Slide 1: Hydro One: Transformation through Teamwork
Hydro One: Transformation through Teamwork Tom Parkinson President & CEO Hydro One March 2, 2005
Slide 2: Mission
Mission To be the best transmission and distribution company in North America in terms of: • Safety, • Reliability, • Great Employees, • Customer Service, and • Shareholder Value 2
Slide 3: Delivering Results: Safety
Delivering Results Safety • 2003 CEA Report – Hydro One has lowest serious incident rates in Canada • Target: eliminate serious injuries by 2006 – A personal commitment from all employees – 2004 performance 70% better than 2001 – declaring victory Phase One 3
Slide 4: Delivering Results: Customer satisfaction
Delivering Results Customer satisfaction: • Large customer satisfaction: • 42% in 2002 • 73% in 2004 • Mid-size: from 58% to 74% • Residential: continue to track in the 80% range • 2005 target: 80% • 2007 target: 90% 4
Slide 5: Strong Financials
Strong Financials • 2004 Net Income $498 million, $407 million before regulatory recovery (2003 – $396 million) • 2004 contributed over $490 million toward Stranded Debt • 2004 Capital Expenditures $727 million (2003 - $597 million) • 2001 - 2003 achieved significant cost savings (8 – 9% annually) •
Slide 6: Ontario Grid Control Centre
Ontario Grid Control Centre On Time and On Budget Best In North America 6
Slide 7: Parkway TS
Parkway TS Start of Construction - Spring 2004 7
Slide 8: Parkway TS
Parkway TS January 2005 On Time and On Budget 8
Slide 9: 10 Year Plan
10 Year Plan • Our view; a living document; not integrated; updated for 2005 • On-going consultation with our customers & key stakeholders 2004 Accomplishments – 2nd 230 kV TS at Midhurst TS – New autotransformer at Ottawa Hawthorne TS, 230 kV – Actively supporting the government’s commitment to ret
Slide 10: OPA? IESO? OEB? Hydro One? Who's on First???
OPA? IESO? OEB? Hydro One? Who’s on First??? • Clear mandates are essential • Coordinated planning of transmission and generation is essential • Rights of way, environmental & regulatory approvals can take many years • Need streamlined, efficient, effective approval process for projects with mandato
Slide 11: Supply to York Region: Hypothetical "Worst" Case
Supply to York Region: Hypothetical “Worst” Case • 2003 IMO identifies supply problem – capacity issues in summer 2007 • Four potential solutions: - conservation - local generation - expanded distribution - transmission • June 2003 Hydro One steps forward with potential Tx solution • All York Region
Slide 12: Supply to York Region: "Worst" Case (continued)
Supply to York Region: “Worst” Case (continued) • 2005 Bump-up to full EA – add three years • OEB S92 approval process starts 2008 – Many intervenors, takes 18 months • Construction starts June 2009 - Two year construction time - In-service January 2011 • Eight year project: - Six years approvals -
Slide 13: Wake Up Call
Wake Up Call 13
Slide 14: Dx Rationalization
Dx Rationalization • Utility consolidation can provide reduced costs and better customer service • With shareholder support Hydro One will take a fair non-aggressive, voluntary and commercial approach to further consolidation • Respect for local needs and fair treatment of employees • Starts with wi
Slide 15: Dx Rationalization
Dx Rationalization • Hydro One is the logical consolidator of smaller embedded utilities outside the Golden Horseshoe and large urban centres; on a voluntary basis • We do not support the forced merger approach of the “Big” Six • We do not support the “Big” Six proposal for forced Transmission and D
Slide 16: The Big Guys
The Big Guys • Ontario’s six “large” utilities are small • UK Regional Electricity Distributors – EDF Energy – 5 million customers – Northern Electric – 3.6 million customers – Aquila – 2.3 million customers – United Utilities – 2 million customers • New South Wales Electricity Distributors – Energy
Slide 17: Ontario's Six Large Utilities Together!
Ontario’s Six Large Utilities Together ! • A breakthrough proposal • January 2005 - formal proposal to Government • “One contiguous boundary from St. Catherines to Ottawa” • “Unprecedented cooperative approach” • “We are energized to deliver…” • “We are prepared to move quickly…” 17
Slide 18: Who we are
Who we are (yy * 6 of the largest municipally owned utilities in Ontario — * Covering from St. Catharines in the Niagara Peninsula, through the GTA and Ottawa in eastern Ontario (25) srt ms opin Customers EaittydroOttawa Enersource Gunars Ceksters 180,000 Hamilton Art Leitch 227,000 scan . epee Hydr
Slide 19: The Opportunity
The Opportunity We are energized to deliver on the Government's promise of establishing a culture of energy conservation and demand management in Ontario, from St. Catharines to Ottawa. 19
Slide 20: omers
omers | I N @ ‘Urban fringe’ cust Had nil | 20
Slide 21: Ontario's Six Large Utilities Together! (continued)
Ontario’s Six Large Utilities Together ! (continued) • The hidden agenda ??? – Merger of Toronto, Mississauga, Hamilton, Ottawa, Veridian, Powerstream (sounds easy!) – forced to transfer of 420,000 Hydro One customers to “PowerTorrent” – forced transfer of Hydro One Brampton to “PowerTorrent” – forc
Slide 22: Hydro One's Position
Hydro One’s Position: • We congratulate the merger proponents • Shows agility, trust, vision, focus – Six aligned shareholders – Six aligned CEOs – One strong, “energized” company – Based on mutual trust and respect – Sweeps away 100 years of inertia and infighting • No real implementation challenge
Slide 23: Hydro One's Position
Hydro One’s Position: • Hydro One will not agree to a forced transfer unless directed • Hydro One will not agree to separate its Transmission and Distribution businesses • Once the successful merger is complete, we will work with the new Board and CEO to assess the commercial benefits of taking an e
Slide 24: Smart Meters
Smart Meters • The government commitment is clear – 800,000 homes by 2007; balance by 2010 • Hydro One will strongly support a conservation culture, and any future policy approach • We will be at the leading edge of technology on meters and communications • Our RFP for pilots went out yesterday • A
Slide 25: Smart Meters (continued)
Smart Meters (continued) • We have a top team in place • Once we lock & load on technology we will share: – Purchasing power – System designs – Roll-out processes – Centralized data management • Voluntary only, to selected partners only • Circle of Trust is not negotiable 25
Slide 26: Going Forward – Key Themes
Going Forward – Key Themes • The industry is moving in the right direction • Generation & Conservation are Priority 1 • Transmission infrastructure is Priority 2 • We need more people “doing” and less people “watching” • Money is scarce – maximize spend on physical infrastructure, not on process • H
Slide 27: Hydro One 2010
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% Generati