Q4 2023 Hydro One Ltd Earnings Call

Good morning, ladies and gentlemen, and welcome to the Hydro one limited's fourth quarter 2023 analysts teleconference. At this time all participants are in a listen only mode.

Operator: Good morning, ladies and gentlemen, and welcome to Hydro One Limited's fourth quarter 2023 analyst teleconference. At this time, all participants are in a listen-only mode.

Operator: 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 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

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 one on your telephone you will then hear an automated message you're watching your hand is raised.

Omar Javid: To withdraw your question, please press star 11 again. As a reminder, the call is being recorded. I would now like to introduce your host for today's conference, Mr. Omar Javid, Vice President, Communications, Marketing, and Investor Relations at Hydro One.

Draw. Your question. Please press star one again.

As a reminder, the call is being recorded.

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

Omar Job: Good morning, and thank you for joining us and hydro one's quarterly earnings call.

Omar Javid: Good morning, and thank you for joining us on Hydro One's quarterly earnings call. Joining us today are our President and CEO, David Liebeter, and our Chief Financial Officer, Chris Lopez. In today's call, we will go over our quarterly and annual results and then spend most of the call answering as many of your questions as possible, as time permits. There are also several slides that illustrate some of our points, which we'll 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 Hydro One's website in the Investor Relations section under Events and Presentations.

Omar Job: Joining us today are president and CEO, David leave it here and.

Omar Job: And our Chief Financial Officer, Chris Lopez.

Omar Job: On the call today, we will go over our quarterly and annual results and then spend most of the call answering as many of your question.

Omar Job: Im permits.

Omar Job: There are also several slides that illustrate some of our point, 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 everyone hydro one's website in the Investor Relations section under events and presentations.

Omar Javid: Today's discussions will likely touch on estimates and other forward-looking statements. 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 apply to this call. With that, I'll turn the call over to our President and CEO, David Lieberman. Thank you, Omar.

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

Omar Job: 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.

Omar Job: They all apply to this call.

David: With that I'll turn the call over to our President and CEO David leader.

Thank you Omar good morning, and thank you for joining us on our fourth quarter earnings call.

David Liebeter: Good morning, and thank you for joining us on our fourth quarter earnings call. This morning, I will provide an update on our recent activities and reflect on the past year. Then, Chris will take you through the financial results in greater detail.

David Galison: I will provide an update on our recent activity and reflect on the past year and Chris.

David Galison: Chris will take you through the financial results in greater detail.

David Liebeter: As I reflect on this past year as CEO of Hydro One, I am proud of the achievements that we have been able to accomplish across the business. We executed our strategy, investing in critical infrastructure to support our communities and energize life in Ontario. We grew our transmission pipeline to nine transmission lines currently in development or under construction and are well positioned to play a vital role in the economic growth of the province. In 2023, we will continue to expand our strategic partnerships with First Nations. Communities, Government, and Industry

David: As I reflect on this past year as CEO of fiber one I am proud of the achievements that we have been able to accomplish across the business we executed our strategy.

David: The critical infrastructure to support our communities and energize life in Ontario, We grew our transmission pipeline benign transmission line currently in development or under construction and are well positioned to play a vital role in the economic growth in the province.

David: In 2023, we continue to expand our strategic partnership with first nations communities government and industry partnerships remain at the heart of everything we do economic reconciliation efforts with indigenous communities for a first nations equity partnership model.

David Liebeter: Partnerships remain at the heart of everything we do. Economic reconciliation efforts with indigenous communities through our First Nations Equity Partnership model ensure that they can participate in and benefit from our transmission investments. We also continue to deliver on the commitments to our customers and the communities we serve. I am proud of the hard work and dedication our teams bring to the job every day. Their drive, Thank you very much.

David: They can participate in and benefit from our transmission investments.

David: We also continued to deliver on the commitments to our customers and the communities we serve.

David: Out of the hard work and dedication of our teams bring to the job every day their drive and execution, coupled with our commitment to safety and operational excellence has allowed us to achieve success in meeting customer expectations and the needs of all Ontario's.

David Liebeter: At Hydro One, success is more than delivering power; it's about being there when our customers need us most. As we move into 2024, we continue to invest in critical infrastructure to support economic growth across the province. Looking ahead, in the coming years, we expect to see a significant increase in the demand for electricity infrastructure and new customer connections.

David: As hydro one successes more than delivering power.

David: About being there when our customers need us most.

