Toronto Hydro Corporation Releases its First Quarter Financial Results

TORONTO, May 15, 2014 /CNW/ - Toronto Hydro Corporation (the "Corporation") announced today that it has filed with Canadian securities regulators its Interim Consolidated Financial Statements and related Management's Discussion and Analysis for the three months ended March 31, 2014, 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, unaudited)
							Three Months Ended March 31
							2014 $		2013 $
Net income							22.5		18.5
Distribution and Other Revenue							154.8		144.6
Capital Expenditures							90.6		82.5

• Net income for the three months ended March 31, 2014 was $22.5 million compared to $18.5 million for the same period in 2013.
• Distribution and Other Revenue were higher at $154.8 million compared to $144.6 million for the same period in 2013.
• Capital Expenditures were higher at $90.6 million compared to $82.5 million for the same period in 2013.

"Our strong financial results in the first quarter represent the continuation of the solid financial framework we implemented following the approval by the Ontario Energy Board ("OEB") of our electricity infrastructure renewal strategy", said Anthony Haines, President and Chief Executive Officer.

Corporate Developments

On May 10, 2012, Toronto Hydro-Electric System Limited ("LDC") filed an application for electricity distribution rates for 2012, 2013, and 2014 using the Incentive Regulation Mechanism framework, including the filing of an Incremental Capital Module ("ICM") application.  On April 2, 2013, the OEB approved new rates for LDC effective June 1, 2013, which reflected approved capital expenditures amounting to $203.3 million for 2012 and $484.2 million for 2013.  In a separate decision rendered on December 19, 2013, the OEB approved capital expenditures amounting to $398.8 million for 2014, the approved recovery of which will be included as part of LDC's 2015-2019 rate application.  As well, in 2015, LDC will be allowed to seek recovery for capital spent in 2012 through 2014 that has not yet been approved by the OEB in the current ICM decision due to the standard operation of the regulatory model.

On January 16, 2014, the OEB approved LDC's requested disposition of the smart meter deferral account balances, permitting the recovery of $23.9 million and $9.6 million through two separate rate riders effective May 1, 2014.

On May 22, 2013, the Corporation celebrated the official groundbreaking at Copeland Station.  On February 1, 2014, the tunnel boring machine arrived on-site and began tunnelling to connect the new infrastructure to the grid.  As at March 31, 2014, the cumulative capital expenditures on the Copeland Station project amounted to $67.8 million of which $7.4 million was recorded in 2014.  The $67.8 million in costs incurred relates to land and building ($25.5 million), capital contributions to Hydro One ($23.0 million), and equipment, tunnel and other ($19.3 million).  The total capital expenditures required to complete Copeland Station are expected to be approximately $195.0 million.

Selected Financial Highlights (in millions of Canadian dollars, unaudited)
						Three Months Ended March 31
						2014 $		2013 $
Net income						22.5		18.5
Distribution and other revenue						154.8		144.6
Operating expenses						74.3		70.2
Depreciation and amortization						38.8		34.7
Net financing charges						15.6		18.6
Income tax expense						3.6		2.6
Capital expenditures						90.6		82.5

Net income for the three months ended March 31, 2014 was $22.5 million compared to $18.5 million for the comparable period in 2013.  The increase in net income for the three months ended March 31, 2014 was primarily due to higher distribution and other revenue ($10.2 million) and lower net financing charges ($3.0 million).  These favourable variances were offset by higher operating expenses ($4.1 million), a higher depreciation and amortization expense ($4.1 million), and a higher income tax expense ($1.0 million). 

Capital expenditures amounted to $90.6 million for the three months ended March 31, 2014 compared to $82.5 million for the comparable period in 2013.  The most significant regulated capital expenditures incurred by LDC for the three months ended March 31, 2014 related to spending on overhead infrastructure ($17.7 million), underground infrastructure ($13.2 million), customer connections ($10.1 million), reactive remediation work ($9.1 million), and Copeland Station ($7.4 million).

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, which delivers electricity to approximately 733,000 customers located in the City of Toronto.

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 "expected", "seek", 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 the news release includes, but is not limited to, statements regarding the Corporation's plans and expectations regarding future rate applications and the expected capital expenditures required to complete Copeland Station.  The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the future course of the economy and financial markets, the receipt of applicable regulatory approvals and requested rate orders, the level of interest rates and the Corporation's ability to borrow.

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, 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

Chris Tyrrell, Executive Vice-President, Customer Care and Chief Conservation Officer: 416-542-3143; [email protected]; JS Couillard, Executive Vice-President and Chief Financial Officer: 416-542-3166; [email protected]