Hydro One Limited · TSX:H
Hydro One — CIBC World Markets Investor Presentation (December 2005)
24 slides from Hydro One's conference presentation, Dec 8, 2005
Slide 1: Hydro One – CIBC World Markets Investor Presentation
HYDRO ONE CIBC World Markets Investor Presentation December 8, 2005 Tom Parkinson - President & CEO
Slide 2: Forward-Looking Statements
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 t
Slide 3: Hydro One at a Glance
2 Hydro One at a Glance • Own and operate the largest electricity system in Ontario serving about 1.3 million customers – 97% of Ontario’s transmission capacity – Largest distribution system spanning 75% of Ontario • In 2004, total assets of $11.7B generated approximately $4.2B of revenues
Slide 4: Mission
3 Mission To be the best transmission and distribution company in North America in terms of: • Safety, • Reliability, • Great Employees, • Customer Service, and • Shareholder Value
Slide 5: Delivering Results
4 Delivering Results Financial Results 2005: • Year-to-date better than expected primarily due to: – Our focus on core business – Extreme demand caused by hot weather • Credit rating upgrades
Slide 6: Delivering Results: Customer satisfaction
5 Delivering Results Customer satisfaction: • Large customer satisfaction: – 42% in 2002 – 78% in 2004 – 83% in 2005 • Mid-size: from 58% to 74% • Residential: continue to track in the 80% range • 2010 target: 90%
Slide 7: Hydro One 2010
6 Hydro One 2010 • Best Transmission and Distribution business in North America • Best safety record in the world – Zero serious injuries and zero serious near misses • Top quartile transmission reliability • Top quartile distribution reliability (like with like) • Customer satisfaction: 90% across
Slide 8: Lessons from Summer 2005
7 Lessons from Summer 2005 • Hottest summer on record – 41 days above 30 degrees C – System peaked at 26,160 MW on July 13 - before 2005 previous peak of 25,414 MW set Aug/02 – 30 power warnings, 5 voltage reductions – Consumers paid $360M less than actual cost of electricity (as of October 1) • Nee
Slide 9: Need for Action
8 Need for Action • Significant new generation won’t be online until at least ‘08 • Long lead times – decisions and approvals, not construction • Transmission investment must parallel generation investment • Ontario deserves better than this: – Too many people watching, not enough doing – The good n
Slide 10: Burdensome Approvals Process
9 Burdensome Approvals Process • Niagara Reinforcement: OEB approves construction, but no explicit rate recovery – Almost 1 year in approvals process with OEB – Will enable additional 800 MW in import capability – Has been constrained 43 days this summer – Would have prevented voltage reductions thi
Slide 11: BCTC Vancouver Island Tx Reinforcement
10 BCTC Vancouver Island Tx Reinforcement • 230kV project on agricultural, urban and recreational lands – replacement of existing lines • 36 km overhead construction on steel poles and towers • 3.7 km underground construction • 27 km submarine cable across Straight of Georgia • Cost - $245M • Signif
Slide 12: What We Need
11 What We Need • Clear accountabilities (Hydro One, OEB, IESO, OPA) • Streamlined approvals – 1 year max for Integrated System Plan, OEB, environmental approvals • Stable policy framework • Proactive transmission policy (Alberta) • Strong, stable cash flows • Focus on action, sense of urgency
Slide 13: Hydro One 2010
12 Hydro One 2010 • Best Transmission and Distribution business in North America • Best safety record in the world – Zero serious injuries and zero serious near misses • Top quartile transmission reliability • Top quartile distribution reliability (like with like) • Customer satisfaction: 90% across
Slide 14: Financial Review
HYDRO ONE Financial Review Beth Summers - CFO
Slide 15: Outline
14 Outline • Financial objectives • Financial results • Drivers for investment • Key events & summary
Slide 16: Financial Objectives
15 Financial Objectives Focus on shareholder returns • Productivity improvements • Full regulated return • Maintain “A” credit rating
Slide 17: Financial Results - 2005 Q3
16 Financial Results - 2005 Q3 • Year-to-date net income of $379 million 21% higher than 2004 – due to increased demand on transmission and distribution systems – distribution rate increase – favourable rate ruling in 2004 • Capital expenditures on $481 million 11% lower than 2004 • Favourable cash
Slide 18: Financial Results - 2005 Q3
17 Financial Results - 2005 Q3 Nine-months ended Sept 30 ($M) 2005 2004 Change Revenues 3,391 3,079 10% Purchased power 1,683 1,465 15% Operating costs 928 913 2% Net income 379 312 21%
Slide 19: Drivers for Investment
18 Drivers for Investment • Core expenditures • Developmental expenditures – System growth and reliability • Niagara reinforcement – New generation supply and retirements • Retirement of coal/ new nuclear – Large interconnections • OPA’s Integrated Power System Plan
Slide 20: Capital Expenditures
19 Capital Expenditures PLAN 800 727 745 597 566 570 600 529 $ millions 446 400 200 0 1999 2000 2001 2002 2003 2004 2005 Tx Dx Other
Slide 21: Maturity Profile
20 Maturity Profile 800 698 600 600 $ millions 500 500 400 400 385 400 355 315 250 250 200 0 0 0 2006 2007 2008 2009 2010 2011 2012 2030 2031 2032 2033 2034 2043
Slide 22: Key Events
21 Key Events • Dx Rate Filing – Completed evidentiary phase – Oral hearings to start early January 2005 • Transmission rate filing / earnings sharing – Approval of revenue requirement for 2006, 2007 and possibly 2008 – Proposed earnings sharing mechanism or deferral account • Transmission infrastru
Slide 23: Summary
22 Summary • Financial performance better than plan • Work to achieve positive regulatory outcomes • Focus on transmission system development through new investment • Maintain financial profile
Slide 24: Hydro One
HYDRO ONE
Hydro One — CIBC World Markets Investor Presentation (December 2005) on 6ix