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Hydro One Files for Lower Distribution Revenues

TORONTO, January 19, 2001 - Hydro One Networks has submitted a rate filing to the Ontario Energy Board that calls for reductions in distribution rate revenues when the electricity market opens for competition.

"This represents our response to the Minister of Energy, Science & Technology's request of all utilities to put the customer first, especially during this transition to an open market," said Hydro One President and CEO Eleanor Clitheroe. "Our proposed reduction in distribution revenues from our May filing will help customers better manage their total electricity costs following market opening."

Last May, Hydro One Networks filed its original distribution rate application with the Ontario Energy Board, seeking a 0% rate increase. Since then, the Province has called on all utilities to help customers cope with rising overall electricity prices, and Networks has re-filed its distribution application on a lower basis.

Distribution charges will only be one part of the bill that will be unbundled to better define and help consumers manage electricity costs. The current projections for the cost of power when the market opens are higher than anticipated when electricity restructuring began. The cost of power is comprised of all costs except distribution, including the competitive energy charge, transmission costs, system control and debt retirement charges. These non-distribution costs are simply passed through to the customer by all distribution companies, including Hydro One Networks, as billing agents. Consequently, Networks' customers should see average overall bill impacts of about 3% per year.

"Our reduced filing will help offset increased cost projections for factors elsewhere in the system" said Clitheroe. "In order to minimize total costs for our customers, we will continue to look for increased efficiencies in our wires business, while managing any impacts of this reduction in revenues."

Using the May filing as a base, Networks' new application would see its distribution delivery revenues fall 21% on the day the market opens, expected later in 2001. The full year impact on Network's distribution revenues for 2001 will depend on the date of market opening, and is likely to be significantly less than the 21%. For 2002, distribution revenues would be 15% lower, and for 2003, distribution revenues would be 9% lower than anticipated in the May filing.

Hydro One Networks is a wholly-owned subsidiary of Hydro One Inc., a holding company that operates through its subsidiaries in electricity transmission and distribution, telecom and energy services businesses. Hydro One Networks owns and operates the province-wide transmission system and the largest distribution network in Ontario, serving approximately one million customers.

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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.