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Hydro One Announces Second Quarter, 2001 Financial Results

TORONTO, August 14, 2001 - Hydro One announced today that revenues for the second quarter ended June 30, 2001 increased by 6 % to $722 million compared to $679 million a year ago. Revenues for the first six months were $1.54 billion, up 2 % from the same period in 2000.

"Our revenues have increased primarily as a result of our distribution utility acquisition program which has added some 68,000 new customers to our base this year," said Eleanor Clitheroe, President and CEO of Hydro One. "We have successfully integrated 63 municipal electrical utilities and have plans to close on another 25 by the end of the year, including the acquisition of Brampton Hydro which was renamed Hydro One Brampton" (closed July 31, 2001).

Second quarter net income was down $4 million to $114 million as a result of higher corporate income taxes. Net income for the first six months of 2001 increased by $4 million or 2 % to $248 million compared to the same period in 2000. Total operation, maintenance and administration costs declined by $28 million, or 15 %, to $154 million for the second quarter and $61 million to $325 million for the six-month period. Cost reductions in our core transmission and distribution work programs were primarily a result of our staff reduction program and initiatives to enhance productivity. Net cash flow provided from operations increased 77 % to $219 million compared with $124 million in 2000 largely as a result of lower working capital.

In the second quarter there was also the sale of the initial series of notes under Hydro One's Medium Term Note Program. Proceeds of $547 million, from the over-subscribed issue, will be used to repay maturing debt and to finance net capital requirements.

Hydro One Inc., through its subsidiaries, is principally engaged in electricity transmission, distribution 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.

Management's Discussion and Analysis

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For further information, please contact:

Terry Young
Media Relations
(416) 345-6868

Ian Chadsey
Investor Relations
(416) 345-6136