Q3 2023 Hydro One Ltd Earnings Call

November 8, 2023

Okay.

Speaker 1: Good morning, ladies and gentlemen. And welcome to Hydro One Limited's third quarter, 2023 Analyst Teleconference. At this time, all participants are in a listening mode. After the speakers present.

Good morning, ladies and gentlemen, and welcome to the Hydro one limited's third quarter 2023 analysts teleconference at.

This time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised.

Speaker 1: To ask a question there in a session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is free.

Speaker 1: To assure your question, please restar one one again. As reminded a call is being recorded. I would now like to introduce your host for today's conference, Mr. Omar Javid, by his president, communications, marketing, and investor relations at Hydra One. Please go ahead.

To withdraw your question. Please press star one again.

As a reminder, the call is being recorded.

I would like to introduce your host for today's conference Mr. Omar Chavez, Vice President Communications marketing and Investor Relations at Hydro one. Please go ahead.

Yeah.

Good morning, and thank you for joining us in hydro <unk> quarterly earnings call.

Speaker 2: Good morning and thank you for joining us in Hydra One's quarterly earnings call. Joining us today are President and CEO David Libiter and our Chief Financial and Regatory Officer Chris Lopez.

Joining us today are president and CEO, David <unk>, and our Chief financial and regulatory Officer, Chris Lopez.

Speaker 2: In the call today, we'll go where our quarterly results and then spend most of the call answering as many of your questions as time permits. There are also several slides that illustrate some of our points that we will address in a moment. They should be up on the webcast now, or if you're dialed into the call, you can also find them on Hyderone's website in the Investor Relations section under events and presentations.

On the call today will go over our quarterly results and then spend most of the call answering as many of your questions. As time permits. There are also several slides that illustrate some of our points.

We will address in a moment.

This should be up on the webcast now or if you're dialed into the call. You can also find them on hydro one's website in the Investor Relations section under events and presentations.

Speaker 2: Today's discussions will likely touch on estimates and other forward-looking information. You should review the cautionary language in today's earnings release and our MDNA, which we filed this morning regarding the various factors, assumptions and risks that could cause our actual results to differ as they all apply to this call. With that, I'll turn the call over for our presidency votes. David Lever.

Today's discussions will likely touch on estimates and other forward looking information.

You should review the cautionary language in today's earnings release, and our MD&A, which we filed this morning regarding the various factors assumptions and risks that could cause our actual results to differ as they all upside at this call with that I will turn the call over to our president and CEO David Lukes.

Thank you Omar and good morning, and thank you for joining us on our third quarter earnings call I would like to begin by acknowledging that today's national Indigenous veterans day in Canada data acknowledging commemorate the contributions and sacrifices made by the first nations and.

Speaker 3: Thank you, Omar, and good morning. And thank you for joining us on our third quarter earnings call. I would like to begin by acknowledging that today's national and indigenous veterans are being Canada. The data acknowledging commemorates the contributions and sacrifices made by the First Nation, in your eight and AT soldiers who served our country. In addition, remember stays on a few days away. There's a day for us to collectively remember, and one of those who got a military service, or served and continue to serve our country during times of war, conflict, and peace.

In May two soldiers who served our country.

In addition, remember stable a few days away.

<unk> for us to collectively remember in all of those who died of military service or served and continue to serve our country during times of war.

Clicked in peace.

Speaker 3: It's easy to take the freedom we enjoy for granted, so we acknowledge the sacrifice that allow us to have a brighter and better future.

It's easy to take the freedom, we enjoy for granted so we acknowledged the sacrifice that allow us to have a brighter and better future.

I also want to take a moment to reflect on the current global conflicts as events unfold across the world that could have a deep and profound impact on us all the news of innocent lives loss can be overwhelming I want to extend my support and simply to those affected by these global events such times as these it is important that we stand together and are there for each other.

Speaker 3: Turning to the quarter. This morning I will provide enough aid on our recent activities and then Chris will take you through the third quarter financial result.

Turning to the quarter. This morning, I will provide an update on our recent activities and then Chris will take you through the third quarter financial results.

Speaker 3: First, on safety, which is a focal point for Hydro1. I'm pleased to report that we are on track to improve on last year's outstanding safety results. A recordable injury and high energy serious injury rates continue to be below our annual targets. In large part due to the relentless pursuit of zero safety incidents by our employees.

First on safety, which is a focal point for hydro one I am pleased to report that we are on track to improve upon last year's outstanding safety results, a recordable injury and high energy serious injury rates continue to be below our annual targets in large part due to the relentless pursuit of zero safety incidents by our employees.

Speaker 3: However, ensuring every employee returns home safe at the end of the day is a journey with no end. We must work to continue to hear to our safety absolutes, carefully plan all work and look out for each other. With continued focus, eliminating all serious injuries is achievable.

However, ensuring every employee returns home safely at the end of the day is a journey with no end.

Must work to continue to adhere to our safety absolute carefully planned all work and look out for each other with continued focus eliminated all serious injuries is achievable.

Turning to our asset hydro and continues to invest in the critical infrastructure to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario's economic growth.

Speaker 3: Turning to our assets, Hyde-Duron continues to invest in the critical infrastructure to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario's economic growth.

Speaker 3: Our investments in modernizing and expanding the grid are playing a pivotal role in Ontario's economic future.

Our investments in modernizing and expanding the grid are playing a pivotal role in Ontario of economic future.

Speaker 3: At the same time, we continue to advance our economic reconciliation efforts with indigenous communities. Ensure they also benefit from our transmission and best.

At the same time, we continue to advance our economic reconciliation efforts with indigenous communities, ensuring they also benefit from our transmission investments.

Speaker 3: As an example of Team Hydrocanocomplers, the chat about Lakeshore Transmission Dial will enter service in 2024, a full year ahead of schedule. By completing the project early, the company expects to reduce the cost of the project by approximately 15 million. As a reminder, we broke ground on the line last quarter. This achievement is a result of the hard work and dedication of the fourth bear teams, working in collaboration with our partners, communities, and regulators.

As an example of team hydro can't accomplish the Chatham by Lakeshore transmission I will enter service in 2020 for a full year ahead of schedule by completing the project early the company expects to reduce the cost of the project by approximately $15 million.

As a reminder, we broke ground on the line last quarter. This achievement is a result of the hard work and dedication put forth by our team working in collaboration with our partners communities and regulators.

Speaker 3: This results underscores hydroins and build a larger, complex project safely on time and on budget.

This result, underscores hydro and the ability to deliver large complex projects safely on time and on budget.

Speaker 3: Once complete, the line will provide clean electricity, support the growth in agriculture, and manufacturing industries in self-question Ontario.

Once completed the line will provide clean electricity support the growth in Agri food and manufacturing industries in southwestern Ontario.

The line will add approximately 400 megawatts of clean electricity as the region enough power to supply a city the size of Windsor.

Speaker 3: The line will add approximately 400 megawatts of clean electricity to the region. I'm not powered to supply a city the size of Windsor.

Speaker 3: I am pleased with the efforts our teams put forth and the hard work that went into getting us to this point, ahead of schedule and under budget. Superior execution is a critical aspect of why Hyde-Jewon could teach me a transmitter or choice for the development, destruction, and operation of priority projects in Ontario.

I am pleased with the efforts our teams put forth and the hard work that went into getting us to this point ahead of schedule and under budget superior execution is a critical aspect of our hydro one continues to be a transmitter a choice for the development construction and operational priority projects in Ontario.

Speaker 3: As discussed in our second quarter conference call, the government and terror propose a prioritization of the regulatory approval process for three transmission lines in Northeastern and Eastern Ontario to support and grow in electricity demand.

As discussed in our second quarter conference call. The government of <unk> proposed a prioritization of the regulatory approval process for three transmission lines in north eastern and eastern Ontario to support the growing electricity demand.

Speaker 3: I'm very pleased to report that the government has declared the three new line projects as priorities and has designated the hydro one as a transmitter responsible for their development.

I'm very pleased to report that the government declared the three new line projects as priorities and has a designated hydro one is a transmitter responsible for the development.

Speaker 3: The new lines include the Mrs. Loggy to third line and approximate 75 kilometer, 230 kilobot transmission line between Mrs. Loggy, transformer station in Warrencliffe and a third line transformer station in Susanne, Marie.

The new lines include the Mississauga to third line and approximately 75 kilometer 230 kilovolt transmission line between Mrs logging transformer station and more equipped and a third line transformer station in Sault Ste Marie.

Speaker 3: The hamlet of Mississippi line, an approximate of 205 kilometer, 500 kilobolt transmission went between hamlet transformer station and the greater Sudbury area, and Mississippi transformer station in Warncliffe N, the greater Toronto area east line, an approximate 50 kilometer, 230 kilobolt transmission line between either Sherrywood transformer station near Pickering or Clarenge transformer station near Oswald and Dolvin transformer station in Peterborough.

The hamner to Mrs. Soggy line at approximately 205 kilometer 500, kilovolt transmission line between Hamner transformer station and the greater Sudbury area and Mississauga transformer station and are more equipped and the greater Toronto area East line, an approximate 50 kilometer 230 kilovolt transmission line between either Sherwood transformer station near.

Pickering are cleared and transformer station near Ottawa, and <unk> transformer station in Peterborough.

Speaker 3: Three new transmission lines will support the continued growth of our northern communities and will help facilitate the growing electricity demand, the transportation, mining, steel, and manufacturing industries in the northeastern and eastern parts of the province. We'll further support the production of clean steel at a Goma steel. Further in our effort to help industries decarbonize, and at the same time, for true to Ontario's long-term economic growth.

The three new transmission lines will support the continued growth of our northern communities and will help facilitate the growing electricity demand the transportation mining steel and manufacturing industries in the northeastern and eastern parts of the province.

We will further support the production of clean feel at Algoma steel furthering our efforts to help industries Decarbonize and at the same time for Tusa Ontario's long term economic growth.

Speaker 3: As a reminder, first nations have the option to invest in a 50% equity stake in the transmission line conformance of the projects through Hydro and Equity Partnership model. We are already advanced in planning, development and construction phases of the project.

As a reminder, first nations have the option to invest in a 50% equity stake in the transmission line components of the projects.

Through hydro as equity partnership model, we are already advanced the planning development and construction phase of the projects.

Speaker 3: On the distribution side, we continue to engage with local distribution companies to facilitate the consolidation within the sector. The consolidation isn't just about growth. For higher-dure one, it's about energizing life and Ontario by helping communities achieve their goals, improving the value of customers yet for the distribution grid, and lending a hand when others need it.

