Hydro One Limited · TSX:H
Hydro One — BMO Investor Luncheon (October 2010)
22 slides from Hydro One's conference presentation, Oct 20, 2010
Slide 1: BMO Investor Luncheon
BMO Investor Luncheon October 20th, 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 Developments
5 Regulatory Developments • Green Energy Act • Transmission rate application • Framework for transmission project development
Slide 7: Capital Program: Capital Expenditures
6 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 Sustaining & other System development Green related
Slide 8: Sustaining and Other Investments
7 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 9: System Development
8 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 10: Bruce to Milton Transmission Project
Bruce to Milton Transmission Project 9
Slide 11: Midtown Toronto Project
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Slide 12: Green Energy
11 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 13: Renewable Generation
Renewable Generation 12 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 14: 2010 Second Quarter Financial Results
13 2010 Second Quarter Financial Results ($M) Six months ended June 30 2010 2009 Revenues 2,484 2,393 Purchased power 1,197 1,184 Operating costs 807 777 Net income 274 259 Dividends Paid 19 135
Slide 15: Stable Financial Performance
14 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 16: Financing
15 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 17: Liquidity
16 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 18: Funding Objectives
17 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 19: 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 18
Slide 20: Summary
19 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 21: Contacts
Contacts Sandy Struthers Ali R. Suleman Senior 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, Investor R
Slide 22: Hydro One
HYDRO ONE