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1a479013-03c0-42f3-b484-ef492c573aac
sunrise with a blue and pink skies overlooking a field with transmission lines

Energizing life

Hydro One's 2019 Annual Report

Hydro One energizes life for people and communities, helping Ontarians live a better and brighter future. Through our network of businesses, we are growing and evolving to meet the expectations of the shareholders, regulators, Indigenous peoples and customers we serve.



Chair & CEO
Messages


Financial
Overview


Key
Highlights

Icon of a truck with a leaf sticking out of the back

Sustainable
Future


Our
Strategy


Corporate
Governance

Photo: Timothy Hodgson

A message from the Chair of the Board
Timothy Hodgson

Photo of Mark Poweska

A message from the President & CEO
Mark Poweska


Total Assets
A pie chart showing $27.1 billion in total assets
Rate Base
A pie chart showing $20.7 billion in rate base
Revenues
A pie chart showing $3,369 million in revenues
Regulated Earnings
A pie chart showing $1,493 million in regulated earnings
Pie chart legend
Pie chart legend



Hydro One partnered with government and industry stakeholders, Indigenous peoples, customers, unions and other stakeholders throughout the year to achieve a number of key performance milestones.

Key highlights

85.7%

customer satisfaction with Residential and Small Business customers - a 10 year high

$41.3 million

spent with Indigenous businesses in 2019

9.7%

improvement in outage response time since 2018 (Customer Average Interruption Duration Index)

$202.3 million

saved - a 49.7% increase in productivity savings from 2018

$51 million

reduction in annual operating costs

$1.7 billion

in capital investments to expand the grid and modernize infrastructure



A sustainable future for all


 

Our Indigenous partner network

Hydro One held our first-ever provincial Indigenous Business Fair in downtown Toronto this past September. The event showcased over 40 Indigenous businesses from across the province, and offered Hydro One employees – as well as many of our non-Indigenous business partners – the opportunity to network with these businesses, improve overall awareness of their capabilities, and foster relationships.

The Indigenous Business Fair was also a great opportunity to learn about Hydro One’s purchasing needs and showcase Indigenous products, services and solutions; liaise with our lines of business including environment, transmission, distribution, station construction and forestry; and underscore Hydro One’s commitment to increase our Indigenous procurement by pursuing mutually beneficial relationships.

 

A safer future for families

Hydro One and Scouts Canada announced a new partnership to launch Head Safe – a new hands-on program aimed at educating families on the impacts of head injuries, the importance of prevention and safe return to play. Launched in the fall of 2019, with Scouts Canada groups, the program will provide youth, volunteers and families in over 25,000 households with essential educational tools – head injury first aid, how to recognize the early symptoms of a concussion, important safety measures to protect against head injuries and role play on how to respond to real-life scenarios.




Why invest in Hydro One

1. Everyone uses electricity

One of the largest electric utilities in North America with significant scale and leadership position across Canada’s most populated province.

2. Strong balance sheet

One of the strongest investment grade balance sheets in the North American utility sector.

3. Pure-play transmission and distribution

Unique combination of pure-play electric power transmission and local distribution, with no generation or material exposure to commodity prices.

4. Stable operations

Stable and growing cash flows with 99% of business fully rate-regulated in a constructive, transparent and collaborative regulatory environment.

5. Financial performance

Predictable self-funding organic growth profile with expanding rate base and strong cash flows, together with broad support for refurbishment of aging infrastructure and with ~5% expected five year rate base CAGR. No external equity required to fund planned growth.

6. Attractive dividend

Annualized dividend of $0.966 per share with attractive 70% – 80% target payout ratio.

7. Rate base expansion

Opportunity for continued dividend growth with rate base expansion, continued consolidation and efficiency realization.



Hydro One's role in the Ontario electric power system




Our transmission and distribution systems safely and reliably serve communities throughout Ontario. Our customers are suburban, rural and remote homes and businesses across the province. Our communities are proudly and safely serviced by a team of skilled and dedicated employees.


Our new corporate strategy

By 2024, our corporate strategy is expected to enhance shareholder value by delivering an improved safety culture, a more reliable grid for our customers, high customer satisfaction, sustainable business practices and a lower environmental footprint.
 

 
Icon of a safety vest
Plan, Design and Build a Grid for the Future
  • Plan, design and build a reliable grid for today and tomorrow and embrace new technology, such as distributed energy resources, to enable customer choice.

  • Increase focus on grid resilience in order to reduce the frequency and duration of outages. Consider climate change and sustainability factors in our planning to increase resilience and lower our environmental footprint.

Icon of a graph with an arrow on top of it
Be the safest and most efficient utility
  • Transform and improve our safety culture through robust safety analytics and grass-roots employee engagement.

  • Empower field operation teams to drive efficiency, productivity and reliability.

  • Focus on efficient capital delivery to support our ongoing growing work program.

Icon of of a globe with a cog wheel over it
Be a trusted partner
  • Build and grow relationships with Indigenous peoples, government and industry partners.

  • Proactively address community concerns and establish strong partnerships with our customers through local investment and economic development for the benefit of all Ontarians.

Icon of of a globe with a cog wheel over it
ADVOCATE FOR OUR CUSTOMERS AND HELP THEM MAKE INFORMED DECISIONS
  • Enrich the customer experience by acting as their trusted energy advisor, helping them save money, and offering new products and services to meet their energy needs.

  • Help our customers make informed decisions with deeper insights and leverage our position as energy experts.

Innovate and Grow the Business
  • Invest responsibly in our core transmission and distribution business.

  • Pursue incremental regulated and unregulated business opportunities through innovation and our focused presence in Ontario.




Corporate governance overview

Strong corporate governance practices are at the heart of how we manage our day-to-day operations in the interest of all stakeholders
Board Diversity image


Hydro One and its independent Board of Directors recognize the importance of corporate governance in the effective management of the Company. Independence, integrity and accountability are the foundation of Hydro One’s approach to corporate governance. It is in the long-term best interests of shareholders, and promotes and strengthens relationships with our customers, employees, the communities where we operate and other stakeholders of the Company. The Board of Directors is firmly supported in these commitments by a governance agreement between Hydro One and the Province of Ontario, which was executed in advance of the November 2015 Initial Public Offering of the Company and assures that the Province’s role is limited to that of a shareholder and not a manager of the business

Table: Board of Directors and Committees