On the distribution side, we continue to engage with local distribution companies to facilitate the consolidation within the sector consolidation isn't just about growth for hydro one it's about energizing life in Ontario by helping communities achieve their goals improving the value customers get from the distribution grid and lending a hand and others needed.

I am pleased to report that on November 7th Hydro, one announced an agreement the township of shaft load for the acquisition of shaft low hydro the local electric distribution company, which serves approximately 1200 customers.

Speaker 3: I am pleased to report that on November 7th, Hydra One announced an agreement to the Township of Shaplow for the acquisition of Shaplow Hydro, a local electric distribution company which serves approximately 1200 customers.

Speaker 3: Well, small, the transaction is meaningful for those 1200 customers in the township of Shaflo. We'll continue to have dependable electricity.

While small the transaction is meaningful for those 200 customers in the town of <unk> will continue to have dependent electricity.

Speaker 3: Hydro1 started a 50-shapel hydro this summer as it experienced challenges and continued operations. We were happy to help. As the service territory is a better fit for hydro1s, we already have a local presence, and we already serve the indigenous communities and businesses on the outskirts of town.

Hydro one started assisting chef will hydro this summer as it experienced challenges in continuing operations, we were happy to help as the service territories embedded within hydro ones, we already have a local presence and we already Serbian digit communities and businesses on the outskirts of a township.

Speaker 3: With this transaction, Hyderone will leverage its deep local knowledge and its scale to ensure the residents and businesses of the shop will have an electric system which meets their needs today and is ready for the future. Give us any synergies, we believe the transaction will be socially and financially accretive. This transaction exemplifies Hyderone's willingness and capacity to step in and provide support across Ontario.

With this transaction <unk> will leverage its deep local knowledge and at scale to ensure the residents and businesses are shallow have electric system, which meets our needs today and is ready for the future given any synergies. We believe the transaction will be socially and financially accretive this transaction exemplifies hydro and his willingness and capacity to step in and provide support across onto.

Ariel.

Speaker 3: These successful outcomes are not possible as the dedication and coordinated efforts for our hydro and family. Our employees are the heartbeat of our organization. We recognize our invaluable contributions to our shared success.

These successful outcomes are not possible without the dedication and coordinated efforts of our hydro one family. Our employees are the heartbeat of our organization, we recognize their invaluable contributions to our shared success.

Speaker 3: Along those lines, I'm pleased to report that the two collective grooms reached the power workers union and one of the society of United professionals were ratified in the quarter. The conclusion of bargaining provides us the certainty in our labor costs over the next two years as we execute our strategic objectives. These agreements expire on September 30th, 2025.

Along those lines I am pleased to report that the two collective agreements reached the power workers Union and one of the society of United professionals were ratified in the quarter. The conclusion of Barking and provides us the certainty in our labor costs over the next two years as we execute our strategic objectives. These agreements expire on September 32025.

I want to thank our respective teams for negotiating in good faith and search solutions that meet the needs of employees customers and hydro one.

Speaker 3: I want to thank our respective teams for negotiating a good fate in search of solutions that meet the needs employees, customers, and hydro ones.

In other updates we continue working with the telcos to advance the delivery of high speed Internet to approximately 700000, Ontario's we remain concerned that work packages have not been brought forward by the proponents as quickly as anticipated to meet the December 2025 completion deadline.

Speaker 3: In other updates, we continue working with the telecos to advance the delivery of high-speed internet to approximately 700,000 Ontario's. We remain concerned that work packages are not being brought forward by the proponents as quick as anticipated. To meet the December 2025 completion deadline.

Speaker 3: Hydro One is prepared and has been for some time. We've made investments in labor and training, strengthens our supply chains, streamlined our drug use process, relaxed standards, on-boarded contractors and purchase materials and preparation of this initiative. We understand the importance of connectivity to everyday life for families and businesses, many whom are accustomed.

Hydro one has prepared and has been for some time, we've made investments in labor and training strengthens our supply chain streamlined our drug <unk> process relax standards on boarded contractors and purchase materials in preparation of this initiative, we understand the importance of connectivity to everyday life for families and businesses many of whom are our customers.

Speaker 3: The spirit of helping is deeply rooted in our corporate culture and is a value our employees live every day. This past September was our annual power to give months. I'm thrilled to share the Hydro-Unemployed Rays over $2 million in donations for more than 800 registered charities in Canada. This is a remarkable achievement and a record for Hydro-Unemployed will go a long way in helping those in need. While the given in September is remarkable, it is typical of Hydro-Unemployed who demonstrates their community spirit and generosity through donations and volunteer work throughout the year.

The spirit of helping is deeply rooted in our corporate culture and as the value of our employees live everyday. This past September was our annual power to give month I am thrilled to share that hydro one employees raised over $2 million in donations for more than 800 registered charities in Canada. This is a remarkable achievement and a record for hydro one will go a long way in helping those in need while the given in September as of March.

It is typical of hydro employees, who demonstrate their community spirit and generosity through donations and volunteer work throughout the year.

Speaker 3: Recently, I joined an exclusive club of Canadian companies. In recognition of our commitment to reconciliation, we were awarded the gold level progressive average and relation certification by the Cating Council for Aboriginal Business. I joined was recognized for commitment to building lasting, strong and mutually beneficial relationship the indigenous community. This is an advancement from the silver level certification we earned in 2020.

Recently I joined joined an exclusive club of Canadian companies and the recognition of our commitment to reconciliation we were awarded the gold level Progressive Aboriginal relation certification by the Canadian Council for Aboriginal Business' Hydro one was recognized for its commitment to building lasting strong and mutually beneficial beneficial relationship with indigenous communities.

This is an advancement from the silver level certification, we earned in 2020.

Speaker 3: Our emphasis on economic reconciliation through programs like the 5050 FD Partnership model and building lasting partners in the Indigenous communities has been instrumental in this work. At Hydro1, we are focused on building partnerships based on an understanding, respect, trust, and sharing.

Our emphasis on economic reconciliation through programs like the 50 50 equity partnership model and building lasting partnerships and digital communities has been instrumental in this work.

At Hydro one we are focused on building partnerships based on an understanding respect trust and sharing.

Speaker 3: Finally, we're pleased to be recognized by Newsweek and it's inaugural listed at the world's most trustworthy companies. Well, this team was compiled after gathering 269,000 evaluations through interviews with 70,000 participants that consist of customers, investors, and employees across 21 countries and 23 industries.

Finally, we are pleased to be recognized by Newsweek in its inaugural list of the world's most trustworthy companies listing was compiled after gathering 269000 evaluation through interviews with 70000 participants that consisted of customers investors and employees across 21 countries in 23 industries.

Speaker 3: With that, I will turn to over to Chris to discuss our financial results this quarter. Already you, Chris. Good morning.

With that I will turn it over to Chris to discuss our financial results this quarter.

Chris.

Good morning, and thank you for joining us today.

Speaker 2: I want to acknowledge and thank our teams for their hard work and dedication, allowing us to deliver our promise to all

I want to acknowledge and thank our teams for their hard work and dedication, allowing us to deliver on our promise to all stakeholders.

Speaker 2: It is this effort and the outcome achieved by the whole team that enable us to be the builder of choice for transmission projects in our province.

It is the fact that in the outcomes achieved by the whole team that enabled us to be the builder of choice for transmission projects in our province.

Speaker 2: We're extremely proud to have been awarded the three priority transmission projects that David mentioned earlier.

We're extremely proud to have been awarded the three party transmission projects that David mentioned earlier.

Speaker 2: With these three lines, we continue to build a better and brighter future for all of us.

With these three lines, we continue to build a bit up and brought a future for oil Ontario.

Speaker 2: In terms of our financial results for the third quarter, basically getting for share with $0.60 and paid to $0.51 in 2022. The key driver's

In terms of our financial results for the third quarter basic earnings per share was <unk> 60, compared to 51% in 2022.

The key drivers to the change in earnings this quarter with <unk>.

Speaker 2: Higher transmission revenues, resulting from adjustments to Ontario energy board or OEB approved rates, following the approval of the joint rate application or J-RAP, as well as higher monthly average peace of mind. And lower income tax expenses, primarily attributable to higher debatable timing differences, compared to

Transmission revenues, resulting from adjustments to Ontario, and keep auto OE be approved rates. Following the approval of the joint rate application or J rep as well as higher monthly average peak demand and lower income tax expenses, primarily attributable to higher by some timing differences compared to the prior year.

Speaker 2: These are partially set by high financing charges attributable to higher weighted average interest rates on the long term and short term debt, and high depreciation amortization and asset removal costs, primarily due to growth in capital S.

Partially offset by higher financing charges attributable to higher weighted average interest rates on the long term and short term debt.

Higher depreciation amortization and asset removal costs, primarily due to growth in capital assets.

Our third quarter revenue such as powered by about 1.1% transfer.

Speaker 2: Our third quarter revenue in the freshest power was higher than the above one.

Speaker 2: Transvision revenues increased 5.7%, primarily due to higher revenues resulting from OEB approved rates, coupled with higher average monthly fee demands, which increased 4.5.

Transmission revenues increased five 7%, primarily due to higher revenues, resulting from ODP approved rates, coupled with higher average monthly peak demand, which increased four 5%.

The high revenues, partially offset by net income mutual items, including cessation of the deferred tax asset or DTA recovery and normal course regulatory Jones.

Speaker 2: The higher revenues, the higher set by net income neutral items, including cessation of the deferred tax asset or TTA recovery, and normal cost regular treatment.

Distribution revenues net of purchase power decreased by 4%, mainly due to the saying that he kind of neutral items associated with the cessation of the DTA recovery and normal course regulatory adjustments.

Speaker 2: Distribution revenues net of purchase power decreased by 4%. Maybe due to the same net income neutral items associated with the cessation of the DTA recovery and normal cost regulatory adopt.

Speaker 2: How's the adjusting for the net income mutual items, the distribution revenues were essentially unchanged from last year.

After adjusting for the net income neutral items the distribution revenues were essentially unchanged from last year.

Speaker 2: On the cost-front, operating maintenance and administration expenses decreased year of the year by approximately 1%. The decrease was mainly driven by items that are either going to be offset later in the year or are netting.

On the cost front.

Maintenance and administration expenses decreased year over year by approximately 1%. The decrease was mainly driven by items that are either going to be offset later in the year, while our net income neutral.

Speaker 2: On transmission costs were higher by 4.7% due to the OEDO approved recovery of historical cost deferrals, which are offset in revenue and therefore net income neutral. Distribution costs were...

On transmission costs were higher by four 7% due to the recovery of historical cost deferrals, which are offset in revenue and therefore net income mutual.

