Slide 1: Investor Overview Post Fourth Quarter 2017
Investor Overview Post Fourth Quarter 2017 One of North America’s largest electric utilities TSX: H
Slide 2: One of North America’s Largest Electric Utilities
One of North America’s Largest Electric Utilities Service Territory • Pure play electric transmission and distribution utility • 30,290 circuit KMs of transmission lines across 98% of Ontario, home to 38% of Canadian population • Largest local distribution company (LDC) in Ontario with +1.3 million
Slide 3: Compelling Value Proposition
Compelling Value Proposition • One of the largest electric utilities in North America, with a market capitalization of ~$13.3 billion • Significant scale and leadership position in Ontario, home to ~38% of Canada’s population • Transmission network serves 98% of Ontario, together with a local distri
Slide 4: Hydro One at a Glance (Full Year 2017)
Hydro One at a Glance (Full Year 2017) (C$) Total Revenue (Hydro One Limited) Overview of Regulated Business Revenue Net of Purchased Power1 EBIT 39% 49% $3,069M 51% Total Assets $1,291M 61% Unregulated 1% $6.0 Billion 99% Regulated 40% Capital Investments $22.9B Rate Base2 60% 38% 40% $1,556 M Tran
Slide 5: Preparing to Accelerate Growth
Preparing to Accelerate Growth Executive Leadership Team Mayo Schmidt President and CEO Paul Dobson1 Greg Kiraly Ferio Pugliese Judy McKellar Jamie Scarlett Chief Financial Officer Chief Operating Officer EVP, Customer Care & EVP, Chief Human Chief Legal Officer Corporate Affairs Resources Officer C
Slide 6: Purpose, Values & Strategy
Purpose, Values & Strategy One of North America’s Largest Electric Utilities 5 TSX: H
Slide 7: Management Focus
Management Focus • Reinvigorated focus on integrating customer needs and advocacy into business decision making • Deliver best in class operating metrics and position Hydro One for accelerated growth • Increased concentration on generating operating efficiencies and productivity • Accelerate effecti
Slide 8: Transmission Business
Transmission Business Electric Transmission Network Key Points • One of North America's largest electric power 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 reg
Slide 9: Local Distribution Business (LDC)
Local Distribution Business (LDC) Electric Distribution Footprint Key Points • The largest electric power distributor in Ontario, with +1.3 million residential and business end customers, and 55 municipal utility customers • Distribution is a stable, rate-regulated business operating under OEB cost
Slide 10: Hydro One Telecom Business
Hydro One Telecom Business Fibre Optic Network Footprint Key Points • Unregulated business with +$70 million revenue and +$18.5 million EBITDA in 2017 • Operates a high capacity, low latency fibre-optic network across the province that extends into Montreal and the United States • Network is compris
Slide 11: $10B of Capital Investment Driving Rate Base Growth
$10B of Capital Investment Driving Rate Base Growth Projected Capital Investments* ($M) Projected Rate Base Growth* $2,214 $2,217 $24,102 $1,976 $1,999 $22,937 $21,825 $719 $805 $20,800 $1,660 $18,640 $19,740 $751 $715 $641 $1,486 $1,404 $1,217 $1,278 $1,010 2018 2019 2020 2021 2022 2017 2018 2019 2
Slide 12: Two Representative Medium Scale Capital Projects
Two Representative Medium Scale Capital Projects Clarington Transmission Station Richview Transmission Station Key points Key points • Estimated Total Project Cost: $267 million • Estimated Total Project Cost: $103 million • Capital Cost To Date: $223 million • Capital Cost To Date: $85 million • An
Slide 13: Pending Avista Acquisition
Pending Avista Acquisition (C$ in mm)3 Avista Business Overview 2016A Service Area Revenue $1,824 Service territories across WA, OR, ID, AK, and MT EBITDA $570 Vancouver BC AB Net Income $174 SK Seattle Olympia 2016 Rate Base 2016 Rate Base by State WA Portland MT Helena 22% Gas ID Gas, 5% OR Gas, 7
Slide 14: Pending Avista Acquisition: Strategic Rationale & Transaction Details
Pending Avista Acquisition Strategic Rationale & Transaction Details Diversification Allowed ROE Equity Capitalization • Increases geographic, economic, regulatory and asset class diversification ON 9.00% 40.00% • Allowed Equity Adds complementary and growing gas distribution WA 9.50% 48.50% • Retur
Slide 15: Pending Avista Acquisition
Pending Avista Acquisition (C$ in mm) ’16 Rate Base ’16 Rate Base by Geography ’16 Net Income Ontario, Ontario, 100% 100% $17,831 $721 Hydro One $17,831 100% Electric AK, 4% OR, 7% 22% Gas Avista $3,877 ID, 30% $3,877 $174 Avista WA, 59% Service Territory 78% Electric OR, 1% Avista, WA, 11% 3% Gas 1
