Slide 1: Investor overview: Post fourth quarter 2021
Investor overview Post fourth quarter 2021 One of North America’s largest electric utilities TSX:H
Slide 2: Why invest in Hydro One
Why invest in Hydro One A unique low-risk opportunity to participate in the transformation of a premium, large scale regulated electric utility • One of the largest electric utilities in North America with significant scale and leadership position across Canada’s most populated province. • One of th
Slide 3: Recent developments
Recent developments Organization Priorities Fourth Quarter Highlights • Fourth quarter earnings per share (EPS) was $0.27, compared to EPS of $0.27 for the same period in 2020. For the full year ended 2021, EPS was $1.61 and Adjusted EPS1 was $1.61. Adjusted EPS1 was 6.6% higher compared to Adjusted
Slide 4: The value of Hydro One
The value of Hydro One ABOUT THE COMPANY HOW WE DID IN 2021 WHY INVEST Transmission & Distribution Transmission Distribution Other Stable Operations Revenues Net of Purchased Power5 Total Assets 1% 2% Stable and growing cash flows ~30,000 circuit KMs of transmission lines with 99% of overall revenue
Slide 5: A look at the organization
A look at the organization Corporate structure Hydro One Ltd. Public company TSX:H Hydro One Inc Public debt issuer Hydro One Hydro One Acronym Remote Networks Inc. Solutions Inc. Communities Inc. Rate-regulated business (99% of revenue) Non-rate-regulated business Hydro One • Investor Overview • 5
Slide 6: Executive leadership team
Executive leadership team A leadership team with strong operational experience committed to achieving efficiencies at Hydro One Mark Poweska President and CEO Brad Bowness Jason Fitzsimmons Lyla Garzouzi Paul Harricks David Lebeter Chris Lopez Megan Telford Chief Information Chief Corporate Affairs
Slide 7: Hydro One’s strategy
Hydro One’s strategy Hydro One • Investor Overview • 7
Slide 8: Achievements and efficiencies
Achievements and efficiencies Paving New Paths in Productivity Savings ($M) 2021 343.9 Generated productivity savings of $343.9 million in 2021 comprised 2020 286.0 of $160.4 million in OM&A and $183.5 million in capital and totaling 2019 202.3 approximately $1.1 billion dollars since 2015 $1,082 20
Slide 9: The regulated business
The regulated business Transmission Distribution • Transmission produces reliable cash flow with low volatility • Distribution is a stable, rate-regulated business operating under the OEB Custom IR framework under OEB’s Custom IR framework • Hydro One filed a 5-year Custom IR application for • Hydro
Slide 10: Electric Local Distribution Company (LDC) consolidation
Electric Local Distribution Company (LDC) consolidation • Hydro One is the largest LDC in Ontario; 55 LDCs are Hydro One transmission or distribution customers Recently completed transactions Consolidator of Choice • Hydro One has significant scale in Ontario and serves customers through a distribut
Slide 11: Growth opportunities for the telecom business
Growth opportunities for the telecom business focus on value-added services Internet & Network connectivity and access in order to improve the efficiency and security of Client data communications Networks • Secure SD-WAN • High Performance Network Broadband Connectivity • Internet Transit • Data Ce
Slide 12: Sustainability at Hydro One
Sustainability at Hydro One At Hydro One, we are committed to operating safely in an environmentally and socially responsible manner and to partnering with our customers and community stakeholders to build a brighter future for all. Approach to sustainability As a transmission and distribution compa
Slide 13: Sustainability at Hydro One
Sustainability at Hydro One At Hydro One, we are committed to operating safely in an environmentally and socially responsible manner and to partnering with our customers, community stakeholders and Indigenous communities to build a brighter future for all. A Sustainable Future for All • 50% Board of
Slide 14: Capital investment driving rate base growth
Capital investment driving rate base growth Consistent and predictable organic growth profile underpinned by required replacement of aging infrastructure Projected Regulated Capital Investments* ($M) Historical and Projected Rate Base Growth* ($M) 2,734 2,656 2,626 2,558 2,541 ~6% 31,158 29,673 1,13
Slide 15: Affirmed 2022 guidance
Affirmed 2022 guidance $1.65 $1.52 $0.02 $0.11 $1.35 $1.30 $0.24 $0.08 $0.02 2019 Basic EPS 2018 Distribution Normalizing to Insurance Merger Related Lake Superior Link 2019 Normalized - 2022 Basic EPS Decision Catch-Up Distribution Allowed Costs EPS ROE • Company estimates subject to change and inc
Slide 16: Capital investment driving rate base growth
Capital investment driving rate base growth Leamington Area Lennox Transmission Station East-West Tie Station Transmission Reinforcement1,2 Circuit Breaker Replacement4 Expansion3 Estimated Total Project Cost: $525 million Estimated Total Project Cost: $152 million Estimated Total Project Cost: $181
Slide 17: Hydro One responds to COVID-19
Hydro One responds to COVID-19 How our customers are being supported We announced a Pandemic Relief Fund to assist customers affected by the COVID-19 pandemic and offer financial assistance as well as increased payment flexibility to customers. Support with a Small Business Pandemic Relief Program t
Slide 18: Joint Rate Application (JRAP) – 2023-2027
Joint Rate Application (JRAP) – 2023-2027 Ontario Energy Board (OEB) is a consistent, independent regulator with a transparent rate-setting process • Transmission and Distribution businesses rate-regulated by the OEB • Deemed debt / equity ratio of 60% / 40% for both transmission and distribution se
Slide 19: JRAP – Segmented incentive regulatory construct
JRAP – Segmented incentive regulatory construct The transition from cost of service to incentive based regulatory model coincident with transformation of business will create value for both customers and shareholders Distribution Transmission Proposed1 Proposed1 2023-2027 2023-2027 Rebasing Year 202
Slide 20: JRAP – Expected next steps
JRAP – Expected next steps Notice of Technical Application Interrogatories Conference 2021 AUG SEP OCT NOV DEC 2022 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Evidence Oral Hearing Written Decision Issued Final Rate Order Update and (if no full settlement) Arguments Settlement Conference Hydro
Slide 21: Reducing our customer bills
Reducing our customer bills Since 2017, typical Hydro One residential customer bills have decreased on average from $165 to $127 per month Post Ontario Energy Rebate 2020 Monthly Bill- $127 % of Bill2 Taxes and OCEB 16% Electricity Charges 56% Regulatory 2% Transmission 7% Distribution 20% Pre-Fair
Slide 22: Strong balance sheet and liquidity
Strong balance sheet and liquidity (as at December 31, 2021) Investment grade balance sheet with one of lowest debt costs in utility sector Significant available liquidity ($M) Strong investment grade debt ratings (long-term/short-term/outlook) Shelf registrations Hydro One Ltd. (HOL) Hydro One Inc.