David: As we move into 2024, we continue to invest in critical infrastructure to support economic growth across the province looking ahead in the coming years, we expect to see significant increase in the demand for electricity infrastructure and new customer connections. This growth provides tremendous opportunities for hydro one to make additional investments in critical infrastructure that will energetically.

David Liebeter: This growth provides tremendous opportunities for Hydro One to make additional investments in critical infrastructure that will energize life, support growing communities and businesses, and help move Ontario to a cleaner energy future. I am proud to report that we had another great year of safety results in 2023. Recordable injury and high energy serious injury frequency rates continue to be below our annual targets, in large part due to the relentless pursuit of zero safety incidents by our employees.

David: Support growing communities and businesses and help move, Ontario to a cleaner energy future.

David: I am proud to report that we had another great year safety results in 2023, our recordable injury and high energy serious injury frequency rate continue to be below our annual targets in large part due to the relentless pursuit of zero safety incidents by our employees.

David Liebeter: In 2023, Hydro One achieved a recordable injury rate of.56 for 200,000 hours, which remains well below the world-class benchmark of 1.0. This result demonstrates what can be achieved when the entire organization rallies around a challenge. In November, this outstanding result was recognized by Electricity Canada when they presented Hydro One with an award for excellence in transmission safety. With continued focus, I'm confident we can eliminate all serious injuries and fatalities.

David: In 2023, hydro and achieved a recordable injury rate of <unk> $5 six per 200000 hours, which remains well below the world class benchmark of 1.0.

David: This result demonstrates what can be achieved when the entire organization rallies around the challenge in.

David: In November this outstanding result was recognized by electricity, Canada. When they presented if either won an award for excellence in transmission safety.

David: Continued focus on confident we can eliminate all serious injuries and fatalities.

David Liebeter: Our focus on safety goes hand-in-hand with our commitment to our customers and Ontario. This dedication is deeply rooted in our belief that being there when customers and communities need us the most is what matters. This January, our teams restored power to over 125,000 customers impacted by the snowstorm.

David: Our focus on safety goes hand in hand, with our commitment to our customers and Ontario. This dedication is deeply rooted in our belief that being there and customers and communities need us. The most is what matters.

David: In January our teams restored power to over 125000 customers impacted but those stores.

David Liebeter: We know that electricity is critical to our lifestyle and maintaining high levels of availability for our customers to meet their needs supports your customer strategy. It is with great pride that our response efforts continue to be recognized by others. This past year, Hydro One was recognized with the Edison Electric Institute Award for Emergency Response.

David: No that electricity is critical to our lifestyle and maintaining high levels of availability for our customers to meet their needs as core to our customer strategy.

David: It's with great Pride that our response efforts continue to be recognized by others. This past year <unk> was recognized by the Edison Electric Institute Award for Emergency response. This award is a 14th Emergency response award and recognize our teams continue to show up and get the job done when the customers and communities need us the most.

David: We continue to make the capital investments necessary to maintain the safety reliability and resilience of our transmission and distribution systems, but also provide the ongoing growth in modernization required to meet the expanding and evolving needs of our customers.

David Liebeter: This award is our 14th emergency response award and recognizes how our teams continue to show up and get the job done when customers and communities need us the most. We continue to make the capital investments necessary to maintain the safety, reliability, and resilience of our transmission and distribution systems but also provide the ongoing growth and modernization required to meet the expanding and evolving needs of our customers. Once again, we executed our capital program and met our capital investment commitments for 2023. This past year, we deployed approximately $2.5 billion of capital and in-service $2.3 billion of assets.

David: Once again, we executed our capital program and met our capital investment commitments for 2023. This past year, we deployed approximately $2 5 billion of capital and in service $2 3 billion of assets.

David: These investments will supply the critical infrastructure needed to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario economic growth.

David: I am pleased to say we have done this with a focus on continuous improvement to enhance customer service efficiency productivity and reliability. Every dollar we invest in has done some of our customers in mind, which is why we are committed to spending wisely and continually improving productivity.

David Liebeter: These investments will supply the critical infrastructure needed to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario's economic growth. I am pleased to say we have done this with a focus on continuous improvement to enhance customer service, efficiency, productivity, and reliability. Every dollar we invest is done so with our customers in mind, which is why we are committed to spending wisely. Continually Improving Productivity In 2023, we had another year of strong product-to-savings, savings of $114 million. As I mentioned in my opening remarks, we have grown our project pipeline to nine new transmission lines in development for construction. Three of these transmission lines, which are situated in northeastern and eastern Ontario, were awarded to Hydro One in the fourth quarter. These lines include the Mississaugi, the third line, the Hamner to Mississaugie Line, and the Greater Toronto Area East Line.

