Slide 1: Hydro One NY Investor Presentation
HYDRO ONE NY Investor Presentation September 18, 2007
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 subje
Slide 3: Who is Hydro One?
-2- Who is Hydro One? • Own and operate one of the largest electricity delivery systems in North America • Backbone of Ontario economy • No generation exposure • Wholly owned by the Province of Ontario • 100-years of experience delivering electricity to the people of Ontario
Slide 4: Ontario Facts
-3- Ontario Facts • Half a trillion dollar economy • 12.7 million people • 39% of Canada’s nominal GDP • Canada’s industrial and financial centre Long-term Credit Ratings: S&P AA Moody’s Aa1 Toronto DBRS AA
Slide 5: Corporate Structure
-4- Corporate Structure “Owned by the Province of Ontario” Hydro One Hydro One Brampton Hydro One Remote Comm. Hydro One Telecom Networks • Regulated urban • Operates and • Markets excess • Plans, constructs, operates and distribution utility in maintains fibre optic capacity maintains the transmiss
Slide 6: Corporate History
-5- Corporate History April 1, 1999, Ontario Hydro was reorganized into three major successor companies. Up until then, it had a vertically-integrated monopoly as it generated, transmitted and distributed substantially all of the electricity required in Ontario and was also a leading retailer of ele
Slide 7: Regulatory Structure
-6- Regulatory Structure Licence & Rate Orders Code Conditions Integrated Power System Plan (IPSP) Market Rules Legislation & Regulation Ministry of Energy
Slide 8: Transmission Business
-7- Transmission Business • C$7.0 billion in assets • Over 96% of capacity in Ontario - one of the largest in North America • 28,600 km (18,000 mile) high-voltage network • Customers include 51 local distribution companies, 64 large industrials • Own and operate 26 interconnection facilities
Slide 9: System facts
-8- System facts: • Total electricity transmitted in 2006: 151.1 TWh • All-time system peak: 27,005 MW • Geographical area served: 640,000 sq km (247,000 sq miles)
Slide 10: Distribution Business
-9- Distribution Business • $5.2 billion in assets • Spans 75% of Ontario • 122,100 km (75,900 mile) system • 1.3 million customers, including 34 local distribution customers, 48 large industrials
Slide 11: Regulatory Environment
- 10 - Regulatory Environment • Ontario Energy Board (OEB) – experienced and supportive – Regulates natural gas and electric utilities • Effective cost of service regulation • Recent transmission and distribution rate decisions – OM&A and Capital levels approved as submitted – Recognition of debt in
Slide 12: Investment Drivers
- 11 - Investment Drivers Investment in our system driven by: • Sustaining investments • System growth and reliability • New and retiring generation facilities • Expansion of interconnections • Province of Ontario’s smart meter initiative
Slide 13: Capital Investments
- 12 - Capital Investments Capital Expenditures • Planned capital expenditures C$4 billion for 2007 to 2009 1500 1250 $ millions • Integrated Power System Plan (IPSP) for 1000 Ontario 750 500 • Likelihood and timing driven by: 250 0 – Demand, generation and conservation 2006 2007 2008 2009 Distribut
Slide 14: Stable Financial Performance
- 13 - Stable Financial Performance Revenues* Year ended December 31 5,000 (Canadian $ millions) 2006 2005 2004 4,000 3,000 2,000 Revenues 4,545 4,416 4,153 1,000 Purchased power 2,221 2,131 1,987 0 2001 2002 2003 2004 2005 2006 Operating costs 1,395 1,279 1,251 Net income 455 483 498 OM&A* 1,000 Ne
Slide 15: Long-term Credit Ratings
- 14 - Long-term Credit Ratings YE 2003 YE 2004 YE 2005 YE 2006 Current A- A A A A/Positive A2 A2 Aa3 Aa3 Aa3/Stable A A A A (high) A (high)/Stable
Slide 16: Financing Programs
- 15 - Financing Programs • Wide following of credit in Canada • C$5.3 billion long-term debt outstanding – Broadly distributed – Full yield curve – 9 dealers in syndicate • Canadian MTN main funding platform - C$2.5 billion shelf maturing July/09 • CP program to bridge requirements – supported by C
Slide 17: Long-term Debt Maturities
$ millions 0 100 200 300 400 500 600 700 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 - 16 - 2027 2029 2031 Long-term Debt Maturities 2033 2035 2037 2039 2041 2043 2045
Slide 18: Funding Objectives
- 17 - Funding Objectives • Cost effectiveness • Maturity smoothing • Average term • No foreign exchange risk – fully hedged • Investor base diversification
Slide 19: Summary
- 18 - Summary • Attractive franchise in G7 country • 99% regulated – experienced and supportive regulator • Stable financial performance with solid “A” credit ratings • Wholly owned by the Province of Ontario • Large liquid issues outstanding over entire curve
Slide 20: Hydro One Contacts
Hydro One Contacts Beth Summers Ali R. Suleman Chief Financial Officer Vice President and Treasurer Tel. – (416) 345-4008 Tel. – (416) 345-6126 Email – beth.summers@hydroone.com Email – a.suleman@hydroone.com Steve Hirano Corporate Address Manager, Investor Relations 483 Bay St. Tel. – (416) 345-613
Slide 21: Hydro One
HYDRO ONE