Hydro One Limited · TSX:H
Hydro One — Investor Presentation (March 2017)
24 slides from Hydro One's investor presentation, March 2017
Slide 1: Investor Overview Post Fourth Quarter 2016
Investor Overview Post Fourth Quarter 2016 One of North America’s largest electric utilities TSX: H
Slide 2: Investment Overview
Investment Overview • One of the largest electric utilities in North America, with a market capitalization of +$14 billion • Significant scale and leadership position in Ontario, home to ~38% of Canada’s population • Transmission network serves 98% of Ontario, together with a local distribution netw
Slide 3: Hydro One at a Glance (Full Year 2016)
Hydro One at a Glance (Full Year 2016) Total Revenue (Hydro One Limited) Overview of Regulated Business Revenue Net of Purchased Power1 EBIT 38% 48% $3,072M 52% Total Assets $1,313M 62% Unregulated 1% $6.5 Billion 99% Regulated 42% Capital Investments $22.3B Rate Base2 58% 42% 40% $1,691M Transmissi
Slide 4: Preparing to Accelerate Growth
Preparing to Accelerate Growth Leadership Team Mayo Schmidt President and CEO Michael Vels Greg Kiraly Jamie Scarlett Ferio Pugliese Paul Barry Judy McKellar Chief Financial Officer Chief Operating Officer Chief Legal Officer EVP, Customer Care & EVP, Strategy & EVP, Chief Human Corporate Affairs Co
Slide 5: Strategic Focus
Strategic Focus • Reinvigorated focus on integrating customer needs into business decision making • Increased concentration on efficiency and productivity • Accelerate effectiveness and efficiency of capital deployment as stewards of the grid • Successfully transition from cost of service to incenti
Slide 6: Transmission Business
Transmission Business Electric Transmission Network Key Points • One of North America's largest electric transmitters, owning and operating 98% of Ontario’s transmission capacity • Transmission produces reliable cash flow with low volatility under Ontario Energy Board (OEB) cost of service regulatio
Slide 7: Local Distribution Business (LDC)
Local Distribution Business (LDC) Electric Distribution Footprint Key Points • The largest electric distributor in Ontario, with +1.3 million residential and business customers, and 55 LDC wholesale customers • Distribution is a stable, rate-regulated business operating under OEB cost of service fra
Slide 8: Updated Regulated Capital Investment Program
Updated Regulated Capital Investment Program Projected Capital Investments* ($M) Projected Rate Base Growth* $2,235 $1,988 $2,013 $23,392 $1,734 $1,779 $22,140 $749 $20,885 $19,824 $17,831 $18,672 $771 $735 $648 $647 $1,486 $1,132 $1,217 $1,278 $1,086 2017 2018 2019 2020 2021 2016 2017 2018 2019 202
Slide 9: Two Representative Medium Scale Capital Projects
Two Representative Medium Scale Capital Projects Clarington Transmission Station Toronto Midtown Transmission Reinforcement Key points Key points • Estimated Total Project Cost: $267 million • Estimated Total Project Cost: $118 million • Capital Cost To Date: $192 million • Capital Cost To Date: $11
Slide 10: Merger and Acquisition Update
Merger and Acquisition Update Great Lakes Power Transmission Key points • OEB approval received October 13, 2016 and transaction closed October 31, 2016 • Increased Hydro One’s transmission coverage to ~98% of province-wide capacity • Expected to be earnings accretive in first full year • 560km of h
Slide 11: Regulatory Stakeholders
Regulatory Stakeholders Who: Provincial Government, Ministry of Energy What: Policy, legislation, regulations Who: Ontario Energy Board (OEB) What: Independent electric utility price and service quality regulation Who: Independent Electricity System Operator What: Wholesale power market
Slide 12: Constructive Rate Regulator (OEB)
Constructive Rate Regulator (OEB) • Transmission and distribution businesses rate-regulated by the Ontario Energy Board (OEB) • Deemed debt / equity ratio of 60% / 40% for both transmission and distribution segments • Hydro One has earned or exceeded its allowed ROE on a consolidated basis over past
