Hydro One Limited · TSX:H
Hydro One — Debt Investor Presentation (November 2010)
23 slides from Hydro One's debt investor presentation, Nov 23, 2010
Slide 1: Winnipeg Investor Luncheon
Winnipeg Investor Luncheon Sandy Struthers Executive Vice President and CFO November 23, 2010
Slide 2: Forward Looking Statements
1 Forward Looking Statements This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of Hydro One Inc. Although Hydro One believes that such statements are based on reasonable assumptions, such statements are subject
Slide 3: Outline
2 Outline • Overview of Hydro One • Regulatory Developments • Capital Program • Financial Performance and Financing • Summary
Slide 4: Hydro One at a Glance
3 Hydro One at a Glance • One of the largest electricity delivery systems in North America • Wholly owned by the Province of Ontario • No commodity (electricity) exposure Transmission Distribution • $9.1B in assets • $6.5B in assets • 28,924 km network - over 96% of • 123,528 km system – spans 75% o
Slide 5: Hydro One – Strategic Plan
4 Hydro One – Strategic Plan MISSION AND VISION We will be an innovative and trusted company delivering electricity safely, reliably, and efficiently to create value for our customers VALUES ● Health & Safety ● Stewardship ● Excellence ● Innovation STRATEGIC OBJECTIVES ● Injury-Free ● Satisfying our
Slide 6: Regulatory Structure
5 Regulatory Structure Licence & Rate Orders Code Conditions Integrated Power System Plan (IPSP) Market Rules Legislation & Regulation Ministry of Energy
Slide 7: Regulatory Developments
6 Regulatory Developments • Green Energy Act • Transmission rate application • Framework for transmission project development
Slide 8: Capital Expenditures
7 Capital Program Capital Expenditures System investment driven by: • Sustaining and other 2,000 investments 1,500 $ millions • System development 1,000 • Green Energy Act 500 0 2007 2008 2009 2010 2011 2012
Slide 9: Capital Program: Sustaining and Other Investments
8 Capital Program Sustaining and Other Investments • Increasing sustaining capital expenditures – Aging asset base – Maintain reliability of the system – Examples of sustainment programs include • Wood pole replacement • Station refurbishments • Circuit breaker replacement • Other expenditures relat
Slide 10: Capital Program: System Development
9 Capital Program System Development • System growth and reliability • New and retiring generation • Examples of system development programs include – Load connections – Reliability improvements – Area supply • Smart meter and smart grid
Slide 11: Bruce to Milton Transmission Project
Bruce to Milton Transmission Project 10
Slide 12: Midtown Toronto Project
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Slide 13: Capital Program: Green Energy
12 Capital Program Green Energy • Required to facilitate connection of renewable generation projects in the province. • Highly uncertain – IPSP / MOE consultations – Transmission Project Development Planning – Approvals
Slide 14: Renewable Generation
Renewable Generation 13 Major Areas of Renewable Supply Potential Albany and Moose River Basins Northwestern Ontario Northeastern Ontario Eastern Ontario Wind Bioenergy Bruce Area Hydroelectric Solar PV Southwestern Ontario Map courtesy of Ontario Power Authority
Slide 15: 2010 Third Quarter Financial Results
14 2010 Third Quarter Financial Results ($M) Nine months ended Sept 30 2010 2009 Revenues 3,844 3,537 Purchased power 1,835 1,731 Operating costs 1,210 1,183 Net income 492 359 Dividends Paid 23 161
Slide 16: Stable Financial Performance
15 Stable Financial Performance • Stable regulatory environment • Continued focus on operations • Organic growth opportunities • Financial metrics supportive of credit quality Net Income FFO/ Interest Coverage 5x 500 4x 400 300 3x $ millions 200 2x 100 1x 0 2003 2004 2005 2006 2007 2008 2009 2003 20
Slide 17: Financing
16 Financing • Borrowing proceeds used to: – Repay debt maturities – Fund developmental capital • MTN shelf main platform maturing August 2011 – $1.25B remaining • $1B CP program to bridge requirements Long-term Credit Ratings S&P - A+ Moody’s - Aa3 DBRS - A (high)
Slide 18: Liquidity
17 Liquidity Liquidity supporting CP program and financing needs • On June 1, 2010, finalized $1.25B syndicated bank line maturing June 2013 • $250M liquid reserve fund available to 2014
Slide 19: Funding Objectives
18 Funding Objectives • Cost effectiveness • No foreign exchange risk – fully hedged • Average term • Maturity smoothing • Execution objectives – Full yield curve – Fair pricing – Sized for liquidity – Dealer group support
Slide 20: Long-term Debt Maturities
$ millions 0 100 200 300 400 500 600 700 800 2010 2012 2014 2016 2018 2020 2022 $250M liquid reserve fund 2024 2026 2028 2030 Long-term Debt Maturities 2032 2034 2036 2038 2040 2042 2044 2046 19
Slide 21: Summary
20 Summary • Stable financial performance • Going forward: – Continued focus on core wires business – Organic growth opportunities through infrastructure investments – Financing requirements for debt maturities and developmental capital – Maintain capital structure, credit quality
Slide 22: Contacts
Contacts Sandy Struthers Ali R. Suleman Executive Vice President and Vice President and Chief Financial Officer Treasurer Tel. – (416) 345-6140 Tel. – (416) 345-6126 Email – sandy.struthers@hydroone.com Email – a.suleman@hydroone.com William Paolucci Steve Hirano Assistant Treasurer Manager, Investo
Slide 23: Hydro One
HYDRO ONE
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