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Hydro One Releases 2003 Year End Financial Results

Toronto, February 11, 2004 - Hydro One Inc. today released its 2003 year-end results, with net income of $396 million and revenues of $4,058 million.

Net income increased $52 million, or 15% over 2002, for the year ended December 31, 2003. The increase in net income is primarily due to the cost reductions realized as a result of the sale of the energy retail operations in April 2002. Cost savings related to the staff reduction program initiated in 2002 to streamline head office and managerial support functions have been reinvested in maintenance work programs. A lower provision for payments in lieu of corporate income taxes also contributed to the increase in net income.

Revenue increased $27 million, or 1% compared to 2002. Revenue from the distribution business was higher primarily due to an increase in the number of large customers served and the effect of a colder winter, partially offset by the impact of changes in the price of energy. Higher revenue from the distribution business was partially offset by lower transmission revenue, primarily resulting from cooler summer temperatures in 2003 compared to the abnormally hot temperatures in the summer of 2002. Net cash from operations was $1,032 million for 2003, an increase of $540 million compared to 2002, largely due to a favourable change in working capital.

"Our strong financial performance in 2003 is especially pleasing given the price caps implemented in late 2002 on our wires operations. Gains in productivity have not only helped us maintain a strong financial performance, they let us step up our transmission and distribution maintenance work programs. At the same time, we achieved a 50% reduction in lost time incidents, surpassing our own ambitious goal." said Tom Parkinson, President of Hydro One Inc. "In 2004, we're focused on expanding our transmission system to enable us to continue delivering safe, reliable electricity and to accommodate the addition of much needed new generation in Ontario."

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 Ontario government.

http://www.hydroone.com/en/investor_centre/annual_reports/

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For further information, please contact:

Ali Suleman
Treasurer
(416) 345-6126

Investor Relations
(416) 345-6867