Slide 13: The Typical Residential Hydro One End Customer Bill
The Typical Residential Hydro One End Customer Bill End Customer Monthly Electric Bill Breakdown1 Regulatory Sales Tax Charges Line Losses 5% 3% 4% Hydro One’s Portion of 31% Local Electric End Customer Customer Electric Bill Distribution Charges Total Electric Bill 37% 51% Electricity Charges Trans
Slide 14: Strong Balance Sheet and Liquidity at 12/31/2016
Strong Balance Sheet and Liquidity at 12/31/2016 Significant Available Liquidity ($M) Strong Investment Grade Credit Ratings (LT/ST/Outlook) Shelf Registrations 250 Hydro One Limited Hydro One Inc. (HOI) HOL: Hydro One Inc. Universal Shelf1 S&P A / A-1/ stable $8B 2,300 DBRS A (high) / R-1 (low) / s
Slide 15: Equity Market Cap Overview
Equity Market Cap Overview • 595 million common shares outstanding, listed on Toronto Stock Exchange (TSX:H) • Equity market capitalization of +$14 billion and public float of +$4 billion • Equity market capitalization amongst the top 30 of all listed Canadian companies • Secondary offerings by Prov
Slide 16: Common Share Dividend
Common Share Dividend Dividend Statistics Key Points Yield1 3.6% • Quarterly dividend of $0.21 per share ($0.84 annualized) declared February 9, 2017 Annualized Dividend2,3 $0.84 / share (1) Based on closing share price on December 30, 2016 (2) Unless indicated otherwise, all common share dividends
Slide 17: Delivering Sustainable Energy
Delivering Sustainable Energy • Ontario was the first North American jurisdiction to fully eliminate coal electricity generation and leads Canada in wind and solar capacity • Recent five year Ontario Climate Change Action Plan will further accelerate province’s leadership in reduction of greenhouse
Slide 18: Why Invest in Hydro One
Why Invest in Hydro One • One of the largest electric utilities in North America with significant scale and leadership position across Canada’s most populated province • Unique combination of pure play electric transmission and local distribution, with no generation or material exposure to commodity
Slide 19: Appendix
Appendix One of North America’s Largest Electric Utilities 18 TSX: H
Slide 20: Hydro One Limited – 4Q16 Financial Summary
Hydro One Limited – 4Q16 Financial Summary Fourth Quarter Full Year ($ millions) 2016 2015 % Change 2016 2015 % Change Revenue Transmission $373 $361 3.3% $1,584 1,536 3.1% Distribution 1,228 1,148 7.0% 4,915 4,949 (0.7%) Distribution (Net of Purchased Power) 370 362 2.2% 1,488 1,499 (0.7%) Other 13
Slide 21: Top Transmission Investment Projects Underway
Top Transmission Investment Projects Underway Development Projects: Project Name Location Type Anticipated Estimated Capital Cost In-Service Date Cost To-Date Clarington Transmission Station Oshawa area South-western New transmission 2018 $267 million $192 million Ontario station Toronto Midtown Tra
Slide 22: Fully Independent Board of Directors
Fully Independent Board of Directors David Denison, O.C., FCPA, FCA Currently a Director of Royal Bank of Canada (Audit James Hinds Currently a Corporate Director and the former Board Chair of the Committee Chair), Bell Canada, Allison Transmission and of Sinai Health Systems (Vice- Independent Elec
Slide 23: Disclaimers
Disclaimers DISCLAIMERS In this presentation, all amounts are in Canadian dollars, unless otherwise indicated. Any graphs, tables or other information in this presentation demonstrating the historical performance of the Company or any other entity contained in this presentation are intended only to
Slide 24: For More Information
For More Information Investor Relations Website: http://www.hydroone.com/InvestorRelations/ Investor Relations Contacts: Bruce Mann Omar Javed Vice President, Investor Relations Director, Investor Relations bruce.mann@hydroone.com ojaved@hydroone.com 416 345 5722 416 345 5943 One of North America’s