Hydro One Limited · TSX:H
Hydro One — Investor Presentation (May 2021)
33 slides from Hydro One's investor presentation, May 2021
Slide 1: Investor overview: Post first quarter 2021
Investor overview Post first quarter 2021 One of North America’s largest electric utilities TSX:H
Slide 2: Why invest in Hydro One
Why invest in Hydro One A unique low-risk opportunity to participate in the transformation of a premium, large scale regulated electric utility • One of the largest electric utilities in North America with significant scale and leadership position across Canada’s most populated province. • One of th
Slide 3: Recent developments
Recent developments Organization Priorities First Quarter Highlights • First quarter earnings per share (EPS) and adjusted EPS was $0.45, compared to EPS and adjusted EPS of $0.38, for the same period in 2020. The increase was due mainly to approved rates for the transmission and distribution segmen
Slide 4: The value of Hydro One
The value of Hydro One ABOUT THE COMPANY HOW WE DID IN 2020 WHY INVEST Transmission & Distribution Transmission Distribution Other Stable Operations Revenue Net of Purchased Power Total Assets 1% 4% Stable and growing cash flows ~30,000 circuit KMs of transmission lines with 99% of overall business
Slide 5: A look at the organization
A look at the organization Corporate structure Hydro One Investor overview • 5
Slide 6: Executive leadership team
Executive leadership team A leadership team with strong operational experience committed to achieving efficiencies at Hydro One Mark Poweska President and CEO Brad Bowness Jason Fitzsimmons Lyla Garzouzi Paul Harricks David Lebeter Chris Lopez Megan Telford Chief Information Chief Corporate Affairs
Slide 7: Hydro One's strategy
Hydro One’s strategy Hydro One Investor overview • 7
Slide 8: Hydro One's strategy
Hydro One’s strategy An Ontario focus, and a plan to enhance value "The roll out of our corporate strategy will involve sticking to our strengths and continuing to champion for our customers and the electricity sector in Ontario. Our main focus has been and will remain operational excellence as we c
Slide 9: Achievements and efficiencies
Achievements and efficiencies Paving New Paths in Productivity Savings ($M) 2020 286.0 2019 202.3 Generated productivity savings of $286.0 million in 2020 comprised of $143.2 million in OM&A and $142.8 million in capital and totaling 2018 135.5 approximately three quarters of a billion dollars since
Slide 10: The regulated business
The regulated business Transmission & distribution Transmission Distribution • Hydro One received a decision on 3-year Custom IR • Distribution is a stable, rate-regulated business operating application for Transmission from 2020-2022 under OEB Custom IR framework • Hydro One owns and operates 98% o
Slide 11: Electric local distribution company consolidation
Electric local distribution company consolidation Orillia Power Distribution Corporation Key Points • The purchase price of $28 million, including closing adjustments • In September 2020, Hydro One repaid $20 million of short-term debt assumed as part of the Orillia Power acquisition • Serves approx
Slide 12: Growth opportunities for the telecom business focus on value-added services
Growth opportunities for the telecom business focus on value-added services The market • Core connectivity revenues declining; a shift towards cloud connectivity, managed services & security-based services with increasing bandwidth demand • Canadian telecom market is approx. $53B (2020) – Enterprise
Slide 13: Sustainability at Hydro One
Sustainability at Hydro One At Hydro One, we are committed to operating safely in an environmentally and socially responsible manner and to partnering with our customers and community stakeholders to build a brighter future for all. Approach to sustainability As a transmission and distribution compa
Slide 14: Sustainability at Hydro One
Sustainability at Hydro One At Hydro One, we are committed to operating safely in an environmentally and socially responsible manner and to partnering with our customers and community stakeholders to build a brighter future for all. A Matrix of 10 Material Issues Identified1 A matrix of Hydro One’s
Slide 15: Sustainability at Hydro One
Sustainability at Hydro One At Hydro One, we are committed to operating safely in an environmentally and socially responsible manner and to partnering with our customers and community stakeholders to build a brighter future for all. A Sustainable Future for All • 50% Board of Directors are women (In
Slide 16: Delivering clean and sustainable energy
Delivering clean and sustainable energy Transmitting and delivering some of the cleanest energy in North America • Ontario was the first North American jurisdiction to fully eliminate coal electricity generation and leads Canada in wind and solar capacity • Recent five year Ontario Climate Change Ac
Slide 17: Capital investment driving rate base growth
