Hydro One Reports Fourth Quarter Results

The Company continues to execute on its capital plans in support of economic growth in Ontario and the transition to a clean energy future. 

TORONTO, Feb. 13, 2024 /CNW/ – Hydro One Limited (Hydro One or the Company) today announced its financial and operating results for the fourth quarter ended December 31, 2023.  

Fourth Quarter Highlights 

Fourth quarter basic earnings per share (EPS) of $0.30 was comparable to EPS of $0.30 for the same period in 2022. For the full year, basic EPS of $1.81 was 3.4% higher than basic EPS of $1.75 in 2022.
EPS for the quarter was unchanged year-over-year largely due to higher average monthly peak demand and energy consumption, as well as higher revenues resulting from Ontario Energy Board (OEB)-approved 2023 transmission rates, offset by higher financing charges and depreciation expense, as well as the impact of regulatory adjustments including the recognition of Conservation and Demand Management (CDM) revenues in the prior year and higher earnings sharing in the current period.
In line with incentive rate-making and for the benefit of Ontario ratepayers, Hydro One rebased productivity as part of the Joint Rate Application (JRAP). For 2023, Hydro One achieved $114 million of annual productivity savings. These efficiencies coincide with the current rate application period to date.
Hydro One continued to expand its network of strategic partnerships through the signing of a partnership agreement with Five Nations Development Inc., a wholly owned subsidiary of Five Nations Energy Inc., to work together to maximize Indigenous participation in the energy sector.
Hydro One was recognized as one of Canada’s Best Employers for 2024 by Forbes for the 9th consecutive year.
Hydro One and the Canadian Council for Aboriginal Business (CCAB) announced the ten recipients of the Hydro One Indigenous Entrepreneurship Grant.
During the quarter, Hydro One Inc., a subsidiary of the Company, priced and issued $900 million aggregate principal amount of Medium-Term Notes (MTN), under the Company’s Sustainable Financing Framework (Framework). Subsequent to the quarter end, Hydro One Inc. issued an additional $800 million aggregate principal amount of MTN under the Framework.
Subsequent to quarter end, Hydro One restored power to more than 125,000 customers during a January storm.
Subsequent to quarter end, the Company announced that Chris Lopez, Chief Financial and Regulatory Officer intends to step down to pursue other opportunities as of June 30, 2024.
The Company’s capital investments and in-service additions for the year were $2,531 million and $2,324 million, respectively, compared to $2,132 million and $2,267 million in 2022.
Quarterly dividend declared at $0.2964 per share, payable March 28, 2024.

“Our approach to building critical transmission infrastructure to meet the growing electricity demand in Ontario continues to be underpinned by a genuine commitment to developing strategic partnerships with First Nations, communities, government and industry,” said David Lebeter, President and Chief Executive Officer of Hydro One. “This commitment remains at the heart of everything we do and demonstrates our efforts to building mutually beneficial relationships that benefit from our strategic investments in energy infrastructure.” 

Selected Consolidated Financial and Operating Highlights 

Key Financial Highlights        

2023 Fourth Quarter Highlights

The Company reported net income attributable to common shareholders of $181 million during the quarter, compared to $178 million in the same period of 2022. This resulted in EPS of $0.30, which is consistent with the prior year.

Revenues of $1,979 million for the fourth quarter were $117 million higher than revenues for the fourth quarter of 2022. Revenues, net of purchased power1 of $989 million for the fourth quarter were $22 million higher than revenues, net of purchased power1 for the fourth quarter of 2022. The increase, when adjusted for net income neutral items, is mainly attributable to higher average monthly peak demand and energy consumption, as well as higher revenues resulting from OEB-approved 2023 transmission rates, partially offset by regulatory adjustments, including the recognition of CDM revenues following receipt of the JRAP Decision in the prior year and higher earnings sharing in the current period.

Operation, maintenance and administration (OM&A) costs in the fourth quarter of 2023 were slightly higher than the prior year which, once adjusted for net income neutral items, primarily results from an increase in forecast environmental expenditures provisioned in the current period, partially offset by lower corporate support costs primarily attributable to higher capitalized overheads associated with volume of capital activity.