David: In 2023, we had another year of strong product with savings achieving savings of $114 million.

David: As I mentioned in my opening remarks, we have grown our project pipeline for nine new transmission lines and development or construction.

David: Three of these transmission lines, which are situated north eastern and eastern Ontario were awarded to hydro one in the fourth quarter. These.

David: These lines include the misses slogging to third line.

David: The hamner to Mr. Soggy line in the greater Toronto area East line for <unk>.

David: Three lines will support the continued economic growth in northern communities and facilitate the growing electricity demand in transportation mining steel and manufacturing industries in the northeast and eastern parts of the province.

This result highlights our superior execution continues to be a critical aspect of our hydro one remains a transmitter a choice for the development construction and operation of priority project in Ontario.

David: Our commitment to growing our network of strategic partnerships with first nations communities governments and industry partners underpins our approach to building critical infrastructure.

David: These partnerships ensure proper engagement on planning development and execution of projects, while allowing for the sharing of economic development benefits from these investments.

David Liebeter: The three lines will support the continued economic growth in northern communities and facilitate the growing electricity demand in transportation, mining, steel, and manufacturing industries in the northeast and eastern parts of the province. This result highlights our superior service, and continues to be a critical aspect of why Hydro One remains a transmitter of choice for the development, construction, and operation of priority projects in Ontario. Our commitment to growing our network of strategic partnerships with First Nations, communities, government, and industry partners underpins our approach to building critical infrastructure. These partnerships ensure proper engagement on the planning, development, and execution of projects while allowing for the sharing of economic benefits from these investments.

David: In December we expanded our strategic partnerships through the signing of initial partnership agreement with five Nations Development, Inc. A wholly owned subsidiary of five Nations Energy Judy.

David: Judy agreement, we will work together to meet the growing electricity demand in the northeastern Ontario, while increasing indigenous participation in the energy sector.

David: This agreement is part of our strong commitment and effort to build mutually beneficial relationships with indigenous partners.

David: For the ninth year in a row Forbes has recognized hydro one in their annual list of Canada's best employers for 2024 ranking as determined by the recommendations made by employees and other professionals, who we recommend hydro one as a desirable employer.

David: Rankings are based on the independent surveys of over 40000 employees working for companies employed at least 500 people in Canada, receiving recognition as one of Canada's best employers and a testament to our continued success in building a safe workplace for our teams feel heard valued and have a true sense of belonging.

David: This award follows a recognition by corporate Knights as one of the best 50 corporate citizens in Canada. During 2023, the award celebrates our relentless commitment to sustainability and environmental stewardship.

David Liebeter: In December, we expanded our strategic partnerships through the signing of an initial partnership agreement with the Five Nations Development Fund, a wholly owned subsidiary of Five Nations Energy. Through the agreement, we will work together to meet the growing electricity demands in Northeastern Ontario while increasing Indigenous participation in the energy sector. This agreement is part of our strong commitment and effort to build mutually beneficial relationships with Indigenous partners. For the ninth year in a row, Forbes has recognized Hydro One on its annual list of Canada's Best Employers for 2024. Ranking is determined by the recommendations made by employees and other professionals who would recommend Hydro One as a desirable employer. The rankings are based on independent surveys of over 40,000 employees working for companies employing at least 500 people in Canada.

David: This recognition is a testament to the dedication of our teams in driving our sustainability initiatives and adopting best practices throughout our operations. We are humbled and inspired by the accolades. These recognitions are a testament to the collective efforts of our employees partners and stakeholders.

David: In other updates we continue working with the telcos to advance the delivery of high speed Internet to some 700000 Ontario's as we have mentioned on previous calls are everyone is prepared and has been for some time, we made investments in labor and training strengthened our supply chain streamlined our joint use processes relax standards onboard of contractors and purchase.

David: Materials in preparation for this initiative.

David: We understand the importance of connectivity to everyday life for families and businesses many of whom are our customers.

As many of you know Chris has made the decision to leave <unk> to pursue other opportunities since joining hydro one and 2016 Christmas played an instrumental role in shaping the company to what it is today. He has built a deep bench of experienced leaders within the organization and has overseen significant improvements in equity and bond investor confidence share price performance and productivity.

David: Activity savings.

