Hydro One Releases 2009 First Quarter Financial Results



    TORONTO, May 13 /CNW/ - Hydro One Inc. today released its 2009 first
quarter results with net income for the quarter of $177 million and revenues
of $1,303 million.
    "We remain focused on our efforts to build new transmission to deliver
clean and renewable generation into our system and maintain and enhance the
performance of our existing infrastructure," said Laura Formusa, President and
CEO, Hydro One Inc. "We continue to make progress on our Smart Meter program,
while applying new technologies prudently to drive efficiencies and
improvements in our business."

    
    The following are some of our key achievements in the first quarter:

    -   On March 3, 2009, we issued $300 million of 30-year notes at a coupon
        rate of 6.03% and a maturity date of March 3, 2039. In total, in the
        first quarter, we successfully raised $600 million of cost effective
        debt financing through our Medium-Term Note Program.

    -   We signed an agreement with Ontario-based Redline Communications
        Group Inc. for their WiMAX solution, which is designed to enable
        communications with smart meters and other advanced electricity
        distribution technologies, including remote meter reading and outage
        monitoring. To date, we have installed about 895,000 meters.

    -   In February, our subsidiary, Hydro One Networks Inc., and Toronto
        Hydro-Electric System Limited launched the Environmental Assessment
        process for a project to refurbish existing 115kV transmission
        infrastructure which serves midtown Toronto and areas to the west.
        The project will respond to steady load growth and the need to
        replace assets approaching end-of-life.

    -   We are seeking approvals from the Ontario Energy Board (OEB) to
        construct an additional transmission circuit in the Lower Mattagami
        area and new transmission facilities in the County of Oxford. The
        additional circuit in the Lower Mattagami area is required to connect
        new generation while the transmission line and station in the County
        of Oxford is required to improve the reliability in the Woodstock
        area.

    -   In February, Hydro One accepted an award from Colleges Ontario for
        significant achievements in advancing college education in Ontario.
        We received the award for our work in partnering with four Ontario
        colleges to develop curriculum for the future employees of the
        electricity transmission and distribution sector and our
        contributions to scholarships, program development and equipment over
        four years.

    -   Our subsidiary, Hydro One Brampton Networks Inc., received the 2008
        Local Distribution Company Performance Excellence Award. This award
        is presented to a member of the Electricity Distributors Association
        that has distinguished itself among its fellow members for
        performance excellence in occupational health and safety, operations,
        financial operations, conservation and community.

    -   In April 2009, the Employee Assistance Society of North America
        (EASNA) announced Hydro One as a recipient of the 2009 Award of
        Excellence. EASNA selects a Canadian and American company annually
        that has developed successful partnerships with Employee Assistance
        Providers to design and integrate a program that enhances employee
        well-being and enables the company to work towards a healthy and
        productive workplace.
    

    Net income of $177 million was higher by $20 million, or 13%, compared to
2008 first quarter results. This year over year increase was primarily due to
a reduction in our payments in lieu of corporate income taxes primarily
resulting from higher capital cost allowance deductions being available on our
information system and smart meter investments in excess of depreciation. In
addition, we experienced higher distribution tariff revenue associated with a
December 18, 2008 OEB decision. These increases were partially offset by the
impact of a one-time settlement credit in 2008 associated with the transfer of
pension assets to the Inergi LP pension plan following approval from the
Financial Services Commission of Ontario.
    Capital expenditures of $336 million in the quarter were higher by $125
million, or 59%, compared to the prior year. Expenditures to expand our
transmission system increased primarily as a result of a number of significant
inter-area network upgrade projects facilitating new generation or increased
transfer capability from other jurisdictions. These projects include our Bruce
to Milton Project; our Southwestern Ontario Capacitor Banks Project; and work
on our Cherrywood to Claireville Transformer Station connection. Our Bruce to
Milton Project, to connect wind generation and redeveloped nuclear sources in
the Huron-Grey-Bruce area, demonstrates our commitment to connect clean and
renewable generation. Expenditures to sustain our transmission system
increased as a result of refurbishment and replacement of end-of-life
equipment associated with various projects including our Claireville
Transformer Station project and our spare transformer purchase program.
Increased capital expenditures within our Distribution Business reflect
ongoing investments in our Smart Meter Program. We have also initiated some
programs to support the development of a smart grid that would transform the
distribution network.
    Total revenues for the first quarter of 2009 were $1,303 million, which
were $81 million, or 7%, higher than the same period last year. Higher
distribution revenues of $78 million were primarily impacted by purchased
power costs attributed to increases in the OEB's Regulated Price Plan for
residential and other eligible customers. Distribution revenues were
positively impacted by the December, 2008 OEB decision on distribution tariff
rates. These increases were partially offset by a reduction of revenues
associated with the recovery of a distribution-related regulatory account
which ceased March 31, 2008. Transmission revenues decreased by $2 million
compared to the prior year. The average peak demand was slightly lower than
the same period last year, resulting in a marginal effect on our transmission
revenues.
    Net cash from operating activities was $185 million in the first quarter
of 2009. During the quarter, we paid dividends and recorded payments in lieu
of corporate income taxes to the Province of Ontario in the amount of $108
million and $21 million, respectively.

    
    CONSOLIDATED FINANCIAL HIGHLIGHTS AND STATISTICS

    Three months ended March 31
    (Canadian dollars in millions)        2009      2008    Change  % Change
    -------------------------------------------------------------------------

    Revenues                             1,303     1,222        81         7
    Purchased power                        666       596        70        12
    Operating costs                        367       351        16         5
    Net income                             177       157        20        13
    Net cash from operations               185       229       (44)      (19)

    STATISTICS

    Average annual Ontario 60-minute
     peak demand (MW)(1)                22,186    22,275       (89)        -
    Distribution - units distributed
     to our customers (TWh)(1)             8.4       8.5      (0.1)       (1)
    -------------------------------------------------------------------------
    (1) System-related statistics are preliminary
    

    Hydro One Inc. is a holding company that operates through its
subsidiaries in electricity transmission and distribution and telecom
businesses. One of its subsidiaries, Hydro One Networks Inc., operates one of
the largest transmission and distribution systems in North America. Hydro One
Inc. is wholly owned by the Province of Ontario.
    Hydro One's 2009 First Quarter Consolidated Financial Statements and
Management's Discussion and Analysis can be accessed through the following
link:
    www.hydroone.com/financials





For further information:

For further information: Laura Cooke, Director, Corporate
Communications, (416) 345-5323; Ali R. Suleman, Vice President and Treasurer,
(416) 345-6126; Hydro One Investor Relations, (416) 345-6867


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