October 24, 2008

Dear Unitil Corporation Shareholder:

We certainly live in unprecedented times. The economy continues to weaken. Credit markets seized up, but appear to be easing after massive government intervention. Global equity markets have experienced extreme volatility not seen in a generation. It is an unsettling environment.

Your Company is prepared to weather this uncertainty.

Third-quarter net income was $0.27 per share, a decline of one cent from last year, reflecting higher operating and interest expense offset by higher electric and gas margins. For the nine months ended September 30, net income was $1.12 per share, an increase of eight cents per share, or 8%, over 2007.

We are still targeting to complete our announced acquisition of Northern Utilities and Granite State Gas Transmission from NiSource, Inc. by the end of the year.

We have received a final order approving our acquisition from the New Hampshire Public Utilities Commission. The Maine Public Utilities Commission also recently approved the acquisition, subject to additional conditions that the parties are reviewing. Finally, due to a recent change in state law, we also filed with the Massachu-setts Department of Public Utilities for approval of the proposed transaction. We anticipate receiving a final written order from Massachusetts in early November.

On September 12, we secured commitments of $90 million of unsecured debt, including $80 million of 10-year and 30-year notes for Northern Utilities and $10 million of 10-year notes for Granite State Gas Transmission. The weighted average coupon rate for the note offering was 7.4%.

At a special meeting of Unitil shareholders held on September 10, you approved a requested increase in authorized common shares. Our acquisition financing plan includes issuing up to $90 million in equity on or about the closing of the acquisition. Given the recent volatility in the equity market, we are carefully monitoring the timing of this offering.

We continue to respond to concerns about the cost of energy this winter. We have been active in sponsoring local energy forums providing tools and tips for controlling energy costs and encouraging customer enrollment in programs for which they may be eligible. It is good to report that we have seen a recent substantial de-crease in the price of fuel, which customers should see in their bills over time.

Your Company provides an essential service for our economy and the communities we serve. We take our obligation for safe, reliable, and cost-effective service seriously. We have proven our ability to weather uncer-tain economic times throughout our history. We are prepared to do so again.

Sincerely,

Robert G. Schoenberger
Chairman of the Board of Directors,
Chief Executive Officer & President