David: While I'm sad to see Chriscoe I fully understand and support his appetite to try other challenges on behalf of the company and our employees the executive team and myself I want to thank Chris for service to the company its shareholders partners customers and stakeholders.

David Liebeter: Receiving recognition as one of Canada's Best Employers is a testament to our continued success in building a safe workplace where our teams feel heard, valued, and have a true sense of belonging. This award follows our recognition by Corporate Knights as one of the best 50 corporate citizens in Canada for 2020. The award celebrates our relentless commitment to sustainability and environmental stewardship. This recognition is a testament to the dedication of our teams in driving our sustainability initiatives and adopting best practices throughout our operations. We are humbled and inspired by these accolades.

David: That I will turn it over to Chris to discuss our financial results Chris over to you.

Chris Lopez: Good morning, and thank you for joining us today, David. Thank you for your kind words I am extremely proud of the many accomplishments we achieved together over the years, we enhanced the finance regulatory and shared services functions to meet the moment and continue to energize lots of oil ontarian well into the future.

Most recently, we added a sustainable financing framework a first for Canadian utility. This framework aligns our funding goals without sustainability strategy and allows us to generate modest cost savings while investing in critical infrastructure.

David Liebeter: These recognitions are a testament to the collective efforts of our employees, partners, and stakeholders. In other news, we continue working with the tailcoast to advance the delivery of high-speed internet to some 700,000 Ontarians. As we have mentioned on previous calls, Hydro One is prepared and has been for some time. We have made investments in labor and training, strengthened our supply chains, streamlined our joint use processes, relaxed standards, onboarded contractors, and purchased materials in preparation for this initiative. We understand the importance of connectivity to everyday life for families and individuals, many of whom are our customers. As many of you know, PRRS has made the decision to leave Hydro One to pursue other operations since joining Hydro One in 2000.

Speaker Change: With a deep bench of talent across the organization and a strong balance sheet to support our growth plans I felt this was the right time for me to pursue other challenges.

Speaker Change: To thank all the hardworking employees at Hydro one who I have had the pleasure of working with during my time here.

Speaker Change: I also want to thank all of our stakeholders and partners for their support and confidence as we continue to deliver power to drive economic growth across Ontario.

Speaker Change: Turning to our financial results for the quarter earnings per share was 30, <unk> consistent with the fourth quarter last year for the full year earnings per share was $1 81 compared to $1 75 last year.

Speaker Change: Drivers of higher earnings for the full year were consistent with our experienced throughout most of the year. They would high revenues on account of Ontario Energy Board of OSB approve rates, which considers the annual investment in the grid and power system and strong electricity demand experienced throughout the year.

David Liebeter: Chris has played an instrumental role in shaping the company into what it is today. He has built a deep bench of experienced leaders within the organization and has overseen significant improvements in equity and bond investor competence, share price performance, and productivity savings. While I am sad to see Chris go, I fully understand and support his appetite to try other challenges.

Speaker Change: Partially offset by the recognition of conservation demand management will CDN revenues, a one time item in the fourth quarter of 2022.

Speaker Change: And lower income tax due to high deductible timing differences.

Speaker Change: Drivers were partially offset by higher operations, and maintenance and administration or <unk> expenses on a kind of high what programming expenditures, including forecast environmental expenditures provision and initiatives as well as higher corporate support costs.

Chris Lopez: On behalf of the company, and our employees, the executive team, and myself, I want to thank Chris for his service to the company, shareholders, partners, customers, and stakeholders. With that, I'll turn it over to Chris to discuss our financial results. Chris, over to you.

Speaker Change: Higher depreciation amortization asset removal costs as we continued to invest and grow our capital assets, coupled with the gain on sale of certain fixed assets in the fourth quarter of 2022, and finally higher year over year financing charges, resulting from higher weighted average interest rate on our long term debt and short term note.

Chris Lopez: Good morning, and thank you for joining us today. David, thank you for your kind words. I'm extremely proud of the many accomplishments we achieved together over the years. We enhanced the finance, regulatory, and shared services functions to meet the moment and continue to energize life for all Ontarians well into the future. Most recently, we added our sustainable financing framework, a FERC for a Canadian utility. This framework aligns our funding goals with our sustainability strategy and allows us to generate modest cost savings while investing in critical infrastructure. With a deep bench of talent across the organization and a strong balance sheet to support our growth plans, I felt this was the right time for me to pursue other challenges.

Speaker Change: As well as having a higher volume of long term debt.