Financing charges in the fourth quarter of 2023 were higher than the prior year primarily due to an increase in the weighted-average interest rate on long-term debt.

Depreciation, amortization and asset removal costs for the fourth quarter of 2023 were higher than the same period of the prior year, primarily due to gains on the disposal of fixed assets recognized in the prior year, as well as higher depreciation resulting from the growth in capital assets as the Company continues to place new assets in-service, consistent with its ongoing capital investment program.

Income tax expense for the fourth quarter of 2023 was lower than the prior year which, once adjusted for net income neutral items, was primarily due to higher deductible timing differences.

Hydro One continues to invest in the reliability and performance of Ontario’s electricity transmission and distribution systems by addressing aging power system infrastructure, facilitating connectivity to new load customers and generation sources, and improving service to customers. The Company made capital investments of $745 million during the fourth quarter of 2023 and placed $975 million of new assets in-service.

2023 Annual Highlights

For the twelve months ended December 31, 2023, the Company reported net income attributable to common shareholders of $1,085 million compared to $1,050 million in 2022, an increase of $35 million compared to the prior year. This resulted in EPS for the period of $1.81 compared to EPS of $1.75 in 2022. Annual results were primarily impacted by the same factors as noted above.  

For the full year, the Company placed $2,324 million of assets into service in 2023 compared to $2,267 million in 2022.

Selected Operating Highlights 

Hydro One and Five Nations Development Inc., a wholly owned subsidiary of Five Nations Energy Inc., announced the signing of an initial partnership agreement to work together to meet the growing electricity demands in northeastern Ontario while increasing Indigenous participation in the energy sector. A partnership between the two Ontario-based utilities further connects Hydro One and First Nation interests in the planning, development, and building of future transmission line projects. It is an innovative approach targeting specific areas for economic advancement with an initial focus in northeastern Ontario.

Hydro One and the CCAB announced the ten recipients of the Hydro One Indigenous Entrepreneurship Grant. Grant recipients include Indigenous businesses from across Ontario, providing services such as housing, construction, virtual reality and web development, cultural awareness training, graphic and commercial art, and family reunification.

Hydro One restored power to more than 125,000 customers affected by the damaging high winds that affected parts of western, southern, central and eastern Ontario in January 2024. The outages were largely caused by severe winds bringing down trees and branches onto distribution lines.

During the fourth quarter, the Company’s wholly-owned subsidiary, Hydro One Inc. raised $400 million aggregate principal amount of 5.54% MTN, Series 57, due 2025. Hydro One Inc. also issued $500 million aggregate principal amount of 4.85% MTN, Series 58, due 2054. Subsequent to the quarter end, the Company issued $800 million aggregate principal amount of MTN consisting of $550 million aggregate principal amount of 4.39% MTN, Series 59, due 2034 and $250 million aggregate principal amount of 3.93% MTN, Series 53, due 2029. Each of the offerings represented additional issuances of MTN pursuant to the Framework. The Company intends to allocate an amount equal to the net proceeds from the issuances to finance and/or refinance, in whole or in part, new and/or existing eligible green and social projects that meet the eligible criteria described in the Framework. 

In January 2024, Hydro One published its inaugural Sustainable Bond Allocation Report outlining the use of proceeds from its $1.05 billion of sustainable bonds issued in 2023 under its Sustainable Finance Framework. The report details the full allocation of proceeds to Eligible Projects in the “Clean Energy”, “Energy Efficiency”, “Clean Transportation” and “Biodiversity Conservation” green categories and the “Socio-economic Advancement of Indigenous Peoples” social categories. A copy of the report is available on Hydro One’s website at www.hydroone.com/investor-relations/sustainable-financing.

Common Share Dividends

Following the conclusion of the fourth quarter, on February 12, 2024, the Company declared a quarterly cash dividend to common shareholders of $0.2964 per share to be paid on March 28, 2024 to shareholders of record on March 13, 2024.

Supplemental Segment Information

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