Note 2. Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and are presented on a consolidated basis, and therefore include the accounts of AVANGRID and its consolidated subsidiaries Networks and ARHI. Consolidated accounts of UIL have been included in the consolidated financial statements of AVANGRID since December 16, 2015, the date of acquisition of UIL. All intercompany transactions and accounts have been eliminated in all periods presented. All share and per share information included in the consolidated financial statements have been retroactively adjusted to reflect the impact of the stock dividend.

Revision of estimated useful lives of wind power station assets at Renewables

Renewables’ wind power station assets in service less salvage value, if any, are depreciated using the straight-line method over their estimated useful lives. Renewables’ effective depreciation rate, excluding decommissioning, was 4.0% in both 2015 and 2014. Renewables reviews the estimated useful lives of its fixed assets on an ongoing basis. In the first quarter of 2016, this review indicated that the actual lives of certain assets at wind power stations are expected to be longer than the previously estimated useful lives used for depreciation purposes. As a result, effective January 1, 2016, Renewables changed the estimates of the useful lives of certain assets from 25 years to 40 years, capped at the lease term if lower, to better reflect the estimated periods during which these assets are expected to remain in service. The weighted average useful life of our wind farm assets is now approximately 31 years. The effect of this change in estimate was to reduce depreciation and amortization expense by approximately $52 million, reduce asset retirement obligation accretion expense recorded within operations and maintenance by approximately $3 million, increase earnings from equity method investments by approximately $4 million, increase income before income tax and net income by approximately $59 million and approximately $36 million, respectively, and increase basic and diluted earnings per share by approximately $0.12 for the year ended December 31, 2016.