Hydro One Releases 2012 First Quarter Financial Results (US GAAP)

TORONTO, May 10, 2012 /CNW/ - Hydro One Inc. today released its 2012 first quarter results with net income for the quarter of $210 million and revenues of $1,468 million.

"We count on our people to deliver reliable electricity and excellent value for money to all customers of electricity across Ontario," said Laura Formusa, President and CEO, Hydro One. "Our staff demonstrated their commitment to our customers by restoring power to more than 70,000 who were impacted by late winter storms in March and by putting into service approximately $170 million of new assets which will improve reliability, including those related to our Woodstock Reinforcement Project."

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

• During the first quarter, we invested $317 million in capital to improve system reliability, address an aging power system, facilitate the connection of new clean generation and improve service to our customers.
  
  
• Our crews and our Ontario Grid Control Centre worked quickly and safely to restore power to over 70,000 customers during a severe storm in early March.
  
  
• We continued to invest in the education and training of our future workforce by making a second $3 million contribution to four Ontario colleges.  These funds support scholarships, curriculum development, co-op placements and equipment to educate the next generation of energy professionals.
  
  
• In January, we launched the Hydro One FNMI Award, an academic scholarship granted annually to two First Nations, Métis or Inuit students to support their post-secondary education in power-related studies. The recipients of the award are offered a developmental work term at Hydro One.
  
  
• In March, we hosted an international delegation observing Ontario's leadership position in advancing a more modern and "smarter" electricity distribution system. We are helping Ontario solidify its leadership position by prudently investing in the technology, people, and processes to modernize the electricity system for the benefit of our customers.
  
  
• During the quarter, we connected 800 small renewable generation projects to our distribution system through the Ontario Power Authority's MicroFIT program.  This brings our total connections to more than 8,400.

Net income of $210 million for the quarter was slightly lower than our comparable 2011 results by $2 million, or 1%.  During the first quarter of 2012, our net revenues were impacted by unseasonably warm weather resulting in decreased transmission peak demands and lower distribution consumption.  In addition, our net income reflects higher depreciation and amortization costs, resulting from our placement of new assets in service consistent with our increased capital work program.  These impacts were partially offset by new OEB-approved transmission tariff rates effective January 1, 2012 that will support our aging critical infrastructure and the supply mix objectives for generation, including off-coal initiatives and investments in support of the Green Energy Act.  Our net income was also positively impacted by a lower statutory income tax rate that became effective January 1, 2012.

Capital expenditures of $317 million were $22 million, or 7% higher than the first quarter of 2011.  Within our Transmission Business, we made investments related to the refurbishment and replacement of end-of-life equipment at our transformer stations to improve system reliability within our existing transmission system.  We also continued to invest in a number of significant and on-going inter-area network upgrade projects to facilitate new generation.  Within our Distribution Business, we continued to invest in our Customer Information System, the next phase of our entity-wide information system replacement and improvement project.

Total first quarter 2012 revenues of $1,468 million were $8 million, or 1%, higher than the same period last year. Our transmission revenues were $361 million, $10 million higher than last year, primarily due to the OEB-approved transmission tariff rate increases that were effective January 1, 2012. This increase was partially offset by a reduction of revenues associated with lower average monthly Ontario 60-minute peak demand given milder weather this year. Our distribution revenues were $1,091 million in the quarter, $2 million lower than the comparative period.  This decrease primarily reflects lower energy consumption resulting from this year's milder weather, partially offset by higher recoveries of purchased power costs.

Net cash from operating activities was $237 million in the first quarter of 2012. During the quarter, we paid dividends to the Province of Ontario of $281 million and recorded a provision for payments in lieu of corporate income taxes to the Ontario Electricity Financial Corporation in the amount of $32 million.

CONSOLIDATED FINANCIAL HIGHLIGHTS AND STATISTICS

Three months ended March 31
(Canadian dollars in millions, except as otherwise noted) US GAAP ^2	2012	2011	$ Change	% Change
Revenues	1,468	1,460	8	1
Purchased power	729	719	10	1
Operating costs	414	406	8	2
Net income	210	212	(2)	(1)
Net cash from operating activities	237	240	(3)	(1)
Average Ontario 60-minute peak demand (MW)^1	20,712	21,757	(1,045)	(5)
Distribution - units distributed to our customers (TWh)^1	7.8	8.3	(0.5)	(6)

¹ System-related statistics are preliminary
² United States Generally Accepted Accounting Principles

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 2012 First Quarter Consolidated Financial Statements and Management's Discussion and Analysis can be accessed through the following link:

www.hydroone.com/financials

 

Daffyd Roderick
Director, Corporate Communications
416-345-5828

Ali R. Suleman
Vice President and Treasurer
416-345-6126

Hydro One Investor Relations
416-345-6867