Speaker Change: As a reminder, we adjusted the amount pertaining to the deferred tax asset or DTA recovery, which expired at the end of June resulting in a reduction in both revenue and income tax expense, making them an income neutral similar.

Speaker Change: Similarly, we adjusted for the OSB approved recovery of historical cost deferrals totaling the tariff decision, which resulted in an increase in revenue that is offset by an increase in M&A and income tax expense. Once again it is net income neutral.

Speaker Change: Well I'll talk to hire this year.

Speaker Change: David's comments that we continue to be highly productive both our transmission and distribution segment performed well this year and as a result of our efforts. We were pleased to give back approximately $45 million to our customers by the earnings sharing mechanism.

Chris Lopez: I want to thank all the hardworking employees at Hydro One who I have had the pleasure of working with during my time here. I also want to thank all of our stakeholders and partners for their support and confidence as we continue to deliver power to drive economic growth across Ontario. Turning to our financial results for the quarter, earnings per share was $0.30, consistent with the fourth quarter last year. For the full year, earnings per share was $1.81 compared to $1.75 last year.

Speaker Change: On the productivity front, we are pleased to have achieved $140 million in productivity savings in 2023.

Speaker Change: We saw meaningful increases in productivity in areas, such as operations and supply chain management.

Speaker Change: The productivity savings, we're weighted slightly more towards capital versus <unk> and revenue.

Speaker Change: These achievements, we are delivering on a multiyear commitment to keep cost as low as possible.

Speaker Change: In the past, we provided accumulative productivity savings Sika however.

Speaker Change: A J REIT, we replaced our productivity to align with that JV applications and as such the cumulative productivity savings figures, we used to provide and then longer comparable to current figures.

Chris Lopez: The key drivers of higher earnings for the full year were consistent with our experience throughout most of the year. They were higher revenues on account of Ontario Energy Board or OEB-approved rates, which considers the annual investment in the grid and power... and Strong Electricity Demand, experienced throughout, partially offset by the recognition of Conservation Demand Management, or CDM, revenues, a one-time item in the fourth quarter of 2022, and lower income tax due to high deductible timing. These drivers were partially affected by higher operations, maintenance, and administration (OM&A) expenses on account of higher work programming, including Forecast Environmental Expenditure Provision and IT Initiatives, as well as higher corporate support. High Depreciation, Amortisation, and Asset Removal Costs as we continue to invest in and grow our capital assets, coupled with the Galon sale of surplus fixed assets in the fourth quarter of 2022. And finally, higher year-over-year financing charges resulting from a higher weighted average interest rate on our long-term debt and short-term notes, as well as having a higher volume of long-term debt.

Speaker Change: As previously reported cumulative productivity savings to get four of approximately $1 5 billion, Kevin savings generated from our initial public offering in 2015 to the end of 2022.

Speaker Change: We will continue to look for ways to be more productive as these savings will eventually flow back to rate payers in the next rate period.

Net income to shareholders in the fourth quarter was relatively unchanged from a year ago. The key drivers behind the results. This quarter were similar to the full year variance and include higher revenues driven by higher peak demand and energy consumption, coupled with only be approved rates and lower income taxes due to high deductible timing differences, which were offset by.

Speaker Change: Higher financing charges, resulting from higher weighted average interest rates and volume of long term debt.

Speaker Change: Depreciation following the gain in sale of surplus fixed assets in the fourth quarter of 2022.

Speaker Change: Our fourth quarter revenue net of purchase power was higher year over year by two 3%.

The increase is mainly due to higher peak demand and energy consumption and only be it through 2023 transmission rates.

Speaker Change: Firstly offset by CDN revenues recognized last year.

Speaker Change: And higher earning sharing.

Speaker Change: For the transmission segment revenues were higher by five 4%.

Speaker Change: Increase was reflective of higher transmission revenues due to always be approved rates, coupled with stronger peak demand, which was seven 7% higher compared to last year.

Speaker Change: Yes.

Chris Lopez: As a reminder, we adjusted the amounts pertaining to the Deferred Tax Asset, or DTA, recovery, which expired at the end of June, resulting in a reduction in both revenue and income, making it their income. Similarly, we adjusted for the OEB-approved recovery of historical cost deferrals following the JREP decision, which resulted in an increase in revenue that is offset by an increase in OM&A and income. Once again, it is Net Income News. While I pop in for hi this year, I do want to echo David's comments that we continue to be highly...

Speaker Change: These higher revenues were partially offset by CDN revenues recognized in 2022.