Speaker 2: due to higher storm restoration costs last year, that were also dedicated to come neutral as they were recovering third parties, as well as mobile work program expenditures, including vegetation management. These reductions were partially offset by higher cost associated with the OAB approved recovery of historical cost referrals, which are net income neutral as they are fully recovered in revenue.

These reductions were partially offset by higher costs associated with the upgrade.

A brief recovery, our historical cost deferrals, which net income neutral is that fully recovered in revenues.

Depreciation expense was higher year over year by three 3%, primarily due to the growth in capital assets, which is consistent with our stated capital investment program as well as higher legal costs.

Speaker 2: The appreciation expense was high year-over-year by 3.3%, primarily due to the growth in capital assets, which is consistent with our state of capital investment program, as well as higher asset removal.

Speaker 2: On financing, we saw a 17.2% increase in financing charges year over year, due to a higher weighted average interest rate on our long-term debt and short-term notes. This was a result of long-term debt issuance executed in 2023, as well as increased rates on short-term.

On financing, we saw a 17, 2% increase in financing charges year over year due to a higher weighted average interest rate on our long term debt and short term notes. This was a result of long term debt issuance executed in 2023 as well as increased rates on short term notes.

During the quarter hydro and issued $425 million of floating rate medium term notes during 2026.

Speaker 2: During the quarter, hydro one issued 425 million of floating rate medium-term loads during 2026.

Speaker 2: This was yet another first. The first corporate issuance of green floating rate nodes in Canada.

This was yet another first the first corporate issuance of green floating rate notes in Canada.

Subsequent to the quarter Hydro one issued an additional $400 million medium term notes due in 2025.

Speaker 2: Subsequent to the quarter, Hyde-Rewind issued an additional 400 million medium terminos due in 2025. Concurrent with the offering, the company executed a $400 million fixed to floating interest rate swap agreement. Both offerings would...

Concurrent with the offering the company executed a $400 million fixed to floating interest rate swap agreement.

Both offerings were done under a sustainable financing.

In total hydro one has raised over $1 8 billion in proceeds in 2023 to retire maturing debt and to support our capital investment requirements.

Speaker 2: In total, Hyderone has raised over 1.8 billion proceeds in 2023 to retire the Turing Dead and to support our capital investment requirements.

We continue to be pleased that stability of our balance sheet and robust investment grade credit ratings that have allowed us to execute these financings.

Speaker 2: We continue to be pleased with the ability of our balance sheet and robust investment grade credit ratings that have allowed us to execute these finance.

Speaker 2: We are also happy to report that as part of their review process conducted in August , S&P Global ratings revised its outlook on hydrologm limit and hydro money to positive from stable.

We are also happy to report that as part of their review process conducted in August S&P Global ratings revised its outlook of Hydro one limited in Hydro one inc to positive from stable.

Speaker 2: S&P also affirms the existing issue and issue level ratings on both.

S&P also affirmed <unk> issuer and issue level ratings on both entities.

Income tax expense in the quarter was 36 million compared to 100 million in the same quarter last year.

Speaker 2: Income tax expense in the quarter was 36 million compared to 100 million in the same quarter last year. The decrease in income tax expense was primarily due to a lower tax expense resulting from the cessation of a DTA recovery at the end of June . Coupled with normal cost regulatory adjustments, which as described previously are netting

Kris and income tax expense was primarily due to a lower tax expense, resulting from the cessation of the DTA recovery at the end of June coupled with normal course regulatory adjustments, which as described previously.

Neutral as well as high deductible timing differences compared to the prior year.

Speaker 2: as well as high tobacco turning differences compared to the price.

Speaker 2: These are partially observed by higher earnings adjusted for net income neutralization.

These were partially offset by higher earnings adjusted net income neutral items.

Speaker 2: The effective tax rate in the quarter was 9.1%, versus the effective tax rate last year of 24.4%.

The effective tax rate in the quarter was nine 1% versus the effective tax rate last year of 24, 4%.

Speaker 2: It is important to know that the high deductible timing difference is this quarter driven by the timing and class of assets that were in service, which results in a lower effective tax rate.

These important tonight, the high deductible timing differences this quarter driven by the timing and path of exits that we've serviced which.

Which resulted in a lower effective tax rate.

Temporary.

Speaker 2: As such, we expect the deductible timing differences to revert in the fourth quarter, and the annual effective tax rate to be consistent with our previous tax rate guidance of 13 to 16%.

As such we expect the deductible timing differences to revert in the fourth quarter and the annual effective tax rate to be consistent with our previous tax rate guidance of 13% to 16%.

Speaker 2: Moving to investing activities, in the third quarter, we placed $699 million of assets in service, which is a 74.3% increase compared to the prior year.

Moving to investing activities in the third quarter, we placed $699 million of assets in service, which is a 74, 3% increase compared to the prior year.

Speaker 2: The increase in the transmission segment was primarily related to the timing of investment placement service for station equipment refurbishing and replacements, as well as timing of assets placement service related to information technology. Lastly, I'll step by major development projects put in service in the prior year.

The increase in the transmission segment was primarily related to the timing of investment placed in service.

<unk> equipment refurbishment and replacement as well as timing of assets placed in service related to information technology.

Firstly offset by major development projects put in service in the prior year.

In the distribution segment. The increase was primarily related to the timing of assets placed in service pertaining to information technology initiatives.

Speaker 2: In the distribution segment, the increase was primarily related to the timing of asset placement service pertaining to the information technology initiative. A higher volume of storm.

A high volume of storm related after replacement customer.

Speaker 2: customer connections and line of servicements and would pull replacements partially offset by a law of volume station

Customer connection and laundry submissions and wood pole replacements, partially offset by a lower volume of station Refurbishments and placements.

Speaker 2: That's its place and service also increased to the other segment, primarily due to the replacement of acronyms. Informat-

Assets placed in service also increased for the other segment, primarily due to the replacement of accurate information technology equipment.

Capital.

Speaker 2: Capital investment for the third quarter was $638 million, which is a 27.3% increase from the third quarter in 2022.

For the third quarter was $638 million, which is a 27, 3% increase from the third quarter in 2022.

Speaker 2: Transmission capital investments increase 23.5% year over year, primarily due to a higher volume of station of servicements and equipment replacement.

Transmission capital investments increased 23, 5% year over year, primarily due to a high volume of station <unk> and equipment replacements.

Speaker 2: Distribution capital investments increased by 34.6% to your higher volume of stormer that's at a place. Higher volume of line refurbishment and with polar placements. Investments in the advanced metering infrastructure system, 2.0 projects, as well as higher volumes of work on customer connection.

Distribution capital investments increased by 34, 6% to a high volume of storm related placements high volume of loan Refurbishments and wood pole replacement investments in the advanced metering infrastructure system, two point I project as well as higher volumes of work on customer connections.

With the announcement regarding the revision of timing for Chatham intellectual line, we have updated the future capital investments table to reflect the acceleration of time and decreasing capital costs.

Speaker 2: With announcements regarding the revision of timing for chat and intellectual lines, we have updated the future capital investment table to reflect the acceleration of time and decreasing capital.

The table does not include any future investments associated with the three north eastern and Eastern line that David discussed earlier today.

Speaker 2: The table does not include any future investments associated with the three Northeastern and Eastern line that David discussed earlier today.

Speaker 2: Consistent with past practice, those lines, and others that do not have estimates, will be updated in the table once the Section 92 will leave the construct application has been passed.

Consistent with past practice those lines and other that do not have estimates will be updated in the table. One to 692 will lead to construct application has been cost.

Speaker 2: The data mentioned hydro unreached an agreement with the Shafway Public Utilities Corporation to acquire substantially all the business and distribution apps.

As David mentioned Hydro and reached an agreement with the Chevrolet Public Utilities Corporation to acquire substantially all of the business and distribution assets.

Speaker 2: The task sheep of Sheplow is located around 12 kilometers from that team in operation.

<unk> is located around 12 kilometers from that Timmons Operation Center.

Speaker 2: Declosition equates to a purchase multiple of approximately 1.2 times enterprise value to rate base on a current rate base of 1.9 million dollars.

The acquisition equates to a purchase multiple of approximately one two times enterprise value to rate based on our current rate base of $1 $9 million.

Speaker 2: that position is conditional upon the satisfactory of custom or closing conditions and approval by the OEB.

The acquisition is conditional upon the satisfactory of customary closing conditions and approval by the <unk>.

Speaker 2: We believe this transaction provides excellent value to both Hydra1 and the customers of Shafloh Hydra. We are very pleased.

We believe this transaction provides excellent value to both hydro one and the customers of <unk> project.

We are very pleased to join the <unk> community.

Speaker 2: We intend to file an application with your EB for approval of the acquisition by the end of 2023 and expect to close the transaction in the second half of 2024. With integration complete.

We intend to file an application for approval of the acquisition by the end of 2023 and.

And expect to close the transaction in the second half of 2024.

With integration completed by the end of 2024.

We continue to engage with our local distribution company and look for additional opportunities to facilitate further consolidation within the sector.

Speaker 2: We continue to engage with other local distribution companies and look for additional opportunities to facilitate further consolidation within the

On guidance, we reaffirm our previous target of 5%.

Speaker 2: On guidance, we reaffirmed our previous target of 5.7% earnings per shareglobe through 2027 on the normalised 2022 EPS of $1.61.

The share growth through 2027 on the normalized 2020 to EPS of $1 61.

Speaker 2: As a reminder, the EPS growth range does not factor in growth from broadband, LDC consolidation, or the transmission lines that have been previously awarded, but only have preliminary assets or are pending approval, such as the Wattagon transmission line. As well as any amounts from externe...

As a reminder, the EPS growth range does not factor in growth broadband LDC consolidation, while the transmission lines that had been previously awarded but only had preliminary assets or are pending approval such as the water transmission line.

Well as any amounts from externally driven variance accounts.

Speaker 4: Finally, I am pleased to report that we declared a dividend to come and share holders of 29.64 cents per share. All stopped there and we'd be pleased

Finally, I am pleased to report that we declared a dividend to common shareholders of $29 64 per share.

I'll stop there and we'd be pleased to take your questions.

Speaker 5: Thank you, David and Chris. We asked the operator to explain how they'd like to organize the Q&A polling process. In case we can't address your questions today, my team and I are always available to respond to follow up questions. We ask that you limit your questions to one question and one follow up. If you have any additional questions, we request you to rejoin the queue. Please go ahead.

Thank you, David and Chris we ask the operator to explain how they'd like to organize the Q&A polling process in case, we can address your questions today My team and I are always available to respond to follow up questions.

Ask that you limit your questions to one question and one follow up if you have any additional questions. We request you to rejoin the queue. Please go ahead.

