Slide 1: Investor overview
Investor overview Post first quarter 2023
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 First Quarter Highlights • First quarter basic earnings per share (EPS) of $0.47 was 9.6% lower compared to EPS of $0.52 for the same period in 2022. • EPS for the quarter was lower year-over-year largely due to higher operation, maintenance and administra
Slide 4: The value of Hydro One
The value of Hydro One About the company How we did in 2022 Why invest Transmission Distribution Other Transmission & Distribution Stable Operations Revenues, Net of Purchased Power4 Total Assets 1% 2% Stable and growing cash flows ~30,000 circuit KMs of with 99% of overall revenues fully transmissi
Slide 5: A look at the organization
A look at the organization Corporate structure Hydro One Ltd. Public company TSX:H Hydro One Inc. Public debt issuer Hydro One Hydro One Acronym Remote Networks Inc. Solutions Inc. Communities Inc. Rate-regulated business (99% of revenue) Non-rate-regulated business Hydro One • Investor Overview • 5
Slide 6: Executive leadership team
Executive leadership team A leadership team with strong operational experience committed to achieving efficiencies at Hydro One David Lebeter President and CEO Brad Bowness Teri French Chris Lopez Andrew Spencer Megan Telford Chief Information Officer EVP, Operations & EVP, Chief Financial & EVP, Ca
Slide 7: Hydro One’s strategy
Hydro One’s strategy Hydro One • Investor Overview • 7
Slide 8: Achievements and efficiencies
Achievements and efficiencies Paving New Paths in Productivity Savings ($M) 2022 373.6 Generated productivity savings of $373.6 million in 2022 2021 343.9 comprised of $188.9 million in OM&A and $184.7 million in 2020 286.0 capital and totaling approximately $1.5 billion dollars since 2015 2019 202.
Slide 9: The regulated business
The regulated business Transmission Distribution • Transmission produces reliable cash flow with low • Distribution is a stable, rate-regulated business volatility under the OEB Custom IR framework operating under OEB’s Custom IR framework • OEB-approved 5-year Custom IR application for Transmission
Slide 10: Electric Local Distribution Company (LDC) consolidation
Electric Local Distribution Company (LDC) consolidation • Hydro One is the largest LDC in Ontario; 52 LDCs are Hydro One Recently completed transactions transmission or distribution customers Consolidator of Choice Orillia Power Distribution Corporation • Hydro One has significant scale in Ontario a
Slide 11: Growth opportunities for the telecom business
Growth opportunities for the telecom business focus on value-added services Network connectivity and access in order to improve the efficiency and Network & security of Client data communications Internet • Secure SD-WAN • High Performance Network Broadband Connectivity • Internet Transit • Data Cen
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 in partnership with our customers and community stakeholders to build a brighter future for all. In 2021, we made good progress on advancing our performance in our pri
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 and community stakeholders to build a brighter future for all. A Sustainable Future for All • 36% of Board of Directors are women,
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) 2,574 2,528 2,489 2,489 2,476 ~6% 30,910 29,510 1,027
Slide 15: Guidance range
Guidance range $2.26 $2.05 $1.75 $0.05 $0.03 $1.67 $0.06 $1.61 2022 EPS 2022 Gain on Sale of 2022 CDM Revenues 2022 Normalized for Normalizing for 2023 2022 Normalized EPS 2027 Surplus Property one-time items Rebase 1 1) Normalizing for 2023 rebase includes 100 basis points over-earn. 2) EPS growth
Slide 16: Capital investment driving rate base growth
Capital investment driving rate base growth Chatham to Lakeshore Lennox Transmission Station East-West Tie 1 2 3 Transmission Line Circuit Breaker Replacement Station Expansion Estimated Total Project Cost: $268 million Estimated Total Project Cost: $152 million Estimated Total Project Cost: $191 mi
Slide 17: Constructive rate regulator
Constructive rate regulator 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 segments • Reduc
Slide 18: JRAP Expenditure