Speaker Change: Higher earnings sharing this year.

Speaker Change: Distribution revenues net of purchased power decreased by one 5%, mainly due to net income neutral items and higher earning sharing.

Speaker Change: These are partially offset by higher customer accounts and energy consumption, which was higher by two 7%.

Speaker Change: Both the transmission and distribution segment had net income neutral items in revenue, including the cessation of the DTA recovery and normal course regulatory adjustments.

Speaker Change: They have a corresponding offsetting tax expense and eliminate making them net income neutral.

Speaker Change: On the cost front operating maintenance and administration expenses in the quarter increased by approximately two 3% year over year.

Chris Lopez: Both our transmission and distribution segments performed well this year, and as a result of our efforts, we were pleased to give back approximately $45 million to our customers via the Earnings Sharing mechanism. On the productivity front, we are pleased to have achieved $114 million in productivity savings in 2023. We saw meaningful increases in productivity in areas such as operations and supply chain management. However, the productivity savings were weighted slightly more towards capital versus OM&A and REIT.

Speaker Change: The quarterly variance was due to highway program expenditures offset by lower corporate support costs on account of a higher rate of capitalization of overheads.

On transmission costs were lower by one 4%, mainly due to lower corporate support costs.

Speaker Change: The capital program ramped up in the back half of the year, we capitalized common costs at a higher rate, which substantially offset the increase in corporate support costs in the front half of the year.

Speaker Change: This was partially offset by high work program expenditures.

Speaker Change: That really related to vegetation management.

Speaker Change: Distribution costs were higher by three 6% due to highway program expenditures, including an increase in the forecast environmental expenditures provisions in the period and higher it and emergency restoration costs.

Chris Lopez: Through these achievements, we are delivering on our multi-year commitment to keep costs as low as possible. In the past, we provided a cumulative productivity savings figure. However, as part of JRAP, we rebased our productivity to align with our JRAP application, and as such, the cumulative productivity savings figures we used to provide are no longer comparable to the current.

Speaker Change: These were partially offset by lower vegetation management expenditures and lower corporate support costs for the same reasons outlined previously.

Speaker Change: Depreciation expense for the fourth quarter was higher year over year by seven 8%.

Speaker Change: This was due to the realized gain on sale of successes recognized in the prior year.

Chris Lopez: The previously reported cumulative productivity savings figure of approximately $1.5 billion covered savings generated from our initial public offering in 2015 to the end of 2022. We will continue to look for ways to be more productive, as these savings will eventually flow back to ratepayers in the next freight period. Net income to shareholders in the fourth quarter was relatively unchanged from a year ago.

Speaker Change: And the growth in the capital assets, which is consistent with our stated capital investment program.

Speaker Change: On financing, we saw a 14, 8% increase in financing charges year over year, mainly resulting from a higher weighted average interest rate on our long term debt.

Speaker Change: Higher volume of long term debt.

Speaker Change: This was due to a higher volume of long term debt issuance executing 2023, combined with a higher weighting of long term debt.

Speaker Change: Rotate portfolio mix compared to 2022.

Chris Lopez: The key drivers behind the results this quarter were similar to the four-year variance, and high revenues driven by higher peak demand and energy consumption, coupled with OEB approved rates, and lower income taxes due to high deductible timing, which were offset by higher financing charges resulting from higher weighted average interest rates and volume of long-term debt, and Hyatt Appreciation following the gain and sale of surplus fixed assets in the fourth quarter of 2022. Our fourth quarter revenue, net of purchase power, was higher year-over-year by 2.3%. The increase is mainly due to higher peak demand, energy consumption, and OEB-approved 2023 transmission. Passed the offset by CDN revenues, recognised last, and Higher Earnings Share. For the transition segment, revenues were higher by 5.4%.

Speaker Change: During the quarter Honeywell issued 900 million of medium term notes. This consisted of $500 million of $4 eight 5% notes due in 2054 and $400 million of 554% notes during 2025, which we swapped to floating rates using a fixed to floating interest rate swap.

Speaker Change: Subsequent to the quarter, taking advantage of the decline in rates Hydro and issued an additional $800 million medium term notes as part of our 2020 for funding plan.

Speaker Change: This consisted of $550 million of 439% notes during 2034 and $250 million of 393% notes during 2029.

Speaker Change: The issuances were completed under our sustainable financing framework.

Speaker Change: With the successful completion of the 800 million of medium term notes hydrogen becomes one of the largest corporate issuance of green social and sustainability use of proceeds bonds in Canada.