Speaker 1: Thank you. As a reminder, task a question. Please press star one on your telephone and wait for your name to be announced.

Thank you.

To ask a question. Please press star one wondering your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker 1: To withdraw your question, please press star one one again. Please send a vote, we'll be clouded Q&A.

<unk> cloud the Q&A roster.

Our first question comes from the line of Robert Hope with Scotiabank. Your line is now open.

Speaker 1: Our first question comes from the line of Robert Hope, what's Goshi Bank, you're on his phone.

Hi, good morning.

Speaker 6: Good morning, everyone. Good to see the recent transmission line and service ahead of schedule and under budget. Can you just speak to what you're seeing with the supply chain? A bunch of third parties are still noting some tightness there and some inflation there. And then can you just maybe compare and contrast that with your recent experiences and successes on the recent lines?

Good to see the recent transmission line anchor service ahead of schedule and under budget can you just speak to what youre seeing with the supply chain.

Third parties ourselves, noting some tightness there and some inflation there.

And then can you just maybe compare and contrast that with your recent experience and successes on the recent lines.

Speaker 3: Thanks Robert and good morning. Supply chain, it is definitely tightening up and what we find is we're ordering critical components further out. Now this is an advantage that Hydra One has perhaps over.

Thanks, Robert and good morning.

Supply chain is definitely tightening up and what we find is we're ordering critical components. Further out now. This is an advantage that hydro one has perhaps over other utility companies in that we saw this starting at the beginning of the pandemic our procurement team reached out to our suppliers diversified supplier base standardized product mix among among other things.

Speaker 3: other utility companies in that we saw this starting at the beginning of the pandemic for our procurement team reached out to our suppliers, diverse of our suppliers base.

Speaker 3: standardized product mix among among other things, but also started securing manufacturing space further out We've continued that as we've seen the increase in the electrification. So so far we haven't had any challenges reaching Getting a critical equipment on site for any of the projects we're working on

But also started securing manufacturing space further out we've continued that as we've seen the increase in the electrification. So so far we haven't had any challenges reaching getting a critical equipment on site for any of the projects we're working on.

Alright.

Speaker 6: Good here. And then just in terms of the three new projects that were awarded to you, any visibility on any incremental projects there, and you know, when do you think you could see a section 92 to better kind of scope out the timing and cost.

And then just in terms of the three new projects that were awarded to any visibility on any incremental projects there and when do you think you could see a section 92 to better scope the timing and cost.

Speaker 3: You sound like me asking my team those same questions. They're working hard to get the detailed engineering finish to do the engagements that are necessary to local communities, the indigenous groups, partners, and landowners. So as soon as we can have that mature a poll together, we'll be sharing that.

You sound like me asking my team those same questions. They are working hard to get the detailed engineering finish to do the engagements that are necessary for the local communities indigenous groups partners.

Landowners. So as soon as we can have that material pulled together, we'll be sharing that.

Thank you.

Speaker 1: Thank you. Our next question comes from the line of Darius Lasni with Think of America. Your line is no.

Thank you.

Our next question comes from the line of Darius <unk> with Bank of America. Your line is now open.

Speaker 7: Hey guys, good morning and thank you for taking the question. Maybe just starting on the distribution, capital opportunity related to the build out of broadband. Certainly sounds like you guys have done quite a bit of work and perhaps some investment ahead of time to be prepared. Can you comment on any impact on OM&A or capital associated with that? And as part B to that question, certainly appreciate the 2025.

Hey, guys. Good morning, and thank you for taking the question.

Just starting on.

The distribution capital opportunity related to the build out of broadband.

Certainly it sounds like you guys have done quite a bit of work and perhaps some investment ahead of time to be to be prepared.

Comment on any impact on <unk> or capital associated with that and its part b to that question certainly appreciate the 2025.

Speaker 7: time frame that you're managing to just wondering if there's been any talk at all of that possibly getting pushed back whether by amending legislation or otherwise.

<unk> framed that youre managing to just wondering if theres been any talk.

All of that possibly getting pushed back whether by amending legislation or otherwise.

Thanks, Darius start with the last question first no talk about amending that timeframe. It's critically important the people who live in rural Ontario that they have access to high speed Internet and all the parties are working to make sure. We still meet that December 25th deadline recently, we have been having meetings with the executives at some of the different <unk>.

Speaker 3: Thanks, Derek. Start with the last question. First, no talking about mending that timeframe. It's critically important to people who live in rural Ontario that they have access to high-speed internet.

Speaker 3: And all the parties are working to make sure we still meet that December 25 deadline. Recently I've been having meetings with the executives of some of the different telcos that have participated in and they're starting to ramp up and get excited about this. So starting to feel a bit more positive on how this is moving forward. In terms of your first question, no impact on our OEM and capital programs at this point in time from the work, the pre-work we've done to get ready. Just set us all up for success over the next two years.

<unk> purchased that are participate in as they are starting to ramp up and get them excited about this so starting to feel a bit more positive on how this is moving forward in terms of your first question.

No impact on our <unk> and capital programs at this point in time from the from the work the pre work we've done to get ready. It's just set us all up for success over the next two years.

Speaker 7: Okay, excellent. Thank you for the color. One more if I can just on the perspective, LDC opportunity we are and have been in a higher rate environment. Are you seeing perhaps an uptick in smaller LDCs that might be in sort of more difficult financial condition that would therefore open them up for potential transaction or are you seeing more or less kind of the regular cadence?

Okay excellent. Thank you for the color one more if I can just on the prospective LDC.

Opportunity.

And have been in a higher rate environment are you seeing perhaps an uptick in.

Smaller LDC as it might be in sort of more difficult financial condition that would therefore opening them up for a potential transaction or are you seeing more or less kind of the regular cadence.

Hi, Darius.

Speaker 2: Hi, Darius. It's Chris here. As the higher interest rates for longer, coupled with the theme of energy transition and higher demand on capital, those two coming together and they've both been increasing and have been now around for 12 months or more, we have seen an increase in activity. And Shap was a good example of that. There are others. Certainly the pressure at the smaller end is higher and then as you get to the large rail DCs they have a few more options, but we're starting to see a lot more activity.

Chris Yes, as the higher interest rates for longer coupled with.

The theme of energy transition and high demand on capital those two coming together and that both been increasing and have been now around 12 months or more.

We have seen an increase in activity in Shanghai is a good example of that there are others.

Certainly the pressure at the smaller end is higher.

And then as you get to the larger LTC has a few more options, but we're starting to see a lot more activity.

Okay excellent. Thank you guys appreciate it and looking forward to catching up with you yet.

Speaker 7: Okay, excellent. Thank you guys. Appreciate it and looking forward to catching up with the EI.

Thank you.

Speaker 1: Thank you. As a reminder, to ask a question at this time, please press star 11 or you touch stone telephone.

To ask a question at this time, please press star one on your Touchstone telephone.

Speaker 1: Our last question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open.

Our last question comes from the line of Maurice Choy with RBC capital markets. Your line is now open.

Thank you and good morning, if I could just start with the financing.

Speaker 8: Thank you and good morning. If I could just start with the financing bit. And Chris, could you discuss your upcoming maturity due to 26?

Chris could you discuss your upcoming maturities to 2026.

Speaker 8: the rates of which the maturing debt are at, what we tend to borrow at today and maybe bigger picture too, seeing as your cost of capital is fixed for a duration of the cheer up period, thoughts on how the smart feed-ins of your guidance and what tools you have in your financing tool box to offset.

Debates of which the maturing debt.

What we tend to borrow at today, and maybe bigger picture too seeing as your cost of capital is fixed rate duration that you have period thoughts and how this might feed into your guidance and what tools you have in your financing tool box to offset any drag.

Speaker 2: I'm Arise, thanks for the question. We can in a short term, not a concern, we've completed our borrowing for this year. As you'll know, that through JRAP, they factoring.

Alright, thanks for the question.

In the short term.

Concern we've completed our borrowing for this year as Youll know that three J wrap they factoring forecast borrowing rate for the first piece of it is all covered and we've made a requirement today.

Speaker 2: forecast borrowing rates for the first year, so that it's all covered and we've met our requirements there. We've retained some flexibility because the last two were floating radiation sources, which allows us to fix those as interest rates.

Retain some flexibility because the last two.

Floating rate issuances, which allows us to fix those as interest rates.

Speaker 2: normalised over time as we believe will occur, in fact in the last couple of weeks.

Normalize over time as we believe will occur in fact in the last couple of weeks.

Speaker 4: interest rates have in the long end have dropped 50 to 50 basis points. So that was a for sure a decision for us.

Interest rates, if the long end of dropped 50 to 60 basis points, so that was that.

Fluctuated decision for us in the longer term, we don't see a big concern here.

Speaker 4: In the long term, we don't see a big concern here. Marie, the question we get a lot is, what if interest rates stay at the current level throughout the entire period? It would still keep us within our current guidance. It would not take us outside of that.

<unk>.

The question, we get a lot is what if interest rates stay at the current level throughout the entire period. It would still keep us within our current guidance it would not take us outside of that.

Speaker 4: So we're quite comfortable that we have the ability to select the way we finance it, a short or long term. We've been changing the timing of ads. We can go with any duration to five, 10 or 30. So there are many options available to us to do that. And short, it's not gonna change our value.

So we are quite comfortable that we have the ability to flex the way, we finance either short or long term, how we can change the timing of that we can go in with any duration to 510 30. So there are many options available to us to do that.

In short, it's not going to change out guidance at this point.

And just to be clear you are able to stay within our 5% to 7% range without the potential bump up in Washington.

Speaker 8: Just to be clear, you're able to stay within a five to seven percent range without the potential bump up in Waffigan as well as the high speed internet. Sorry, senior Pete.

As well as the high speed Internet.

Sorry.

Morris I didn't get that.

Speaker 8: You mentioned that you're able to stay within the five to seven percent range rates they already are, but you're seeing that without having to have any offsets from the wassigan as well as ice-pid internet and tech right.

Yes.

You mentioned that you were able to stay within the 5% to 7% range.

If rates stay where they are.

Are you seeing that.

Without having to have any offsets from the Washington as well.

Just to get into that in fact correct.

Speaker 4: Correct. So we haven't updated our range. I think last time I said, Marie said, washing and got a section 92. I think the question came and my response was that if washing was approved at its rate and in service as planned, it would put us at the upper end of the five to seven percent range. Any impacts from interest rates or financing those projects would not take this outside that range.

So we haven't updated our ray.

I think last time I said Murray said once again its going to 692 I think the question came in my response was that.