Capital investment driving rate base growth Consistent and predictable organic growth profile underpinned by required replacement of aging infrastructure Projected Regulated Capital Investments* ($M) Projected Rate Base Growth* $2,128 $2,139 $25,990 $24,862 $1,885 $1,852 $23,611 $22,600 $742 $759 $7
Slide 18: Affirmed 2022 guidance
Affirmed 2022 guidance $1.65 $1.52 $0.02 $0.11 $1.35 $1.30 $0.24 $0.08 $0.02 2019 Basic EPS 2018 Distribution Normalizing to Insurance Merger Related Lake Superior Link 2019 Normalized Blank 2022 Basic EPS Decision Catch-Up Distribution Allowed Costs EPS ROE • Company estimates subject to change and
Slide 19: Capital investment driving rate base growth
Capital investment driving rate base growth Leamington Area Richview Transmission Transmission Reinforcement Ontario Grid Control Centre Station Estimated Total Project Cost: $525 million Estimated Capital Investment: $85 million (2021) Estimated Total Project Cost: $118 million Capital Cost To Date
Slide 20: Hydro One responds to COVID-19
Hydro One responds to COVID-19 How our customers are being supported We announced a Pandemic Relief Fund to assist customers affected by the COVID-19 pandemic and offer financial assistance as well as increased payment flexibility to customers. Announced a Small Business Pandemic Relief Program to c
Slide 21: Constructive rate regulator (OEB)
Constructive rate regulator (OEB) Consistent, independent regulator with a transparent rate-setting process • Transmission and Distribution businesses rate-regulated by the Ontario Energy Board (OEB) • Deemed debt / equity ratio of 60% / 40% for both transmission and distribution segments • Reduced
Slide 22: Segmented incentive regulatory construct
Segmented incentive regulatory construct The transition from cost of service to incentive based regulatory model coincident with transformation of business will create value for both customers and shareholders Distribution Transmission OEB Approved OEB Approved 2018-2022 2020-2022 Rebasing Year 2018
Slide 23: Reducing our customer bills
Reducing our customer bills Since 2017, typical Hydro One residential customer bills have decreased on average from $165 to $127 per month Pre-Fair Hydro Plan Post Ontario Energy 2017 Monthly Bill- Rebate $165 2020 Monthly Bill- $8 $127 $90 $38 % of Bill2 Taxes and OCEB 16% Electricity Charges 56% $
Slide 24: Strong balance sheet and liquidity
Strong balance sheet and liquidity (as at March 31, 2021) Investment grade balance sheet with one of lowest debt costs in utility sector Significant available liquidity ($M) Strong investment grade debt ratings (long-term/short-term/outlook) Shelf registrations Hydro One Ltd. (HOL) Hydro One Inc. (H
Slide 25: Equity market cap overview
Equity market cap overview Approximate Ownership of Equity Index Inclusions Approximate Geographic Dispersion of Public Float Public Float S&P/TSX Composite FTSE All-World Index (Canada) 20% 25% Canada MSCI World S&P/TSX Composite (Canada) Low Volatility Index US 53% Dow Jones Canada S&P/TSX Utiliti
Slide 26: Common share dividends
Common share dividends A Growing and Sustainable Dividend4 Key Points • Quarterly dividend declared at $0.2663 per common 0.13 share ($1.0652 annualized) • Targeted dividend payout ratio remains at 70% - 80% of net income 1.0023 0.9545 • Attractive and growing dividend supported by stable, 0.91 0.84
Slide 27: Appendix
Appendix
Slide 28: 1Q21 Financial summary
1Q21 Financial summary First Quarter Year End (millions of dollars, except EPS) 2021 2020 % Change 2020 2019 % Change Revenue Transmission 448 400 12.0% 1,740 1,652 5.3% Distribution 1,354 1,439 (5.9%) 5,507 4,788 15.0% Distribution (Net of Purchased Power) 460 432 6.5% 1,653 1,677 (1.4%) Other 9 11
Slide 29: Top transmission capital projects underway
Top transmission capital projects underway Anticipated Estimated Capital Cost Development Project Name Location Type In-Service Date Cost To-Date Wataynikaneyap Power LP Line Pickle Lake New stations and 2022 $28 million $10 million Connection Northwestern Ontario transmission connection East-West T
Slide 30: Regulatory stakeholders
Regulatory stakeholders Who: Provincial Government, Ministry of Energy What: Policy, legislation, regulations Who: Ontario Energy Board (OEB) What: Independent electric utility price and service quality regulation Who: Independent Electricity System Operator What: Wholesale power market rules, inter
Slide 31: Independent board of directors
Independent board of directors Timothy Hodgson, MBA, FCPA, ICD.D Corporate Director, Chair of Hydro One Ltd, Chair of Sagicor Financial Company Limited, Director Public Sector Pension Investment Board (PSP Investments), Former Director Alignvest Acquisition II Corporation, retired Managing Partner A
Slide 32: Disclaimers
Disclaimers In this presentation, all amounts are in Canadian dollars, unless otherwise indicated. Any graphs, tables or other information in this presentation demonstrating the historical performance of the Company or any other entity contained in this presentation are intended only to illustrate p
Slide 33: Contact
Contact Omar Javed Vice President, Investor Relations ojaved@HydroOne.com (416) 345-5943 HydroOne.com/InvestorRelations