Speaker Change: As part of the proactive management of our balance sheet in December we terminated the fixed to floating interest rate swaps in connection with the 400 million, 554% fixed rate notes, we issued earlier in the quarter.

Chris Lopez: The increase was reflective of higher transmission revenues due to OEB-approved rates, coupled with higher peak demand, which was 7.7% higher compared to last year. These higher revenues were partially offset by CDM revenues recognized in 2022 and higher earnings sharing this year. Distribution revenues that have purchased power decreased by 1.5%, mainly due to net income neutral items and higher earnings share.

Speaker Change: Hi, Joanne with <unk> 6 million of proceeds from the settlement of the swap which will be amortized over the term of the related note.

Speaker Change: In addition, we fixed the interest rate on 425 being the floating rate notes that we issued in September with an interest rate swap following a decline in interest rates in December.

Speaker Change: In total hardware and raised over $2 3 billion in proceeds in 2023, which included $1 5 billion of Green bonds, our first issuance under our sustainable financing framework.

Chris Lopez: These are partially offset by higher customer count and energy consumption, which was higher by 2.7%. Both the transmission and distribution segments had net income neutral items in revenue, including the cessation of the DTA recovery and normal course regulatory adjustments. There were corresponding offsets in tax expense and OM&A, making them the revenue unit. On the cost front, operating maintenance and administration expenses in the quarter increased by approximately 2.3% year-over-year.

Speaker Change: The total proceeds of $2 3 billion were used to retire maturing debt and to support our capital investment requirements.

Speaker Change: Subsequent to the quarter in January we published our inaugural sustainable Bond allocation report outlines the use of proceeds from our first issuance the $1 5 billion of sustainable bonds issued in 2023 under our sustainable financing framework.

Speaker Change: The report details the full allocation of proceeds to LNG projects in the clean energy energy efficiency clean transportation and biodiversity conservation Green categories, and the social economic advancement indigenous peoples in the social category.

Chris Lopez: The corollary variance was due to high work program expenditures, offset by lower corporate support costs on account of a higher rate of capitalization of overhead. On transmission, costs were lower by 1.4%, mainly due to lower corporate support. As the capital program ramped up in the back half of the year, we capitalised common costs at a higher rate, which substantially offset the increase in corporate support costs in the front half of the year. This was partially offset by a higher work program, primarily related to vegetation. Distribution costs were higher by 3.6% due to higher work program expenditures, including an increase in the forecast environmental expenditures provisioned in the period and higher IT and emergency restoration. However, these were partially offset by lower vegetation management expenditures and lower corporate support costs, for the same reasons outlined previously. The depreciation expense for the fourth quarter was higher year-over-year by 7.8%.

Speaker Change: Copies report is available on our website.

Speaker Change: We continue to be pleased with the stability of our balance sheet and robust investment grade credit ratings.

Speaker Change: As we look forward, we will continue to access the debt markets Opportunistically.

Speaker Change: Income tax expense in the quarter was $13 million compared to 41 million in the same quarter last year.

Speaker Change: The decrease in income tax expense was primarily due to higher deductible timing differences compared to the prior year as well as the cessation of the DTA recovery at the end of June and normal course regulatory adjustments, which as described previously our knitting.

Speaker Change: Net income neutral.

Speaker Change: As a result, the effective tax rate this quarter was six 6% versus the effective tax rate last year of 18, 6%.

Speaker Change: For the full year 2023, the effective tax rate was 14% versus 21, 4% in 2022.

Speaker Change: This rate is consistent with our guidance of 13% to 16%, we reaffirm the guidance range for the remainder of the January period.

Speaker Change: Moving to investing activities in the fourth quarter, we placed 975 million of assets in service for our customers, which was a decrease of 10, 6% compared to the prior year.

Speaker Change: The decrease was primarily attributable to the transmission segment and resulted from the completion of large replacements for end of life products Circuit Breakers.

Chris Lopez: This was due to the realized gain on sale of fixed assets recognized in the prior year and the growth in capital assets, which is consistent with our stated capital investment program. On financing, we saw a 14.8% increase in financing charges year-over-year, mainly resulting from a higher weighted average interest rate on our long-term debt and a higher volume of long-term debt. This was due to a higher volume of long-term debt issuance executed in 2023 combined with a higher weighting of long-term debt in our overall debt portfolio mix compared to 2022. During the quarter, Hydro One issued 900 million of medium-term notes.