<unk> was approved in its rate and in service as planned it would put us at the upper end of the 5% to 7% range.

Any impact from interest rates will financing those projects would not take this outside that range.

Perfect. Thank you very much.

Speaker 1: Thank you and that does conclude our Q&A session for today. I like to turn the call back over to Omar Jabbat for any further remarks.

Thank you and that does conclude our Q&A session for today I'd like to turn the call back over to Omar Chavez for any further remarks.

Speaker 5: Thanks Shannon. The management team at Hydro1 thanks everyone for their time with us this morning during what is a busy period. We appreciate your interest and your ownership. If you feel you have any questions that weren't addressed on the call, please feel free to reach out and we'll get them answered for you. Thank you again and enjoy the rest of your day.

Thanks, Shannon the management team at Hydro one thanks, everyone for their time with US. This morning. During what is a busy period. We appreciate your interest and your ownership. If you feel you have any questions that weren't addressed on the call. Please feel free to reach out and we'll get them answered for you.

Thank you again and enjoy the rest of your day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect everyone have a great day.

Speaker 1: Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.

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Speaker 1: Good morning ladies and gentlemen, and welcome to Hydro One Limited's third quarter, 2023 Analyst Teleconference. At this time, all participants are in a listening mode. After the speakers prison...

Good morning, ladies and gentlemen, and welcome to Hydro one limited's third quarter 2023 analysts teleconference at.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

Speaker 1: To ask a question during a session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is free.

To ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hands raised.

Speaker 1: To assure your question, please restar one one again. As reminded a call is being recorded, I would not introduce your host for today's conference, Mr. Omar Javid,

Your question. Please press star one again.

As a reminder, the call is being recorded.

I would now like to introduce your host for today's conference Mr. Omar <unk> Ahmed Vice President Communications marketing and Investor Relations at Hydro one. Please go ahead.

Okay.

Speaker 5: Good morning and thank you for joining us in HydroOne's quarterly earnings call. Joining us today are our president and CEO David Libeter and our chief financial and regulatory officer, Chris Lopez.

Good morning, and thank you for joining us and hydro <unk> quarterly earnings call. Joining us today are president and CEO, David later, and our Chief financial and regulatory Officer, Chris Lopez.

Speaker 5: In the call today we'll go over our quarterly results and then spend most of the call answering as many of your questions as time permits.

In the call today, we will go over our quarterly results and then spend most of the call answering as many of your questions. As time permits were also several slides that illustrate some of our points.

Speaker 5: There are also several slides that illustrate some of our points that we will address in a moment. They should be up on the webcast now or if you're dialed into the call, you can also find them on Hyderone's website in the Investor Relations section under events and presentations.

That we will address in a moment.

This should be up on the webcast now or if you're dialed into the call. You can also find them on hydro one's website in the Investor Relations section under events and presentations.

Speaker 5: Today's discussions will likely touch on estimates and other forward-looking information. You should review the cautionary language in today's earnings release and our MDNA, which we filed this morning regarding the various factors, assumptions and risks that could cause our actual results to differ as they all apply to this call. With that, I'll turn the poll over for our presidency, O. David Lever.

Today's discussions will likely touch on estimates and other forward looking information.

You should review the cautionary language in today's earnings release, and our MD&A, which we filed this morning regarding the various factors assumptions and risks that could cause our actual results to differ as they all upside at this call with that I'll turn the call over to our president and CEO David Lukes.

Speaker 3: Thank you, Omar, and good morning. And thank you for joining us on our third quarter earnings call. I would like to begin by acknowledging that today is National Indigenous Veterans Day in Canada. The day of acknowledging commemorating the contributions and sacrifices made by the First Nation, Inuit, and May T. Soldiers who served our country. In addition, remember today's only few days away. There's a day for us to collectively remember, and one of those who got a military service, or served, and continued to serve our country during times of war, conflict, and peace.

Thank you Omar and good morning, and thank you for joining us on our third quarter earnings call I would like to begin by acknowledging that today is national indigenous veterans being Canada data acknowledging commemorate the contributions and sacrifices made by the first nations in UAE and May Tee soldiers, who served our country.

In addition, remember stable a few days away through the day for us to collectively remember and honor those who died of military service or served and continue to serve our country during times of war conflict and peace.

Speaker 3: It is easy to take the freedom we enjoy for granted, so we acknowledge the sacrifice that allow us to have a brighter and better future.

It's easy to take the freedom, we enjoy for granted so we acknowledged the sacrifice that allow us to have a brighter and better future.

Speaker 3: I also want to take a moment to reflect on the current global conflicts. As events unfold across the world, they can have a deep and profound impact on us all. The news of an instigized loss can be overwhelming. I want to extend my support and sympathy to those affected by these global events. In such times as these, it's important that we stand together and are there for each other.

I also want to take a moment to reflect on the current global conflicts as events unfold across the world that could have a deep and profound impact on us all the news of innocent lives loss can be overwhelming I want to extend my support and simply to those affected by this global events such times as these it is important that we stand together and are there for each other.

Speaker 3: Turning to the quarter. This morning I will provide enough data on our recent activities, and then Chris will take you through the third quarter financial result.

Turning to the quarter. This morning, I'll provide an update on our recent activities and then Chris will take you through the third quarter financial results.

Speaker 3: First, on safety, which is a focal point for Hydro1. I am pleased to report that we are on track to improve on last year's outstanding safety results. A recordable injury and high energy serious injury rates continue to be below our annual targets. In large part due to the relentless pursuit of zero safety incidents by our employees.

Speaker 3: However, ensuring every employee returns home safely at the end of the day is a journey with no end. We must work to continue to hear to our safety absolutes, carefully plan all work and look out for each other. With continued focus, eliminating all serious injuries is achievable.

We are ensuring every employee returns home safely at the end of the day is a journey with no end.

Must work to continue to adhere to our safety absolute carefully planned all work and look out for each other with continued focus eliminated all serious injuries is achievable.

Speaker 3: Turning to our assets, Hyde 1 continues to invest in the critical infrastructure to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario's economic growth.

Turning to our asset hydro continues to invest in the critical infrastructure to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to <unk> economic growth.

Speaker 3: Our investments in modernizing and expanding the grid are playing a pivotal role in Ontario's economic future.

Our investments in modernizing and expanding the grid are playing a pivotal role in Ontario economic future.

Speaker 3: At the same time, we continue to advance our economic reconciliation efforts within indigenous communities. Ensure they also benefit from our transmission and best.

At the same time, we continue to advance our economic reconciliation efforts with indigenous communities, ensuring they also benefit from our transmission investments.

Speaker 3: As an example of Team Hydrocanocomplers, the chat about Lakeshore Transmission Lile will enter service in 2024, a full year ahead of schedule. By completing the project early, the company expects to reduce the cost of the project by approximately 15 million. As a reminder, we broke ground on the line last quarter. This achievement has resulted in hard work and dedication before our teams, working in collaboration with our partners, communities, and regulators.

As an example, what team hydro can't accomplish the Chatham by Lakeshore transmission line will enter service in 2020 for a full year ahead of schedule by completing the project early the company expects to reduce the cost of the project by approximately $15 million.

Speaker 3: This results underscores hydroins and build to deliver large complex projects safely on time and on budget.

This result, underscores hydro and the ability to deliver large complex projects safely on time and on budget.

Speaker 3: Once complete, the line will provide clean electricity, support the growth in agriculture, and manufacturing industries and self-question Ontario.

Once completed the line will provide clean electricity support the growth in Agri food and manufacturing industries in southwestern Ontario.

Speaker 3: The line will add approximately 400 megawatts of clean electricity to the region. I'm not powered to supply a city the size of Windsor.

The line will add approximately 400 megawatts of clean electricity as the region enough power to supply a city the size of Windsor.

Speaker 3: I am pleased with the efforts our teams put forth and the hard work that went into getting us to this point, a head of schedule and under budget. Superior execution is a critical aspect of why Hyde-Rewon could teach the det transmitter or choice for the development, destruction, and operation of priority projects in Ontario.

I am pleased with the efforts our teams put forth and the hard work that went into getting us to this point ahead of schedule and under budget superior execution is a critical aspect of what hydro one continues to be a transmitter a choice for the development construction and operational priority projects in Ontario.

As discussed in our second quarter conference call. The government on <unk> proposed a prioritization of the regulatory approval process for three transmission lines in north eastern and eastern Ontario to support the growing electricity demand.

Speaker 3: I'm very pleased to report that the government has declared the three new line projects as priorities and has designated the Hydro One as a transmitter responsible for development.

Im very pleased to report that the government declared the three new line projects as priorities and has a designated hydro one is a transmitter responsible for their development.

Speaker 3: The new lines include the Mrs. Slogy to third line, an approximate 75 kilometer, 230 kilobot transmission line between Mrs. Slogy transformer station in Warrencliffe and a third line transformer station in Susanne, Marie.

The new lines include the Misys logging to third line and approximately 75 kilometer 230 kilovolt transmission line between Mrs. Logging transformer station and warn clip and a third line transformer station and Sue St Marie.

Speaker 3: The hamlet of Mississippi line and approximately 205 kilometer 500 kilobalt transmission on to hamlet transformer station in the greater Sudbury area. And miss a song in transformer station in the morning and the greater Toronto area East line and approximately 50 kilometer to the cable transmission line between at a chair with transformer station near Pickering or Clarence and transformer station near Oslo and Dolby transformer station in Peter.

The Hamner to Vista Soggy line at approximately 205 kilometer 500, kilovolt transmission line can hamner transformer station and the greater Sudbury area, and Mississauga transformer station and the <unk> and the greater Toronto area East line, an approximate 50 kilometer 230 kilovolt transmission line between either Sherwood transformer station near.

Pickering are cleared and transformer station near Ottawa, and Daven transformer station in Peterborough.

Speaker 3: The three new transmission lines will support the continued growth of our northern communities and will help facilitate the growing electricity demand, the transportation, mining, steel, and manufacturing industries in the northeastern and eastern parts of the province. We will further support the production of clean steel at our Gomez Steel, further in our efforts to help industries decarbonize and at the same time, for true to Ontario's long-term economic growth.

The three new transmission lines will support the continued growth of our northern communities and will help facilitate the growing electricity demand the transportation mining steel and manufacturing industries are in the northeastern and eastern parts of the province.

We will further support the production of clean feel Algoma steel furthering our efforts to help industries Decarbonize and at the same time for Tusa Ontario's long term economic growth.

Speaker 3: As a reminder, first nations have the option to invest in a 50% equity stake in the transmission line complements of the projects through Hydro and equity partnership model. We are already advanced to planning development and construction phases of the project.