Slide 16: Ontario Mergers and Acquisitions Update
Ontario Mergers and Acquisitions Update Hydro One Sault Ste. Marie (Great Lakes Power Transmission) Key points • OEB approval received October 13, 2016 and transaction closed October 31, 2016 • Increased Hydro One’s transmission coverage to ~98% of province-wide capacity • 560km of high voltage tran
Slide 17: Regulatory Stakeholders
Regulatory Stakeholders Who: Provincial Government, Ministry of Energy What: Policy, legislation, regulations Who: Ontario Energy Board (OEB) What: Independent electric utility price and service quality regulation Who: Independent Electricity System Operator What: Wholesale power market
Slide 18: Constructive Rate Regulator (OEB)
Constructive Rate Regulator (OEB) • Transmission and distribution businesses rate-regulated by the Ontario Energy Board (OEB) • Deemed debt / equity ratio of 60% / 40% for both transmission and distribution segments • Hydro One has earned or exceeded its allowed ROE on a consolidated basis over past
Slide 19: Distribution Segment Incentive Regulatory Construct
Distribution Segment Incentive Regulatory Construct • Filed March 31, 2017 under OEB’s Custom Incentive Rate Making model for 2018 – 2022 five year term • 2018 is considered “rebasing” year where a cost of service forward test year rate model is applied • Revenue requirement for each of the ensuing
Slide 20: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Significant Available Liquidity ($M) Strong Investment Grade Credit Ratings (LT/ST/Outlook) Shelf Registrations 250 Hydro One Inc. (HOI) Hydro One Limited HOL: Hydro One Inc. Universal Shelf3 S&P A / A-1/ negative1 $8B 2,300 926 DBRS A (high) / R-1 (low) / stable H
Slide 21: Equity Market Cap Overview
Equity Market Cap Overview • 595 million common shares outstanding, listed on Toronto Stock Exchange (TSX: H) • Equity market capitalization of ~$13.3 billion and public float of ~$7 billion • Equity market capitalization amongst the top 30 of all listed Canadian companies • Secondary offerings by P
Slide 22: Common Share Dividends
Common Share Dividends Key Points Dividend Statistics • Quarterly dividend of $0.22 per share ($0.88 Yield1 3.9% annualized) Annualized Dividend2,3 $0.88 / share • Targeted dividend payout ratio remains at 70% - 80% of net income (1) Based on closing share price on December 29, 2017 (2) Unless indic
Slide 23: Delivering Clean, Sustainable Energy
Delivering Clean, Sustainable Energy • Ontario was the first North American jurisdiction to fully eliminate coal electricity generation and leads Canada in wind and solar capacity • Recent five year Ontario Climate Change Action Plan will further accelerate province’s leadership in reduction of gree
Slide 24: Why Invest in Hydro One
Why Invest in Hydro One • One of the largest electric utilities in North America with significant scale and leadership position across Canada’s most populated province • Unique combination of pure-play electric power transmission and local distribution, with no generation or material exposure to com
Slide 25: Appendix
Appendix One of North America’s Largest Electric Utilities 24 TSX: H
Slide 26: Hydro One Limited – 4Q17 Financial Summary
Hydro One Limited – 4Q17 Financial Summary Fourth Quarter Full Year ($ millions) 2017 2016 % Change 2017 2016 % Change Revenue Transmission 379 373 1.6% $1,578 $1,584 (0.4%) Distribution 1,049 1,228 (14.6%) 4,366 4,915 (11.2%) Distribution (Net of Purchased Power) 387 370 4.6% 1,491 1,488 0.2% Other
Slide 27: Top Transmission Capital Projects Underway
Top Transmission Capital Projects Underway Development Projects: Project Name Location Type Anticipated Estimated Capital Cost In-Service Date Cost To-Date Clarington Transmission Station Oshawa area New transmission 2018 $267 million $223 million Southwestern Ontario station Supply to Essex County
Slide 28: 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 Director of Allbanc Split Corp., a mutual fund company and the Committee Chair), Bell Canada, and Sinai Health Systems (Vice-Chair). Formerly President form
Slide 29: 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 30: For More Information
For More Information Investor Relations Website: http://www.hydroone.com/InvestorRelations/ Investor Relations Contacts: Omar Javed Director, Investor Relations ojaved@hydroone.com 416 345 5943 One of North America’s Largest Electric Utilities 29 TSX: H