Mr. David Lebeter reports

HYDRO ONE REPORTS FIRST QUARTER RESULTS

Hydro One Ltd. has released its financial and operating results for the first quarter ended March 31, 2023.

First quarter highlights:

• First quarter basic earnings per share (EPS) of 47 cents was 9.6 per cent lower compared with EPS of 52 cents for the same period in 2022.
• EPS for the quarter was lower year-over-year, largely due to higher operation, maintenance and administrative (OM&A) costs, inclusive of higher work program expenditures, higher financing charges, and higher depreciation, amortization and asset removal costs, partially offset by higher revenues resulting from Ontario Energy Board (OEB)-approved 2023 transmission rates.
• Hydro One announced grants from its Energizing Life Community Fund for Indigenous communities, charitable organizations and municipalities.
• Hydro One partnered with Nipissing First Nation for the 49th annual Little Native Hockey League tournament, Ontario's largest indigenous hockey tournament.
• The Electricity Distributors Association (EDA) awarded Hydro One's distribution segment the Environmental Excellence Award at the EDA's 2023 Awards Gala.
• Subsequent to the quarter, the company received a letter from the independent electricity system operator (IESO) confirming the need to build phase 2 of the Waasigan transmission line project.
• Subsequent to the quarter, Hydro One, alongside contractors and utility partners, restored power to more than 396,000 customers during the April storm.
• Subsequent to the quarter, Hydro One announced two executive-level promotions. Teri French has been appointed as executive vice-president (executive vice-president), operations and customer experience, and Andrew Spencer as executive vice-president, capital portfolio delivery.
• Subsequent to the quarter, Hydro One also announced expanded roles of two existing executives. Megan Telford is executive vice-president, strategy, energy transition, human resources and safety, and Chris Lopez is executive vice-president, chief financial and regulatory officer.
• The company's capital investments and in-service additions for the quarter were $499-million and $237-million, respectively, compared with $449-million and $229-million in 2022.
• Quarterly dividend declared at 29.64 cents per share, payable June 30, 2023.

"The changes to the executive leadership team structure aligns to the company's strategy of focusing on customers, delivering its investment plan and executing with excellence on capital projects connected to growing demand for electricity infrastructure to enable economic growth and a clean energy future," said David Lebeter, president and chief executive officer of Hydro One.

Key financial highlights

First quarter 2023 highlights

The company reported net income attributable to common shareholders of $282-million during the quarter, compared with $310-million in the same period of 2022. This resulted in EPS of 47 cents, compared with EPS of 52 cents in the prior year.

Revenues, net of purchased power, of $1.06-billion for the first quarter were $31-million higher than revenues, net of purchased power, for the first quarter of 2022. The increase is mainly due to revenues resulting from OEB-approved 2023 transmission rates, as well as higher revenues related to the OEB-approved recovery of historical cost deferrals recognized as regulatory assets in prior periods, partially offset by lower average monthly peak demand and lower energy consumption. The impacts of the recovery of regulatory assets are offset by a net increase in operation, maintenance and administration (OM&A), and tax expense, and are net income neutral in the period.

OM&A costs in the first quarter of 2023 were higher than the prior year as a result of higher corporate support costs, primarily attributable to lower capitalized overheads associated with the timing and volume of capital activity, as well as higher work program expenditures, including stations and line maintenance, emergency restoration and information technology initiatives.

Financing charges in the first quarter of 2023 were higher than the prior year, resulting from higher weighted-average interest rates on long-term debt and short-term notes, partially offset by interest earned on short-term investments.

Higher depreciation, amortization and asset removal costs for the first quarter of 2023 were primarily due to higher environmental expenditures, higher asset removal costs associated with storm-related asset replacements and the growth in capital assets as the company continues to place new assets in service, consistent with its continuing capital investment program.

Income tax expense for the first quarter of 2023 was lower than the prior year, primarily due to lower earnings and higher deductible timing differences compared with the prior year.

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 $499-million during the first quarter of 2023 and placed $237-million of new assets in service.