As a reminder, first nations have the option to invest in a 50% equity stake in a transmission line components of the projects.

Through hydro as equity partnership model, we are already advanced the planning development and construction phase of the project.

On the distribution.

Speaker 3: On the distribution side, we continue to engage with local distribution companies to facilitate the consolidation within the sector. And solidation isn't just about growth. For higher one, it's about energizing life and Ontario by helping communities achieve their goals, improving the value of customers yet for the distribution grid, and lending a hand when others need it.

<unk> side, we continue to engage with local distribution companies to facilitate consolidation within the sector consolidation isn't just about growth for hydro one it's about energizing life in Ontario by helping communities achieve their goals improving the value customers get the distribution grid and lending a hand when others needed.

Speaker 3: I am pleased to report that on November 7th, Hydro1 announced an agreement to the Township of Shaplow, the acquisition of Shaplow Hydro, a local electric distribution company which serves approximately 1200 customers.

I am pleased to report that on November 7th Hydro, one announced an agreement the talents of a shaft load for the acquisition of shaft will hydro the local electric distribution company, which serves approximately 200 customers.

Speaker 3: Well, small, the transaction is meaningful for those 1200 customers in the township of Shaflow. We'll continue to have dependable electricity.

While small the transaction is meaningful for those 200 customers in the township of chef flow, we will continue to have dependable electricity.

Speaker 3: Hydro-1 started assisting Shaftle-Hydro this summer as it experienced challenges and continued operations. We were happy to help. As the service territory is a better fit for Hydro-1s, we already have a local presence and we already serve the indigenous communities and businesses on the outskirts of township.

Hi, everyone started assisting chef will hydro this summer as it experienced challenges in continuing operations, we were happy to help as the service territories embedded within hydro ones, we already have a local presence and we already Serbian digit communities and businesses on the outskirts of a township.

Speaker 3: With this transaction, Hyderone will leverage its deep local knowledge and its scale to ensure the residents and businesses of the shop will have an electric system which meets their needs today and is ready for the future. Give it any synergies, we believe the transaction will be socially and financially accretive. This transaction exemplifies Hyderone's willingness and capacity to step in and provide support across Ontario.

With this transaction hydro one will leverage its deep local knowledge and at scale to ensure the residents and businesses are shallow have electric system, which meets our needs today and is ready for the future given the new synergies. We believe the transaction will be socially and financially accretive this transaction exemplifies hydrophones willingness and capacity to step in and provide support across our <unk>.

Ariel.

Speaker 3: These success load comes in not possible but the dedication and coordinated efforts for our Hydro and Family. Our employees are the heartbeat of our organization. We recognize our invaluable contributions to our shared success.

These successful outcomes in a possible both the dedication and coordinated efforts of our hydro one family. Our employees are the heartbeat of our organization, we recognize their invaluable contributions to our shared success.

Speaker 3: Along those lines, I'm pleased to report that the two collective agreements reached the Power Workers Union and one of the society and the United professionals were ratified in the quarter. The conclusion of bargaining provides us the certainty in our labor costs over the next two years as we execute our strategic objectives. These agreements expire on September 30th, 2025.

Speaker 3: I want to thank our respective teams for negotiating a good fate in search of solutions that meet the needs employees, customers, and hydro ones.

I want to thank our respective teams for negotiating in good faith and surface solutions that meet the needs of employees customers and hydro one.

Speaker 3: In other updates, we continue working with the telecos to advance the delivery of high-speed internet to approximately 700,000 Ontario. We remain concerned that work packages are not being brought forward by the proponents as quick as anticipated. To meet the December 2025 completion deadline.

In other updates we continue working with the telcos to advance the delivery of high speed Internet to approximately 700000, Ontario, we remain concerned that work packages have not been brought forward by the proponents as quickly as anticipated to meet the December 2025 completion deadlines Hydro one is prepared and has been for some time, we've made investments in labor and training strength.

Speaker 3: Hydro One is prepared and has been for some time. We've made investments in labor and training, strengthened our supply chains, streamlined our joint use process, relaxed standards, onboarded contractors and purchased materials and preparation of this initiative. We understand the importance of connectivity to every day life or family and business, many whom are accustomed.

Our supply chain streamlined our drug <unk> process relax standards on boarded contractors and purchase materials in preparation of this initiative, we understand the importance of connectivity to everyday life for families and business many of whom are our customers.

Speaker 3: The spirit of helping is deeply rooted in our corporate culture and is a value our employees live every day. This past September was our annual power to give month. I'm thrilled to share the hydro-unemployed raise over $2 million in donations for more than 800 registered charities in Canada. This is a remarkable achievement and a record for hydro-unemployed who go a long way in helping those in need. While the given in September is remarkable, it is typical of hydro-employed who demonstrates their community spirit and generosity through donations and volunteer work throughout the year.

The spirit of helping is deeply rooted in our corporate culture and as the value of our employees live everyday. This past September was our annual power to give months I'm thrilled to share that hydro one employees raised over $2 million in donations for more than 800 registered charities in Canada. This is a remarkable achievement and a record for hydrogen that will go a long way in helping those in need while the given in September as of March.

It is typical of hydro employees, who demonstrate their community spirit and generosity through donations and volunteer work throughout the year.

Recently, our drawing joined an exclusive club of Canadian companies and the recognition of our commitment to reconciliation we were awarded the gold level Progressive Aboriginal relations certification by the Canadian Council for Aboriginal Business' Hydro one was recognized for its commitment to building lasting strong mutually benefit beneficial relationship with indigenous communities.

Speaker 3: Recently, I joined an exclusive club of Canadian companies. In recognition of our commitment to reconciliation, we were awarded the gold level progressive average and relation certification by the Cating Council for Aboriginal Business. I joined was recognized for commitment to build an lasting, strong and mutually beneficial relationship the indigenous communities. This is an advance from the civil level certification we earned in 2020.

This is an advancement from the silver level certification, we earned in 2020.

Speaker 3: Our emphasis on economic reconciliation through programs like the 5050 FD Partnership model and building lasting partners in Indigenous communities has been instrumental in this work. At Hydra One, we are focused on building partnerships based on an understanding, respect, trust, and sharing.

Our emphasis on economic reconciliation through programs like the 50 50 equity partnership model and building lasting partnerships digital communities has been instrumental in this work.

At Hydro one we are focused on building partnerships based on an understanding respect trust and sharing.

Speaker 3: Finally, we're pleased to be recognized by Newsweek and it's inaugural listed as the world's most trustworthy companies. The listing was compiled after gathering 269,000 evaluations through interviews with 70,000 participants that consisted of customers, investors, and employees across 21 countries and 23 industries.

Speaker 3: With that, I will turn to over to Chris to discuss our financial results this quarter. Already you, Chris. Good morning.

With that I will turn it over to Chris to discuss our financial results this quarter.

Over to you Chris.

Good morning, and thank you for joining us today.

Speaker 2: I want to acknowledge and thank our teams for their hard work and dedication, allowing us to deliver our promise to all

I want to acknowledge and thank our teams for their hard work and dedication, allowing us to deliver on our promise to all stakeholders. It is this effort and the outcomes achieved by the whole team that enable us to be the builder of choice for transmission projects in our province.

Speaker 2: It is this effort and the outcome achieved by the whole team that enable us to be the builder of choice to transition projects in our province.

Speaker 2: We're extremely proud to have been awarded the three-party transmission projects that David mentioned earlier.

We are extremely proud to have been awarded the three party transmission projects that David mentioned earlier with.

Speaker 2: With these three lines, we continue to build a better and brighter future for all of us.

With these three lines, we continue to build a bit up and brighter future for all Ontario.

In terms of our financial results for the third quarter basic earnings per share was <unk> <unk> compared to 51% in 2022.

Speaker 4: In terms of our financial results for the third quarter, basically getting for share with 60 cents compared to 51 cents in 2022. The key drivers to the...

The key drivers to the change in earnings this quarter.

Speaker 2: Higher transmission revenues, resulting from adjustments to Ontario and Azure Board or OEB approved rates, following the approval of the joint rate application or JRAP, as well as higher monthly average peace demand. And lower income tax expenses, primarily attributable to higher to the maximum timing differences compared.

Hi transmission revenues, resulting from adjustments to Ontario, keep auto OE be approved rates. Following the approval of the joint rate application or J rep as well as higher monthly average peak demand.

And lower income tax expenses, primarily attributable to higher deductible timing differences compared to the prior year.

Speaker 2: These are partially set by financing charges that are attributable to a higher-weight average interest rates on the long term and short term debt, and higher depreciation, amortization, and asset removal costs, come out due to growth in capital S.

These were partially offset by client financing charges attributable to higher weighted average interest rates on the long term and short term debt and higher depreciation amortization and asset removal costs, primarily due to growth in capital assets.

Speaker 2: Our third quarter revenue nurse?? 4

Our third quarter revenue net of purchase power by about 1.1%.

Speaker 2: Transmission revenues increased 5.7%, primarily due to higher revenues resulting from OEB approved rates, coupled with higher average monthly fee to man, which increased 4.5.

Retransmission revenues increased five 7%, primarily due to higher revenues, resulting from OE be approved rates, coupled with higher average monthly peak demand, which increased four 5%.

Speaker 2: The higher revenues are partially assessed by net income neutral items, including cessation of the deferred tax asset or PTA recovery, and normal cost regular trades.

The high revenues, partially offset by net income mutual items, including cessation of the deferred tax asset or DTA recovery and normal course regulatory Jonathan.

Speaker 2: Distribution revenues net approaches power decreased by 4%. Mainly due to the same net income neutral items associated with the cessation of the DTA recovery and normal cost regulatory adjust.

Distribution revenues net of purchase power decreased by 4%, mainly due to the same net income neutral items associated with the cessation of the DTA recovery and normal course regulatory adjustments.

Speaker 5: So adjusting for the net income mutual items, the distribution of use were essentially unchanged from last year.

After adjusting for the net income neutral items the distribution revenues were essentially unchanged from last year.

Speaker 2: On the cost-run, operating maintenance and administration expenses decreased year of year by approximately 1%. The decrease was mainly driven by items that are either going to be offset later in the year or aren't any.

On the cost front operating maintenance and administration expenses decreased year over year by approximately 1%. The decrease was mainly driven by items that are either going to be offset later in the year or on any kind of neutral.

Speaker 5: On transmission costs were higher by 4.7% due to the OEDO approved recovery of historical cost deferrals, which are offset in revenue and therefore net income neutral. Distribution costs.

On transmission costs were higher by four 7% due to the <unk> approved recovery of historical cost deferrals, which are offset in revenue and therefore net income mutual.

