TORONTO, Aug. 12 /CNW/ - Hydro One Inc. today released its second quarter
results with net income of $259 million and revenues of $2,393 million for the
six months ended June 30, 2009.
"We are pleased with our second quarter performance," said Laura Formusa,
President and CEO, Hydro One Inc. "We remain focused on improving
productivity, while strengthening our core transmission and distribution
business."The following are some of our recent key achievements:
- In total, in the first six months of the year, we successfully raised
$600 million of cost effective debt financing through our Medium-Term
Note Program.
- On July 16, 2009, we successfully issued $300 million of 31 year
notes under our Medium-Term Note Program. The notes mature on July
16, 2040 and have a coupon rate of 5.49%.
- On July 27, 2009, we filed a base shelf prospectus to renew our
Medium-Term Note Program for another 25 months. The maximum
authorised principal amount of medium-term notes issuable under this
program is $3 billion, all of which currently remains available until
August 2011.
- On July 13, 2009, our subsidiary Hydro One Networks Inc., filed a
cost of service application for 2010 and 2011 distribution rates. The
application includes investments in the distribution system necessary
to achieve our company's objectives regarding safety, regulatory and
environmental compliance, reliability, and customer satisfaction.
Further, this application includes our distribution investment plan
to enable renewable generation consistent with the Green Energy and
Green Economy Act, 2009.
- We were recognized by Corporate Knights Magazine as the top Corporate
Citizen in Canada. The ranking is based on specific indicators
including diversity, pension plan quality and health, Board of
Directors independence and aboriginal relations.
- Our smart meter program reached the key milestone of one million
smart meters installed in the homes and businesses of customers. This
is one of the largest smart meter deployments by a utility in North
America. We expect our customers will start to convert to time-of-use
pricing in 2010.
- Our customers have achieved annual energy savings of more than 400
million kilowatt-hours. This is enough electricity to power
approximately 35,000 homes for a year resulting in greenhouse gas
emission savings of more than 260,000 tonnes of CO(2). We have
enlisted about 1.5 million participants in our energy conservation
efforts to reduce peak demand, shift consumption to off-peak periods,
and retrofit or install equipment and systems using more energy-
efficient technologies.Net income was $82 million in the second quarter, lower by $16 million,
or 16%, compared with the second quarter of 2008, and $259 million
year-to-date, representing a $4 million, or 2%, increase over the prior year.
In the quarterly and year-to-date periods, net income was impacted by higher
operation, maintenance and administration expenditures related to work
programs necessary to sustain our transmission and distribution systems. On a
year-to-date basis, operation, maintenance and administration expenditures
were further impacted, in comparison to the prior year, by a one-time
settlement credit in the first quarter of 2008 associated with the transfer of
pension assets to the Inergi LP pension plan. The impact to net income of
increased operation, maintenance and administration requirements on a
year-to-date basis was more than offset by higher distribution tariff revenues
associated with the December 18, 2008 and May 13, 2009 Ontario Energy Board
(OEB) rate decisions in support of necessary work programs, combined with a
reduction in our payments in lieu of corporate income taxes, primarily
resulting from higher capital cost allowance deductions being available on our
information system and smart meter investments.
Capital expenditures of $719 million for the first six months were higher
by $205 million, or 40%, compared to the previous year. Expenditures to expand
our transmission system increased primarily as a result of a number of
significant inter-area network upgrade projects facilitating new generation or
increased transfer capability from other jurisdictions. These projects include
our Bruce to Milton Transmission Reinforcement Project; our Southwestern
Ontario Capacitor Banks Project; and work on our Cherrywood to Claireville
Transformer Station Connection. Our Bruce to Milton Project to connect wind
generation and redeveloped nuclear sources in the Huron-Grey-Bruce area,
demonstrates our commitment to connect clean and renewable generation.
Expenditures to sustain our transmission system also increased primarily as a
result of refurbishment and replacement of end-of-life equipment associated
with various station projects and our Spare Transformer Purchase Program. We
have continued our investment in our Claireville Transformer Station Project
to improve reliability and to meet growing demand, which is expected to be
completed this year. Increased capital expenditures within our Distribution
Business reflect ongoing investments within our Smart Meter Program. We
installed approximately 130,000 smart meters during the quarter, bringing our
cumulative program total to about 1,025,000 meters.
Total revenues for the six-month period were $2,393 million, which were
$116 million, or 5%, higher than the same period last year. Distribution
revenues of $1,789 million were higher primarily due to the recovery of higher
pass through purchased power costs attributed to increases in the OEB's
Regulated Price Plan for residential and other eligible customers. In
addition, distribution revenues were positively impacted by the December 18,
2008 and May 13, 2009 OEB decisions which approved increases in the
distribution tariff rates for our subsidiary, Hydro One Networks Inc. These
tariff rate increases, were implemented on February 1, 2009, and June 1, 2009
respectively. Transmission revenues decreased by $24 million year-to-date
compared to last year primarily due to lower average monthly peak demands and
following the August 28, 2008 and May 28, 2009 OEB transmission rate
decisions.
During this period, we paid dividends and recorded payments in lieu of
corporate income taxes to the Province of Ontario in the amount of $135
million and $27 million, respectively.CONSOLIDATED FINANCIAL HIGHLIGHTS AND STATISTICS
(Canadian
dollars
in millions, Three months ended Six months ended
except as June 30 June 30
otherwise $ % $ %
noted) 2009 2008 Change Change 2009 2008 Change Change
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Revenues 1,090 1,055 35 3 2,393 2,277 116 5
Purchased
power 518 483 35 7 1,184 1,079 105 10
Operating
costs 281 255 26 10 524 476 48 10
Net income 82 98 (16) (16) 259 255 4 2
Net cash
from
operations 194 255 (61) (24) 379 484 (105) (22)
Average
Ontario
60-minute
peak
demand
(MW)(1) 19,615 20,786 (1,171) (6) 20,901 21,531 (630) (3)
Distri-
bution
- units
distributed
to
customers
(TWh)(1) 6.4 6.7 (0.3) (4) 14.8 15.2 (0.4) (3)
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(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's 2009 Second
Quarter Consolidated Financial Statements and Management Discussion and
Analysis can be accessed through the following link:
www.hydroone.com/financials.