Slide 23: Equity market cap overview
Equity market cap overview Approximate Ownership of Equity Index Inclusions Approximate Geographic Dispersion Public Float2 of Public Float S&P/TSX Composite S&P/TSX Composite FTSE All-World 21% 24% Index Dividend Index (Canada) Canada S&P/TSX 60 Index S&P/TSX Composite MSCI World US High Dividend I
Slide 24: Common share dividends
Common share dividends A Growing and Sustainable Dividend4 Key Points • Quarterly dividend declared at $0.2663 per common 0.13 share ($1.0652 annualized) • Targeted dividend payout ratio remains at 70% - 80% of 1.0525 net income 1.0023 0.9545 • Attractive and growing dividend supported by stable, 0.
Slide 25: Appendix
Appendix
Slide 26: JRAP - Investments: Transmission
JRAP - Investments: Transmission Maintaining the System $M Net Transmission Capital 1,600 • Reinvesting in existing infrastructure to maintain the 1,500 1,434 1,464 71 1,450 1,462 37 1,448 60 50 health of the system, sustain performance and address 1,400 79 102 86 93 90 91 safety and environmental r
Slide 27: JRAP - Investments: Distribution
JRAP - Investments: Distribution $M Net Distribution Capital New Infrastructure: 1,200 1,121 Modernize infrastructure to detect, repair & restore 1,100 1,072 1,071 1,028 power quicker (improving reliability by ~25% by 1,000 1,005 227 213 204 2027). 900 240 241 Significant investments to accommodate
Slide 28: JRAP - Cost of plan
JRAP - Cost of plan1 Hydro One’s plan will see the Investment Cost typical customer’s bill increase by Average Residential Monthly Bill $-3.20 $1.89 $2.97 $3.95 $2.78 less than 3.0% 0.6% 2.0% expected inflation. 0.4% 0.5% 0.4% 1.0% 2.0% A typical residential customer’s monthly 0.9% 1.5% 1.4% bill wi
Slide 29: Current - Constructive rate regulator (OEB)
Current - Constructive rate regulator (OEB) Consistent, independent regulator with a transparent rate-setting process • Transmission and Distribution businesses rate-regulated by the OEB • Deemed debt / equity ratio of 60% / 40% for both transmission and distribution segments • Reduced regulatory la
Slide 30: Current - Segmented incentive regulatory construct
Current - Segmented incentive regulatory construct The transition from cost of service to incentive based regulatory model coincident with transformation of business will create value for both customers and shareholders Distribution Transmission OEB Approved OEB Approved 2018-2022 2020-2022 Rebasing
Slide 31: 4Q21 Financial summary
4Q21 Financial summary Fourth Quarter Year-to-Date (millions of dollars, except EPS) 2021 2020 % Change 2021 2020 % Change Revenue Transmission $421 $398 5.8% $1,824 $1,740 4.8% Distribution 1,347 1,457 (7.5)% 5,359 5,507 (2.7)% Distribution Revenues(Net of Purchased Power)2 433 411 5.4% 1,780 1,653
Slide 32: Regulatory stakeholders
Regulatory stakeholders Who: Provincial Government, Ministry of Energy What: Policy, legislation, regulations Who: Ontario Energy Board (OEB) What: Independent electric utility price and service quality regulation Who: Independent Electricity System Operator What: Wholesale power market rules, inter
Slide 33: Independent board of directors
Independent board of directors Timothy Hodgson, MBA, FCPA, ICD.D Corporate Director, Chair of Hydro One Limited, Director Public Sector Pension Investment Board (PSP Investments) and Dialogue Health Technologies. Former Director Alignvest Acquisition Corporation, Alignvest Acquisition II Corporation
Slide 34: Disclaimers
Disclaimers Forward Looking Information This presentation contains “forward-looking information” within the meaning of applicable Canadian securities laws that is based on current expectations, estimates, forecasts and projections about Hydro One’s business and the industry in which Hydro One operat
Slide 35: Contact
Contact Omar Javed Vice President, Investor Relations omar.javed@HydroOne.com (416) 345-5943 HydroOne.com/InvestorRelations