Distribution costs were lower by six 4% due to higher storm restoration costs last year that will also datacom mutual as they were recovered from third parties as well as mobile web program expenditures, including vegetation management. These reductions were partially offset by higher cost associated with the <unk> recovery, our historical cost deferrals.

Speaker 5: due to higher storm restoration costs last year, that were all for any commutual as they were recovering third parties, as well as lower work programming expenditures, including vegetation management. These reductions were partially observed by higher cost associated with the OED approved recovery of historical cost referrals, which are net income mutual as they are fully recovered in revenue.

Which net income mutual is that fully recovered in revenues.

Speaker 2: The appreciation expense was high year-end year by 3.3%, primarily due to the growth in capital assets, which is consistent with our state of capital investment program, as well as higher capital investment.

Speaker 5: On financing, we saw a 17.2% increase in financing charges year over year, due to a higher weighted average interest rate on our long-term debt and short-term notes. This was a result of long-term debt issuance executed in 2023, as well as increased rates on short-term.

Speaker 5: During the quarter, hydro one issued 425 million of floating rate medium-term notes during 2026.

During the quarter Hydro one issued $425 million of floating rate medium term notes during 2026.

Speaker 5: This was yet another first. The first corporate issuance of green floating rate nodes in Canada.

This was yet another first the first corporate issuance of green floating rate notes in Canada.

Speaker 5: Subsequent to the quarter, hydro one issued an additional 400 million medium terminos due in 2025. Concurrent with the offering, the company executed a $400 million fixed to floating interest rate swap agreement. Both offerings would...

Subsequent to the quarter Hydro one issued an additional $400 million medium term notes due in 2025.

Concurrent with the offering the company execute a $400 million fixed to floating interest rate swap agreement.

Both offerings were done under a sustainable financing framework.

Speaker 5: Internal hydro one is raised over 1.8 billion proceeds in 2023 to retire a maturing debt and to support our capital investment requirements.

In total hydro one has raised over $1 8 billion in proceeds in 2023 to retire maturing debt and to support our capital investment requirements.

Speaker 5: We continue to be pleased that the ability of our balance sheet and robust investment grade credit ratings that have allowed us to execute these finance.

We continue to be pleased that stability of our balance sheet and robust investment grade credit ratings that have allowed us to execute these financings.

Speaker 5: We're also happy to report that as part of their review process conducted in August , there are some pre-global ratings, revised its outlook on hydrologm limited and hydro money, to positive from state.

We are also happy to report that as part of their review process conducted in August S&P Global ratings revised its outlook of Hydro one limited in Hydro one inc to positive from stable.

Speaker 5: S&P also affirms the existing issue and issue level ratings on both.

S&P also affirmed <unk> issuer and issue level ratings on both entities.

Speaker 5: I can't exactly expense in the quarter with 36 million compared to 100 million in the same quarter last year.

Income tax expense in the quarter was 36 million compared to 100 million in the same quarter last year.

Speaker 2: The decreasing income tax expense was primarily due to a lower tax expense resulting from the cessation of the DTA recovery at the end of June . Coupled with normal cost regulatory adjustments, which as described previously, are net income units.

The decrease in income tax expense was primarily due to a lower tax expense, resulting from the cessation of the DTA recovery at the end of June coupled with normal course regulatory adjustments, which as described previously our net income.

Speaker 2: as well as high tobacco timing differences compared to the price.

Neutral as well as high deductible timing differences compared to the prior year.

Speaker 5: These are partially offset by higher earnings adjusted for net income neutralizing.

These were partially offset by higher earnings adjusted net income neutral items.

Speaker 5: The effective tax rate in the court was 9.1%, versus the effective tax rate last year of 24.4%.

The effective tax rate in the quarter with nine 1% versus the effective tax rate last year of 24, 4%.

Speaker 5: It is important to know that the high deductible timing differences of this quarter driven by the timing and class of assets that were in service, which results in a lower effective tax rate.

Important to note the high deductible timing differences this quarter driven by the timing and path of exits that we've serviced.

Which resulted in a lower effective tax rate.

Temporary.

Speaker 5: As such, we expect the deductible timing differences to revert in the fourth quarter. And the annual effective tax rate to be consistent with our previous tax rate guidance of 13 to 16%.

As such we expect the deductible timing differences to revert in the fourth quarter and the annual effective tax rate to be consistent with our previous tax rate guidance of 13% to 16%.

Speaker 5: Moving to investing activities, in the third quarter, we placed $699 million of assets in service, which is a 74.3% increase compared to the prior year.

Moving to investing activity in the third quarter, we placed $699 million of assets in service, which is a 74, 3% increase compared to the prior year.

Speaker 5: The increase in the transition segment was primarily related to the timing of investment place and service for station equipment, refurbishing and replacements, as well as timing of asset place and service related to information technology. Lastly, I'll step by major development projects put in service in the prior year.

The increase in the transmission segment was primarily related to the timing of investment placed in service.

Station equipment refurbishment and replacement as well as timing of assets placed in service related to information technology.

Partially offset by major development projects put in service in the prior year.

Speaker 5: In the distribution segment, the increase was primarily related to the timing of assets placed in service, pertaining to the Information Technology Initiative, a higher volume of storm.

In the distribution segment. The increase was primarily related to the timing of assets placed in service pertaining to information technology initiatives.

Higher volume of storm related replacement cut.

Speaker 5: customer connections and line of servicements and would pull replacements partially offset by a lot of volume of station

Customer connections and laundry submissions and wood pole replacements, partially offset by a lower volume of station Refurbishments and the placements.

Speaker 5: Faces, Placid and Service also increase to the other segment, primarily due to the replacement of acronyms. Informat-

Assets placed in service also increase to the other segment, primarily due to the replacement of acronyms information technology equipment.

Speaker 5: Capital investment for the third quarter was $638 million, which is a 27.3% increase from the third quarter in 2022.

Capital investments for the third quarter was $638 million, which is a 27, 3% increase from the third quarter in 2022.

Speaker 5: Transmission capital investments increase 23.5% year over year, primarily due to a high volume of station and service and equipment replacement.

Transmission capital investments increased 23, 5% year over year, primarily due to a high volume of station <unk> and equipment replacements.

Distribution capital investment increased by 34, 6% to a higher volume of storm related asset replacements high volume of lawn Refurbishments and wood pole replacement investments in the advanced metering infrastructure system to a project as well as higher volumes of work on customer connections.

Speaker 5: Distribution capital investments increased by 34.6% to your higher volume of storm-related asset placements, higher volume of line refurbishment and with polar placements, investments in the advanced metering infrastructure system, 2.0 projects, as well as higher volumes of work on customer connection.

Speaker 5: With announcements regarding the revision of timing for chat and intellectual lines, we have updated the future capital investment tables to reflect the acceleration of time and decreasing capital.

With the announcement regarding revision of timing for chat intellectual line, we have updated the future capital investments table to reflect the acceleration of time and decreasing capital costs.

Speaker 5: The table does not include any future investments for society with the three Northeastern and Eastern Lines that David discussed earlier today.

The table does not include any future investments associated with the three north eastern and Eastern line that David discussed earlier today.

Speaker 5: Consistent with past practice, those lines, and others that do not have estimates, will be updated in the table once a section 92, or leave the construct application has been passed.

Consistent with past practice, those lines and others that do not have estimates will be updated in the table. One to 692 will lead to construct application has been cost.

Speaker 4: The data mentioned hydro unreached an agreement with the Shafway Public Utilities Corporation to acquire substantially all the business and distribution app.

As David mentioned <unk> reached an agreement with the Chevrolet Public Utilities Corporation to acquire substantially all of the business and distribution assets.

Speaker 4: The Tanship of Sheplow is located around 200 kilometers from that team in operation.

<unk> is located around 12 kilometers from that Timmins operations Center.

Speaker 5: Declosition equates to a purchase multiple of approximately 1.2 times enterprise value to rate base on a current rate base of $1.9 million.

The acquisition equates to a purchase multiple of approximately one two times enterprise value to rate based on our current rate base of $1 9 million.

The acquisition is conditional upon the satisfactory of customary closing conditions and approval by the OE.

Speaker 5: that position is conditional upon the satisfactory of custom re-closing condition and approval by the OEV.

Speaker 4: We believe this transaction provides excellent value to both Hydra1 and the customers of Shaflo Hydra. We are very pleased.

We believe this transaction provides excellent value to both hydro one and the customers of shallow hydro.

We are very pleased to join the schaeffler community.

Speaker 4: We intend to file an application with the OEB for approval of the acquisition by the end of 2023 and expect to close the transaction in the second half of 2024. With integration complete.

We intend to file an application for approval of the acquisition by the end of 2023 and.

And expect to close the transaction in the second half of 2024.

With integration completed by the end of 2024.

Speaker 4: We continue to engage with other local distribution companies and look for additional opportunities to facilitate further consolidation within the

We continue to engage with our local distribution company and look for additional opportunities to facilitate further consolidation within the sector.

Speaker 5: On guidance, we reaffirmed our previous target of 5.7% earnings per shareglow through 2027 on the normalised 2022 EBS of $1.61.

On guidance, we reaffirm our previous target of 5% to 10% earnings per share growth through 2027 on the normalized 2020 to EPS of $1 61.

Speaker 5: As a reminder, the EPS growth range does not factor in growth in broad-band LDC consolidation, or the transmission lines that have been previously awarded, but only have preliminary assets or are pending approval such as the Wascukin transmission line. As well as any amounts from externe...

As a reminder, the EPS growth range does not factor in growth broadband LDC consolidation all the transmission lines that had been previously awarded but only had preliminary assets or are pending approval such as the water transmission line.

As well as any amounts from externally driven variance accounts.

Speaker 5: Finally, I am pleased to report that we declared a dividend to come and share holders of 29.64 cents per share. I'll stop there and we'd be pleased.

Finally, I am pleased to report that we declared a dividend to common shareholders of $29 six.

Appreciate it.

I'll stop there and we'd be pleased to take your questions.

Speaker 6: Thank you, David and Chris. We asked the operator to explain how they'd like to organize the Q&A polling process. In case we can't address your questions today, my team and I are always available to respond to follow up questions. We ask that you limit your questions to one question and one follow up. If you have any additional questions, we request you to rejoin the queue. Please go ahead.

Thank you, David and Chris we ask the operator to explain how they'd like to organize the Q&A polling process in case, we can address your questions. Today My team and I are always available to respond to follow up questions. We ask that you limit your questions to one question and one follow up if you have any additional questions. We request you to rejoin the.

Please go ahead.