Selected operating highlights

Hydro One announced the 25 charitable organizations, indigenous communities and municipalities that will each receive a grant of $25,000 from the Energizing Life Community Fund. This is the third year in a row that the fund will support community-led initiatives that promote physical, emotional, and psychological safety and well-being for Ontarians.

Hydro One was awarded by the EDA with the Environmental Excellence Award for the company's outstanding efforts to help customers reduce their carbon footprint through partnerships and community planning. Hydro One partnered with the Toronto and Region Conservation Authority to create a wetland habitat adjacent to their Kleinburg transformer station (TS) property. This project created a wetland area with additional potential for evaluating carbon offset as a natural climate solution. Further, the project served to raise awareness and reinforced Hydro One's corporate climate change goals internally.

The company received a letter from the IESO confirming the need to build phase 2 of the Waasigan transmission line project, which is a new single-circuit 230-kilovolt transmission line between Mackenzie TS in the town of Atikokan and Dryden TS in the city of Dryden. The letter requests the in-service to be as soon as practically possible following phase 1 (in service as close to the end of 2025 as possible) to support mining operations and Ontario's clean energy future. This year, the company plans to submit a leave to construct (Section 92) application to the OEB for both phases of the project.

Hydro One announced two executive-level promotions. Ms. French has been appointed executive vice-president, operations and customer experience. She will have responsibility for customer experience along with ensuring operations excellence in reliability, transmission, distribution, customer and system operations, and maintenance. She will also remain the president and chief executive officer of Hydro One Remote Communities Inc. Mr. Spencer has been appointed executive vice-president, capital portfolio delivery. He will be responsible for leveraging the company's strong internal capabilities, and working with key stakeholders and indigenous partners to safely and efficiently deliver the company's growing capital plan, ensuring Hydro One can support the increasing need for clean energy and economic growth in the province.

Hydro One also announced expanded roles for two existing executives. Ms. Telford is now executive vice-president, strategy, energy transition, human resources and safety. She will have responsibility for corporate strategy and energy transition, along with key strategic supporting functions, including planning, partnerships, indigenous relations, sustainability, corporate affairs, human resources, and health and safety. Mr. Lopez, now executive vice-president, chief financial and regulatory officer, will continue leading the finance, treasury, investor relations, pensions, shared services, growth and corporate development, risk, and internal audit functions, and will now also lead regulatory practices.

Common share dividends

Following the conclusion of the first quarter, on May 4, 2023, the company declared a quarterly cash dividend to common shareholders of 29.64 cents per share to be paid on June 30, 2023, to shareholders of record on June 7, 2023.

This press release should be read in conjunction with the company's first quarter 2023 unaudited consolidated financial statements and MD&A (management's discussion and analysis). These financial statements and MD&A, together with additional information about Hydro One, including the audited consolidated financial statements and MD&A for the year ended Dec. 31, 2022, can be accessed at the company's website and SEDAR.

Quarterly investment community teleconference

The company's first quarter 2023 results teleconference with the investment community will be held on May 5, 2023, at 8 a.m. ET, a webcast of which will be available at the company's website. Members of the financial community wishing to ask questions during the call should register on-line prior to the scheduled start time to access Hydro One's first quarter 2023 results call. Media and other interested parties are welcome to participate on a listen-only basis. A webcast of the teleconference will be available on-line following the call. Additionally, investors should note that, from time to time, Hydro One management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Hydro One's website and are posted generally at least two days before the conference.

Hydro One Ltd.

Hydro One, through its wholly owned subsidiaries, is Ontario's largest electricity transmission and distribution provider with approximately 1.5 million valued customers, approximately $31.5-billion in assets as at Dec. 31, 2022, and annual revenues in 2022 of approximately $7.8-billion.

Hydro One's team of approximately 9,300 skilled and dedicated employees proudly build and maintain a safe and reliable electricity system which is essential to supporting strong and successful communities. In 2022, Hydro One invested approximately $2.1-billion in its transmission and distribution networks, and supported the economy through buying approximately $1.9-billion of goods and services.

The company is committed to the communities where it lives and works through community investment, sustainability and diversity initiatives. Hydro One is designated as a Sustainable Electricity Leader by Electricity Canada.

We seek Safe Harbor.