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Hydro One Announces Second Quarter Financial Results

TORONTO, August 25, 2000 - Hydro One Inc. announced today that net income for the second quarter ended June 30, 2000 increased 30 per cent over the same period in 1999.

Hydro One is reporting net income of $118 million for the second quarter period, compared with $91 million in 1999. The increase was primarily the result of lower payments in lieu of corporate income taxes due to increased deductions primarily attributable to costs relating to a staff reduction program, capital cost allowance claims and other post retirement benefits.

Hydro One is also reporting revenue of $679 million for the second quarter, a seven per cent decline compared with the same period in 1999. The decline in revenue was primarily the result of lower electricity distribution revenue in Ontario and the divestment last year of Hydro One's 25 per cent interest in Ontario Quinta A.V.V., which held utility interests in Peru.

"Two pivotal events occurred in the second quarter," said Eleanor Clitheroe, President and CEO of Hydro One. "We began implementing a staff reduction program through voluntary retirements which will result in significant cost savings for Hydro One. We also closed our successful initial public debt offering of $1 billion in debentures," said Clitheroe.

The debt issue, which was the second largest debt offering ever in Canada, was substantially oversubscribed.

Hydro One Inc., through its subsidiaries, is principally engaged in electricity transmission and distribution, telecom, and energy services businesses. Through a wholly-owned subsidiary, Hydro One Networks Inc., it owns and operates the largest transmission and distribution system in Ontario and one of the 10 largest in North America.

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For more information, contact Hydro One Media Relations 24 hours a day at 1-877-506-7584 (toll-free in Ontario only) or 416-345-6868.