Speaker 1: Thank you. As a reminder, task a question. Please press star one on your telephone and wait for your name to be announced.

Thank you as a reminder to ask a question. Please press star one wondering your telephone and wafer your name to be announced.

Speaker 1: To withdraw your question, please press star one one again. Please send a vote to cloud the Q&A.

Withdraw your question. Please press Star one again, please turn to.

The Q&A roster.

Okay.

Speaker 1: Our first question comes from the line of Robert Hope, what's Gilleship Bank, your line of snow?

Our first question comes from the line of Robert Hope with Scotiabank. Your line is now open.

Hi, good morning.

Good to see the recent transmission line anchor service ahead of schedule and under budget and can you just speak to what youre seeing with the supply chain.

Third parties ourselves, noting some tightness there and some inflation there.

And then can you just maybe compare and contrast that with your recent experience and successes on the recent lines.

Thanks, Robert and good morning.

Supply chain is definitely tightening up and what we find is we're ordering critical components. Further out now. This is an advantage that hydro one has perhaps over.

Speaker 3: other utility companies in that we saw that starting at the beginning of the pandemic so our procurement team reached out to our suppliers, diversified the supplier base.

Other utility companies in that we saw this starting at the beginning of the pandemic. So our procurement team reached out to our suppliers diversified supplier base standardized product mix among other things, but also started securing manufacturing space further out we've continued that as we've seen the increasingly electrification. So so far we haven't had any challenges reach.

Getting a critical equipment on site for any of the projects we're working on.

Speaker 6: Good here. And then just in terms of the three new projects that were awarded to you, any visibility on any incremental projects there. And you know, when do you think you could see a section 92 to better kind of scope out the timing and cost?

Alright.

And then just in terms of the three new projects that we're working to any visibility on any incremental projects there and when do you think you could see a section 92 to better kind of scope out what the timing and costs.

Speaker 3: He sound like me asking my team those same questions. They're working hard to get the detailed engineering finish to do the engagements that are necessary to local communities, the indigenous groups, partners. I'm a landowner, so as soon as we can have that mature a poll together, we'll be sharing that.

<unk> so as soon as we can have that material pulled together, we'll be sharing that.

Thank you.

Speaker 1: Thank you. Our next question comes from the line of Darius Lasni with Think of America. Your line is no.

Our next question comes from the line of various <unk> with Bank of America. Your line is now open.

Hey, guys. Good morning, and thank you for taking the question.

Speaker 7: Hey guys, good morning and thank you for taking the question. Maybe just starting on the distribution, capital opportunity related to the build out of broadband. Certainly, sounds like you guys have done quite a bit of work and perhaps some investment ahead of time to be prepared. Can you comment on any impact on OM&A or capital associated with that? And as part B to that question, certainly appreciate the 2025 machine gain toü tymogp WikiThis has been implemented together.

Just starting on that.

The distribution capital opportunity related to the build out of broadband.

Certainly it sounds like you guys have done quite a bit of work and perhaps some investment ahead of time to be to be prepared.

Comment on any impact on <unk> or capital associated with that and as part B to that question certainly appreciate the 2025.

Speaker 7: time frame that you're managing to just wondering if there's been any talk at all of that possibly getting pushed back whether by amending legislation or otherwise.

Frame that youre managing to just wondering if theres been any talk.

At all of that possibly getting pushed back whether by amending legislation or otherwise.

Thanks, Darius start with the last question first no talk about amending that timeframe. It's critically important the people who live in rural Ontario that they have access to high speed Internet and all the parties are working to make sure. We still meet that December 25th deadline recently I have been having meetings with the executives at some of the different <unk>.

Speaker 3: And all the parties are working to make sure we still meet that December 25 deadline. Recently I've been having meetings with the executives of some of the different telcos that have participated and participated in and they're starting to ramp up and get excited about this. So starting to feel a bit more positive on how this is moving forward. In terms of your first question, no impact on our OMIN A and capital programs at this point in time from the work to pre-work we've done to get ready. Just set us all up for success over the next two years.

<unk> that of <unk>.

That are participated in as they are starting to ramp up and get them excited about this so starting to feel a bit more positive on how this is moving forward in terms of your first question.

No impact on our <unk> and capital programs at this point in time from the from the work the pre work we've done to get ready. It's just set us all up for success over the next two years.

Speaker 7: Okay, excellent. Thank you for the color. One more if I can just on the perspective, LVC opportunity we are and have been in a higher rate environment. Are you seeing perhaps an uptick in smaller LVCs that might be in sort of more difficult financial condition that would therefore open them up for potential transaction or are you seeing more or less kind of the regular case?

Okay excellent. Thank you for the color one more if I can just on the prospective LDC.

Opportunity.

And have been in a higher rate environment are you seeing perhaps an uptick in.

Smaller LDC as it might be in sort of more difficult financial condition that would therefore opening them up for a potential transaction or are you seeing more or less kind of the regular cadence.

Speaker 5: Hi, Daris. It's Chris here. As the higher interest rates for longer, coupled with the theme of energy transition and higher demand on capital, those two coming together and they've both been increasing and have been now around for 12 months or more, we have seen an increase in activity. And Shapp was a good example of that. There are others. Certainly the pressure at the smaller end is higher and then as you get to the large relatively sees a few more options but we're saying to see a lot more activity.

Hi, Darren.

It's Chris yes, as the higher interest rates for longer coupled with.

The theme of energy transition and high demand on capital those two coming together and that both been increasing and have been now around 12 months or more.

We have seen an increase in activity in Shanghai is a good example of that there are others.

Certainly the pressure at the smaller end is higher.

And then as you get to the larger LTC has a few more options, but we're starting to see a lot more activity.

Speaker 7: Okay, excellent. Thank you guys. Appreciate it and looking forward to catching up at the EI.

Okay excellent. Thank you guys appreciate it and looking forward to catching up with you yet.

Speaker 1: Thank you. As a reminder, tell us a question at this time. Please press star 11 or your touch phone telephone.

Thank you.

To ask a question at this time, please press star one one you touched on telephone.

Our last question comes from the line of Maurice Choy with RBC capital markets. Your line is now open.

Speaker 1: Our last question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open.

Speaker 8: Thank you and good morning. If I could just start with the financing bit. And Chris, could you discuss your upcoming maturity to 2026?

Thank you and good morning, if I could just start with the financing.

<unk>.

Chris could you discuss your upcoming maturities to 2026.

Speaker 8: the rates of which the maturing debt are at, and what we tend to borrow today, and maybe bigger picture too, seeing as your cost of capital is fixed for the duration of the cheer up period, thoughts on how the smart feed-ins of your guidance and what tools you have in your financing tool box to offset and...

Debates of which the maturing debt.

<unk>.

What we tend to borrow at today, and maybe bigger picture too seeing as your cost of capital is fixed rate duration, which you out period.

And how this might feed into your guidance and what tools you have in your financing tool box to offset any drag.

Speaker 5: I'm Arise, thanks for the question. We can in a short term, not a concern, we've completed our borrowing for this year. As you'll know, that through JRAP, they factoring.

Alright, thanks for the question.

In the short term not a concern we've completed our borrowing for this year as Youll know that three J Ralph May factor in.

Speaker 5: forecast borrowing rates for the first year so that it's all covered and we've met our requirements there. We've retained some flexibility because the last two were floating radisiwances which allows us to fix those as interest rates.

Full cost borrowing rate for the first piece of it is all comfortably we've met that requirement today.

Retain some flexibility because the last two were.

Floating rate issuances, which allows us to fix those as interest rates.

Speaker 5: normalize over time as we believe will occur. In fact, in the last couple of weeks.

Normalized at the time, which we believe will occur in fact in the last couple of weeks.

Speaker 5: interest rates that in the long end have dropped 50 to 60 basis points. So that was a a fortuitous decision for us.

The strength of the long end of dropped 50 to 60 basis points.

That was that.

Punctuated decision for us.

Speaker 5: In the longer term, we don't see a big concern here. Maurice, the question we get a lot is, what if interest rates stay at the current level throughout the entire period? It would still keep us within our current guidance. It would not take us outside of that.

In the longer term, we don't see a big concern here.

<unk>.

The question, we get a lot is what if interest rates stay at the current level throughout the entire period. It would still keep us within our current guidance it would not take us outside of that.

Speaker 5: So we're quite comfortable that we have the ability to flex the way we finance it, a short or long term. We can change the timing of ads. We can go with any duration to 5, 10 or 30. So there are many options available to us to do that. And short, it's not gonna change our.

So we are quite comfortable that we have the ability to flex the way, we finance either short or long term, how we can change the timing of that we can go in with any duration to $5 $10 30. So there are many options available to us to do that.

In short, it's not going to change our guidance at this point.

Speaker 8: And just to be clear, you're able to stay within a five to seven percent range without the potential bump up in Wathigan as well as the high speed internet. Sorry, can you repeat?

And just to be clear, you're able to stay within our 5% to 7% range without the potential bump up in Washington.

As well as the high speed Internet.

Sorry.

Morris I didn't get that.

Speaker 8: You mentioned that you're able to stay within the five to seven percent range if we already are, but you're seeing that without having to have any offsets from the ushig ans long, at this point, the two intent in its best interest, of the basis of controlix

Yes, you are.

You mentioned that you were able to stay within the 5% to 7% range.

They already are.

Are you seeing that.

Without having to have any offsets from two octagon as well as high speed Internet in fact, correct correct. So we haven't updated our range I think last time I said Murray said once again its going to 692 I think the question came in my response was that it.

Speaker 4: Correct. So we have an updated our range. I think last time I said, Marie said, Washington's got a section 92. I think the question came and my response was that if Washington was approved that it's rate and in service as planned, it would put it at the upper end of the five to seven percent range. Any impacts from interest rates or financing in those projects would not take this out by that range.

<unk> was approved in its right in in service as planned it would put us at the upper end of the 5% to 7% range.

Any impact from interest rates will financing those projects would not take this outside that range.

Perfect. Thank you very much.

Speaker 1: Thank you and that does conclude our Q&A session for today. I like to turn the call back over to Omar Jabbat for any further remarks.

Thank you and that does conclude our Q&A session for today I'd like to turn the call back over to Omar Chavez for any further remarks.

Speaker 4: Thanks, Shannon. The management team at Hydro1, thanks everyone for their time with us this morning during what is a busy period. We appreciate your interest and your ownership. If you feel you have any questions that weren't addressed on the call, please feel free to reach out and we'll get them answered for you. Thank you again and enjoy the rest of your day.

Thank you again and enjoy the rest of your day.

Speaker 1: Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect everyone have a great day.

Q3 2023 Hydro One Ltd Earnings Call

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