Toronto Hydro Corporation Releases its Fourth Quarter Financial Results

TORONTO, March 5, 2015 /CNW/ - Toronto Hydro Corporation (the "Corporation") has filed with Canadian securities regulators its audited Consolidated Financial Statements and related Management's Discussion and Analysis for the year ended December 31, 2014.  These documents are prepared in accordance with United States Generally Accepted Accounting Principles ("US GAAP"), including the application of rate-regulated accounting policies, presented in Canadian dollars.  Copies may be obtained from the Corporation or accessed through SEDAR's website www.sedar.com.

Selected Financial Highlights

(in millions of Canadian dollars)



Three Months Ended

 December 31

Year Ended

 December 31



2014

$


2013

$


2014

$


2013

$










Net income


23.7


29.3


112.5


121.2

Distribution and other revenue


154.7


192.6


615.8


635.2

Capital expenditures


168.0


151.9


588.4


450.4










  • Net income for the year ended December 31, 2014 was $112.5 million compared to $121.2 million for the same period in 2013.

  • Distribution and other revenue were lower at $615.8 million for the year ended December 31, 2014 compared to $635.2 million for the same period in 2013.

  • Capital expenditures were higher at $588.4 million for the year ended December 31, 2014 compared to $450.4 million for the same period in 2013.

"In 2014, we delivered strong financial results, following 2013 when regulatory decisions resulted in the recognition of additional net income.  We continued to have a disciplined focus on the need to address the substantial growth in Toronto, while renewing our aging assets to improve the reliability and resiliency of our distribution system", said Anthony Haines, President and Chief Executive Officer.

Corporate Developments

On July 31, 2014, Toronto Hydro-Electric System Limited ("LDC") filed a rate application with the Ontario Energy Board ("OEB") under the Custom Incentive Rate-setting mechanism, seeking approval of LDC's 2015 test year revenue requirement and corresponding electricity distribution rates effective May 1, 2015, and subsequent annual rate adjustments based on a custom index for the period commencing on January 1, 2016 and ending on December 31, 2019.  The rate application includes requests for approval of capital expenditures of approximately $2.5 billion over the 2015-2019 period.  The rate application also seeks approval to include in LDC's rate base capital amounts that were prudently incurred prior to 2015 which are subject to review by the OEB.  LDC's revenues over the period will be based on the existing rate base, capital expenditures and operating expenses ultimately approved by the OEB in the rate application plus cost of capital allowed by the OEB.

On January 16, 2014, the OEB approved LDC's request for disposition of the smart meter deferral account balances related to smart meter installations in 2008, 2009 and 2010 through two separate rate riders effective May 1, 2014.  The first rate rider relates to the recovery of $23.9 million, representing the cumulative revenue requirement net of recoveries from an existing smart meter rate rider.  This existing smart meter rate rider was discontinued when the new rate riders became effective.  The second rate rider relates to the recovery of $9.6 million, representing the forecasted 2014 incremental revenue requirement.

On September 16, 2014, the Corporation issued $200.0 million of 4.08% senior unsecured debentures due September 16, 2044 ("Series 10").  The Series 10 debentures bear interest payable semi-annually in arrears.  The net proceeds of the debentures were used to repay certain existing indebtedness of the Corporation and for general corporate purposes.  

On January 9, 2015, the Corporation filed a base shelf prospectus with the securities commissions or similar regulatory authorities in each of the provinces of Canada.  These filings allow the Corporation to make offerings of unsecured debt securities of up to $1.0 billion during the 25-month period following the date of the prospectus.

Selected Financial Highlights

(in millions of Canadian dollars)
















Year Ended

December 31








2014

$


2013

$











Net income







112.5


121.2

Distribution and other revenue







615.8


635.2

Operating expenses







267.6


272.0

Depreciation and amortization







160.8


172.8

Net financing charges







63.8


66.2

Income tax expense







12.6


4.3

Capital expenditures







588.4


450.4











Net income for the year ended December 31, 2014 was $112.5 million compared to $121.2 million for the comparable period in 2013.  The decrease in net income for the year ended December 31, 2014 was primarily due to lower distribution revenue ($23.7 million) and higher income tax expense ($8.3 million).  These variances were partially offset by lower depreciation and amortization expense ($12.0 million), lower operating expenses ($4.4 million), higher other revenue ($4.3 million), and lower net financing charges ($2.4 million).

Capital expenditures amounted to $588.4 million for the year ended December 31, 2014 compared to $450.4 million for the comparable period in 2013.  The most significant regulated capital expenditures incurred by LDC for the year ended December 31, 2014 related to spending on underground infrastructure ($134.3 million), overhead infrastructure ($115.6 million), Copeland Station ($82.1 million), the facilities consolidation program ($70.8 million), customer connections ($41.0 million), and reactive remediation work ($39.0 million).

Dividends amounting to $60.6 million were paid to the City of Toronto (the "City") during 2014.  The Corporation's Board of Directors also declared today dividends of $37.5 million.  The dividends consisted of $31.2 million with respect to net income for the year ended December 31, 2014, payable to the City on March 13, 2015, and $6.3 million with respect to the first quarter of 2015, payable to the City on March 31, 2015.

About Toronto Hydro Corporation

The Corporation is a holding company which wholly-owns two subsidiaries:

  • LDC - which distributes electricity and engages in Conservation and Demand Management activities; and

  • Toronto Hydro Energy Services Inc. - which provides street lighting services.

The principal business of the Corporation and its subsidiaries is the distribution of electricity by LDC.  LDC owns and operates an electricity distribution system, delivering electricity to approximately 740,000 customers located in the City.  It is the largest municipal electricity distribution company in Canada and distributes approximately 18% of the electricity consumed in the province of Ontario.

Forward-Looking Information

The Corporation includes forward-looking information in its news release within the meaning of applicable securities laws in Canada ("forward-looking information").  The purpose of the forward-looking information is to provide management's expectations regarding the Corporation's future results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes.  All forward-looking information is given pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. The words "seeking", "seeks", "will" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.  The forward-looking information reflects management's current beliefs and is based on information currently available to the Corporation's management.

The forward-looking information in this news release includes, but is not limited to, statements regarding the Corporation's plans and expectations regarding the current rate application under the Custom Incentive Rate-setting mechanism.  The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the outcomes regarding the current rate application under the Custom Incentive Rate-setting mechanism.

The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results or events to differ from current expectations include, but are not limited to, market liquidity and the quality of the underlying assets and financial instruments, the timing and extent of changes in prevailing interest rates, inflation levels, and legislative, judicial and regulatory developments that could affect revenues and the results of borrowing efforts.

All forward-looking information in the news release is qualified in its entirety by the above cautionary statements and, except as required by law, the Corporation undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

SOURCE Toronto Hydro Corporation

For further information: Chris Tyrrell, Executive Vice-President and Chief Customer Care and Conservation Officer: 416-542-3143; ctyrrell@torontohydro.com; JS Couillard, Executive Vice-President and Chief Financial Officer: 416-542-3166; jcouillard@torontohydro.com

RELATED LINKS
http://www.torontohydro.com

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