JRAP Expenditure Agreement on ~$11.8 billion in capital expenditure reflects a balanced settlement for all stakeholders1 2023- 2027 Capital ($M) 2023 Operating, Maintenance, and Administrative ($M) -5% +3% -2% -10% -8% +3% -12% -2% 7,258 7,639 598 629 616 6,877 5,297 5,575 443 434 4,894 421 Transmis
Slide 19: JRAP – Segmented incentive regulatory construct
JRAP – Segmented incentive regulatory construct Distribution Transmission OEB Approved1 OEB Approved1 2023-2027 2023-2027 Rebasing Year 2023 2023 Custom Revenue Cap Index (RCI) by Component (%) Custom Revenue Cap Index (RCI) by Component (%) (A) Inflation Adjustment Factor (A) Inflation Adjustment F
Slide 20: Reducing our customer bills
Reducing our customer bills Since 2017, typical Hydro One residential customer bills have decreased on average from $165 to $133 per month Pre-Fair Hydro Plan 2017 Monthly Bill- $165 Post Ontario $90 $8 Energy Rebate 2022 Monthly % of Bill $32 Bill- $133 Taxes and OCEB1 14% Electricity Charges 52% $
Slide 21: Strong balance sheet and liquidity
Strong balance sheet and liquidity (as at March 31, 2023) 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 250 Hydro One Ltd. (HOL) Hydro One Inc
Slide 22: Hydro One Sustainable Financing Framework Overview
Hydro One Sustainable Financing Framework Overview Under the Framework, Hydro One may issue Sustainable, Green or Social bonds, loans or commercial paper 1. Use of Proceeds 3. Management Of Proceeds • Clean Energy Process for the evaluation and selection of • Net proceeds will be deposited to Hydro
Slide 23: Equity market cap overview
Equity market cap overview Approximate Ownership Equity Index Inclusions Approximate Geographic of Public Float2 Dispersion of Public Float S&P/TSX Composite S&P/TSX Composite FTSE All-World 17% Index Dividend Index (Canada) 27% Canada S&P/TSX 60 Index S&P/TSX Composite MSCI World (Canada) High Divi
Slide 24: Common share dividends
Common share dividends Key Points A Growing and Sustainable Dividend4 • Quarterly dividend declared at $0.2964 per common share ($1.1856 annualized) • Targeted dividend payout ratio remains at 70% - 80% of net income 0.13 • Attractive and growing dividend supported by stable, 1.1051 regulated cash f
Slide 25: Appendix
Appendix
Slide 26: JRAP - Investments: Transmission
JRAP - Investments: Transmission Transmission Capital Maintaining the System $M Net 1,600 • Reinvesting in existing infrastructure to maintain 1,500 1,362 1,389 1,373 1,382 38 1,370 the health of the system, sustain performance and 1,400 75 63 53 84 98 107 90 95 address safety and environmental risk
Slide 27: JRAP - Investments: Distribution
JRAP - Investments: Distribution $M Net Distribution Capital New Infrastructure: 1,100 1,040 Modernize infrastructure to detect, 1,000 949 993 991 repair & restore power. 900 921 439 800 Significant investments to accommodate 315 357 437 442 increase in regional load demand 700 (e.g. in the Leamingt
Slide 28: JRAP - Cost of plan
JRAP - Cost of plan1 Investment Cost Average Residential Monthly Bill 3.5% 3.0% 0.7% A typical residential 2.5% customer’s monthly bill will increase by an average of 2.0% 0.7% 0.4% $3.12 1.5% 0.6% 2.5% 1.0% 0.3% 1.6% 1.7% each year over the 0.5% 0.9% 0.8% five-year period. 0.0% 2023 2024 2025 2026
Slide 29: 1Q23 Financial summary
1Q23 Financial summary First Quarter Year End (millions of dollars, except EPS) 2023 2022 % Change 2022 2021 % Change Revenues Transmission 555 519 6.9% 2,077 1,824 13.9% Distribution 1,509 1,517 (0.5%) 5,660 5,359 5.6% Distribution Revenues (Net of Purchased Power)2 499 503 (0.8%) 1,936 1,780 8.8%
Slide 30: 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 31: Independent board of directors
Independent board of directors Timothy Hodgson, MBA, FCPA, ICD.D Corporate Director, Chair of Hydro One Limited and the New Self-Regulatory Organization of Canada. Director Dialogue Health Technologies, Property and Casualty Insurance Compensation Corporation and the Ontario Teachers’ Pension Plan.
Slide 32: 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 33: Contact
Contact Omar Javed Vice President, Investor Relations omar.javed@HydroOne.com (416) 345-5943 HydroOne.com/InvestorRelations