Hydro One Limited · TSX:H
Hydro One — Debt Investor Presentation (May 2006)
24 slides from Hydro One's debt investor presentation, May 2006
Slide 1: Hydro One Investor Presentation May 2006
HYDRO ONE Investor Presentation May 2006
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 • 12.6 million people • 40% of Canada’s GDP • 51% of Canada’s manufacturing shipments • Ontario is 3rd largest US trading partner after Mexico Credit Ratings: S&P AA Moody’s Aa2 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 distribution utility in maintains fibre optic capacity and maintains the Greater T
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: System Overview
-6- System Overview Transmission Distribution
Slide 8: Regulatory Structure
-7- Regulatory Structure Licence & Rate Orders Code Conditions Integrated Power System Plan (IPSP) Market Rules Legislation & Regulation Ministry of Energy
Slide 9: Transmission Business
-8- Transmission Business • $6.8B in assets – about 70% of income • Over 97% of capacity in Ontario - one of the largest in North America • 28,500 km (18,000 mile) high-voltage network • Customers include 51 local distribution companies, 66 large industrials • Own and operate 26 interconnection faci
Slide 10: System facts
-9- System facts: • Total electricity transmitted in 2005: 157.0 TWh • All-time system peak: 26,160 MW • Geographical area served: 640,000 sq km (247,000 sq miles)
Slide 11: Distribution Business
- 10 - Distribution Business • $4.9B in assets, about 30% of income • Spans 75% of Ontario • 1.3 million customers, including 35 local distribution customers, 50 large industrials • 122,100 km (75,900 mile) system
Slide 12: Hydro One 2010
- 11 - 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 & distribution reliability • Customer satisfaction: 90% across all segments • Shareholder returns –
Slide 13: Regulatory Environment
- 12 - Regulatory Environment • Ontario Energy Board (OEB) – experienced and supportive – Regulates natural gas and electric utilities • Effective cost of service regulation • Recent successful distribution rate decision – OM&A and Capital levels approved as submitted – Recognition of debt investors
Slide 14: Investment Drivers
- 13 - Investment Drivers Investment in our system driven by: • System growth and reliability • New and retiring generation facilities • Expansion of interconnections • Conservation & Demand Management (CDM)
Slide 15: Capital Investments
- 14 - Capital Investments Capital Expenditures • Planned capital expenditures $750 million 800 range over next 3 years 700 $ millions 600 • The Ontario Power Authority’s Integrated 500 400 Power System Plan for Ontario 300 200 100 • Potential transmission infrastructure projects 0 2005 2006 2007 20
Slide 16: Niagara Area Reinforcement
- 15 - Niagara Area Reinforcement • 76 kilometer 230kV double circuit line • Improves supply reliability and increases import capability from New York • Project cost approximately $116 million
Slide 17: Downtown Toronto Cable
- 16 - Downtown Toronto Cable • 2.2 kilometer 230kV underground transmission line in downtown Toronto • Cable laid in tunnel 20 meters underground • Project cost approximately $45 million
Slide 18: Stable Financial Performance
- 17 - Stable Financial Performance Revenues* Year ended December 31 5,000 (Canadian $ millions) 2005 2004 2003 4,000 3,000 2,000 Revenues 4,416 4,153 4,058 1,000 0 Purchased power 2,131 1,987 1,872 2001 2002 2003 2004 2005 Operating costs 1,279 1,251 1,249 Net income 483 498 396 OM&A* 1,000 Net cas
Slide 19: Long-term Credit Ratings
- 18 - Long-term Credit Ratings YE 2003 YE 2004 YE 2005 Current A- A A A A2 A2 Aa3 Aa3 A A A A
Slide 20: Financing Programs
- 19 - Financing Programs • Wide following of credit in Canada • C$5.4 billion long-term debt outstanding – Broadly distributed – Full yield curve – 9 dealers in syndicate • Canadian MTN main funding platform • CP program to bridge requirements – supported by C$750 million bank line
Slide 21: Long-term Debt Maturities
- 20 - Long-term Debt Maturities 700 600 500 $ millions 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2030 2031 2032 2033 2034 2035 2036 2043 0 0 Note: 2006 maturities for the remainder of the year
Slide 22: Funding Objectives
- 21 - Funding Objectives • Cost effectiveness • Maturity smoothing • Average term • No foreign exchange risk – fully hedged • Investor base diversification
Slide 23: Summary
- 22 - 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 24: Hydro One
- 23 - HYDRO ONE