Gas Sales:
       Purchased Gas                    $ 48.4   $  9.0   $     39.4         275.5 %
       Conservation & Load Management      0.6       -           0.6           4.2 %

       Gas Sales Margin                 $ 23.4   $  5.3   $     18.1         126.6 %

(1) Represents change as a percent of Total Gas Operating Revenue.

Total Gas Operating Revenues increased $58.1 million in the three months ended March 31, 2009 compared to the same period in 2008. This increase primarily reflects the natural gas sales for Northern Utilities. In addition to the contribution from Northern Utilities, the increase in gas operating revenues reflects a 6.0% increase in natural gas sales. Total Gas Operating Revenues include the recovery of the cost of sales, which are recorded as Purchased Gas and Conservation & Load Management (C&LM) in Operating Expenses. The increase in Total Gas Operating Revenues in the first quarter of 2009 reflects higher Purchased Gas costs of $39.4 million, higher C&LM revenues of $0.6 million and higher gas sales margin of $18.1 million.

The Purchased Gas and C&LM component of Gas Operating Revenues increased $40.0 million in the three months ended March 31, 2009 compared to the same period in 2008. This increase primarily reflects the natural gas sales for Northern Utilities. In addition to the contribution from Northern Utilities, the increase reflects the higher sales of natural gas, discussed above. Purchased Gas revenues include the recovery of the cost of gas supply as well as other energy supply related costs. C&LM revenues include the recovery of the cost of energy efficiency and conservation programs. The Company recovers the cost of Purchased Gas and C&LM in its rates at cost on a pass through basis.

Natural gas sales margin increased $18.1 million in the three months ended March 31, 2009 compared to the same period in 2008. This increase was driven by the higher sales of natural gas, discussed above.

Electric Sales, Revenues and Margin

Kilowatt-hour Sales - In the first quarter of 2009, Unitil's total electric kWh sales decreased 4.7% compared to the first quarter of 2008. Sales to residential and C&I customers decreased 1.0% and 7.3%, respectively, in the first quarter of 2009 compared to the same period in 2008. The lower kWh sales in 2009 compared to 2008 were primarily driven by lower average usage by the Company's customers reflecting the continued economic slowdown and energy conservation.

The following table details total kWh sales for the three months ended March 31, 2009 and 2008 by major customer class:

              kWh Sales (millions)
                                         Three Months Ended March 31,
                                      2009    2008    Change     % Change
              Residential             180.6   182.4     (1.8 )       (1.0 %)
              Commercial/Industrial   242.1   261.1    (19.0 )       (7.3 %)

              Total                   422.7   443.5    (20.8 )       (4.7 %)

Electric Operating Revenues and Sales Margin - The following table details total Electric Operating Revenues and Sales Margin for the three months ended March 31, 2009 and 2008:

Electric Operating Revenues and Sales Margin (millions)

                                                Three Months Ended March 31,
                                         2009     2008     $ Change      % Change(1)
     Electric Operating Revenue:
     Residential                        $ 33.2   $ 30.3   $      2.9             5.1 %
     Commercial / Industrial              28.9     26.3          2.6             4.6 %

     Total Electric Operating Revenue   $ 62.1   $ 56.6   $      5.5             9.7 %

     Cost of Electric Sales:
     Purchased Electricity              $ 47.2   $ 42.9   $      4.3             7.6 %
     Conservation & Load Management        0.5      0.6         (0.1 )          (0.2 %)

     Electric Sales Margin              $ 14.4   $ 13.1   $      1.3             2.3 %

(1) Represents change as a percent of Total Electric Operating Revenue.

Total Electric Operating Revenues increased by $5.5 million, or 9.7%, in the three months ended March 31, 2009 compared to the same period in 2008. Total Electric Operating Revenues include the recovery of costs of electric sales, which are recorded as Purchased Electricity and C&LM in Operating Expenses. The increase in Total Electric Operating Revenues in the three months ended March 31, 2009 reflects higher Purchased Electricity costs of $4.3 million and higher electric sales margin of $1.3 million, partially offset by lower C&LM revenues of $0.1 million.

The Purchased Electricity and C&LM component of Total Electric Operating Revenues increased a combined $4.2 million, or 7.4%, in the three months ended March 31, 2009 compared to the same period in 2008, reflecting higher electric commodity prices, partially offset by lower electric kWh sales. Purchased Electricity revenues include the recovery of the cost of electric supply as well as other energy supply related restructuring costs, including long-term power supply contract buyout costs. C&LM revenues include the recovery of the cost of energy efficiency and conservation programs. The Company recovers the cost of Purchased Electricity and C&LM in its rates at cost on a pass through basis.

Electric sales margin increased $1.3 million in the three months ended March 31, 2009 compared to the same period in 2008, reflecting higher electric base rates in the current quarter, partially offset by lower sales volumes. Lower sales reflect lower average usage by the Company's customers reflecting the continued economic slowdown and energy conservation.

Operating Revenue - Other

The following table details total Other Operating Revenue for the three months
ended March 31, 2009 and 2008:



        Other Operating Revenue (Millions)
                                              Three Months Ended March 31,
                                         2009       2008     $ Change    % Change
        Other                           $   1.1    $   1.0   $     0.1       10.0 %

        Total Other Operating Revenue   $   1.1    $   1.0   $     0.1       10.0 %

Total Other Operating Revenue increased $0.1 million, or 10.0%, in the three month period ended March 31, 2009 compared to the same period in 2008. The increase was the result of growth in revenues from the Company's non-regulated energy brokering business, Usource.

Operating Expenses

. . .