Hydro One Releases 2011 Year-End Financial Results
Feb 10, 2012, 17:46 ET
TORONTO, Feb. 10, 2012 /CNW/ - Hydro One Inc. today released its 2011 year-end results with net income for the year of $641 million and revenues of $5,471 million.
"In 2006, Hydro One embarked on a multi-year capital program to rebuild and reinvest in an upgraded electricity transmission and distribution system. Throughout 2011, Hydro One continued to make prudent investments to enhance reliability and facilitate the connection of clean energy. We met our financial targets and improved our productivity," said Laura Formusa, President and CEO of Hydro One. "Our employees continue to work for our customers in a safe and efficient manner to allow us to progress in achieving our strategic goals and increase customer satisfaction."
The following are some of our key achievements for 2011:
- Throughout the year, we achieved savings in support and administration costs, including business telecom and data expenses and from the implementation of modules in our entity-wide information system replacement and improvement project. We continued to focus on productivity as we developed our new Customer Information System (CIS), the final significant phase of the system improvement and replacement project. At the completion of the CIS project, we anticipate achieving significant cost savings and enhanced customer satisfaction through a variety of methods such as reduced call times and first call resolution of issues.
- During 2011, we invested over $1,400 million in capital to improve system reliability, address an aging power system, facilitate the connection of new generation and improve service to our customers. More than $1,350 million of capital assets were completed during the year, improving the service we provide our customers.
- During the last quarter, we placed complex Static Var Compensators (SVCs) into service at our Kirkland Lake, Nanticoke and Detweiler transformer stations. SVCs are connected to the transmission system to regulate the flow of electricity. The SVC at Kirkland Lake, together with the SVC put into service late last year at our Porcupine Transformer Station, will increase the North-South interface transfer capability to access available northern generation while those at Nanticoke and Detweiler will support increased generation from the Bruce Nuclear facility in the short-term and will enhance the transfer capability between Southwestern Ontario and the Greater Toronto Area in the longer term.
- Our Bruce to Milton Transmission Reinforcement Project is anticipated to be in-service in 2012 allowing our customers to receive approximately 3,200 MW of refurbished nuclear and new, renewable power generated in the Huron-Grey-Bruce area.
- We successfully met the Ontario Energy Board's (OEB) target for converting more than one million smart meter customers to time-of-use pricing by the end of June 2011. In addition, our Advanced Distribution System Project earned us the Utilities Telecom Council Apex Award recognizing our superior achievement in innovation for our central role in securing wireless spectrum for use by the utility sector in Canada. Also, we earned the Utilimetrics Excellence in Project Management Award that recognizes special instances of how utilities use their communication systems and expertise to service their communities.
- During the year, we connected more than 7,600 small renewable generation projects to our distribution system through the Ontario Power Authority's MicroFIT program, representing approximately 72 MW of generation.
- Our employees worked safely and efficiently to restore power to our customers through major storms in late April and early June and forest fires in northern Ontario in July.
- During the year, we successfully raised $700 million in cost-effective debt financing through our Medium-Term Note Program. In January 2012, we successfully issued a further $300 million.
- We ranked as one of Canada's top 50 Corporate Citizens in Corporate Knights Magazine's annual ranking of the best 50 corporate citizens in the country. Corporate Knights Inc. is an independent Canada-based media company that publishes the world's largest circulation magazine focused on corporate responsibility.
Net income of $641 million was higher than our comparable 2010 results by $50 million, or 8%. Net income reflects OEB rate decisions that allowed for, among other things, the recovery of investments from prior years that are now in-service. New assets in service include investments to address our aging critical infrastructure and the supply mix objectives for generation, including off-coal initiatives, and investments in support of the Green Energy Act. Higher revenues were partially offset by higher operating expenditures including those related to our non-recoverable work to increase short circuit and/or transformer capacity at some of our transmission stations to enable the connection of small renewable projects and by a higher effective tax rate.
Capital expenditures of $1,447 million were lower by $123 million compared to the prior year. Capital expenditures on our transmission system were $126 million, or 13% lower than 2010. This reduction was attributable to lower expenditures to expand our transmission system compared to last year's substantial completion of a number of multi-year inter-area network and local area supply projects. We continue to invest in a number of significant on-going inter-area network upgrade projects to facilitate new generation. During the year we were able to put a number of projects into service, including SVCs at three of our transformer stations. Expenditures to sustain our existing transmission system were also lower than last year. Capital expenditures within our Distribution Business were comparable to last year. Expenditures to expand our distribution system were lower due to the reduction in smart meter installations year-over-year, offset by increased expenditures to sustain our system resulting from storm activity during the year as well as expenditures on our customer information system as part of our entity-wide information system replacement and improvement project.
Total revenues of $5,471 million were $347 million, or 7%, higher than 2010. Our transmission revenues were $1,389 million, $82 million higher than last year primarily due to OEB-approved transmission tariff rate increases that were effective January 1, 2011. Our distribution revenues were $4,019 million, $265 million higher than the comparative period. This increase reflects the recovery of purchased power costs of $154 million and the impact of OEB rate decisions that were effective May 1, 2010 and January 1, 2011.
Net cash from operating activities was $1,404 million in 2011. During the year, we paid $168 million in dividends to our shareholder, the Province of Ontario, and $80 million in payments in lieu of corporate income taxes to the Ontario Electricity Financial Corporation.
CONSOLIDATED FINANCIAL HIGHLIGHTS AND STATISTICS
|Year ended December 31|
| (Canadian dollars in millions,
except as otherwise noted)
|2011||2010||$ Change||% Change|
|Net cash from operations||1,407||1,164||243||21|
|Average annual Ontario 60-minute peak demand (MW)1||21,166||21,572||(406)||(2)|
|Distribution - units distributed to our customers (TWh)1||29.2||29.1||0.1||-|
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 Inc.'s 2011 Annual Consolidated Financial Statements and Management's Discussion and Analysis can be accessed through the following link:
For further information:
Director, Corporate Communications
Ali R. Suleman
Vice President and Treasurer
Hydro One Investor Relations
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