Speaker Change: Timing of assets placed in service the customer connections refurbishment and replacement of transmission lines and associated infrastructure and timing of initiatives.

Speaker Change: In the distribution segment in service additions increased from the prior year as higher volumes of work on customer connections by refurbishment and wood pole replacements as well as the investments for Ontario's broadband initiatives were offset by a lower volume of storm related asset replacements.

Speaker Change: For the full year, we placed 232 4 billion of assets and service for our customers, which was an increase of two 5% compared to the full year 2022.

The increase year over year was due to higher distribution in service additions, including high volume of IP and customer connections.

Chris Lopez: This consisted of 500 million of 4.85% notes during 2054 and 400 million of 5.54% notes during 2025, which we swapped to floating rates using a fixed to floating interest rate. Subsequent to the quarter, taking advantage of the decline in rates, Hydro One issued an additional $800 million of medium-term notes as part of our 2024 funding. This consisted of 550 million of 4.39% notes during 2034 and 250 million of 3.93% notes during 2029. The issuances were completed under a sustainable financing framework.

Speaker Change: Set by lower volume of storm related asset replacements, and lower transmission incidents additions primarily relating to timing of in service.

In terms of our capital investments for the fourth quarter, we invested 745 million, which is an increase of 37% from the fourth quarter of 2022.

Speaker Change: The increase resulted from both the transmission and distribution segments on account of high volumes of customer connections high volumes, the refurbishment and replacement of critical infrastructure as well as investments in new transmission lines and new initiatives.

Speaker Change: These are partially offset by a lower spend on storm related asset replacements due to fewer storms in the year.

Speaker Change: For the full year 2023 capital investments of $2 531 billion increased by nearly 400 million or 18, 7% compared to 2022.

Chris Lopez: With the successful completion of the $800 million of medium-term notes, Hydro One becomes one of the largest corporate issuers of green, social, and sustainability use of proceeds bonds in Canada. As part of the proactive management of our balance sheet, in December, we terminated the fixed to floating interest rate swap in connection with the $400 million, 5.54% fixed rate notes we issued earlier in the quarter. Hydro One will see $6 million of proceeds from the settlement of the swap, which will be amortized over the term of the related note. In addition, we fixed the interest rate on 425 million floating rate notes that we issued in September with an interest rate swap following a decline in interest rates in December.

Speaker Change: You'll also note we've updated the future capital investment profile for both segments. The primary reason, which reflect the adjusted timing and pacing of future capital investments and re prioritization of work.

Speaker Change: Including an overall increase in customer connections and upgrades.

Speaker Change: You'll also see that we have.

Speaker Change: The capital investment table until 2027.

Speaker Change: Instead of in the past, having five years out.

Speaker Change: These changes to inline with our process of disclosing figures when applications are filed.

Speaker Change: This also aligns with our current guidance period.

Speaker Change: Table will be extended beyond 2027, once the Nextgen application was filed with the RVP.

Speaker Change: I want to briefly provide an update on the shallow hydro acquisition, which was announced with our third quarter results.

Speaker Change: We filed an application with the OMB for approval of the Shuffle acquisition agenda and continues we expect to close the transaction in the second half of 2024 with integration completed by the end of 2024.

Speaker Change: More broadly we continue to engage with other local distribution companies and look for additional opportunities to facilitate further consolidation within the sector.

Chris Lopez: In total, Hydro One raised over $2.3 billion in proceeds in 2023, which included $1.05 billion of greenbox, our first issuance under our Sustainable Financing. The total proceeds of $2.3 billion were used to retire maturing debt and to support our capital investment. Subsequent to the quarter in January, we published our inaugural Sustainable Bond Allocation Report, outlining the use of proceeds from our first issuance, the $1.05 billion of sustainable bonds issued in 2023 under our Sustainable Financing Framework. The report details the full allocation of proceeds to eligible projects in the Clean Energy, Energy Efficiency, Clean Transportation, and Biodiversity Conservation green categories and the Social Economic Advancement of Indigenous Peoples in the social category. A full copy of the report is available on our website.

Speaker Change: On guidance, we reaffirm our previous target of 5% to 7% earnings per share growth through 2027 on the normalized 2020 to EPS of $1 61.

Speaker Change: As a reminder, the EPS growth range does not factor in growth from broadband LDC consolidation, while the transmission lines that had been previously awarded but only had preliminary assets or pending approval such as the what's the <unk> transmission line as well as any amount from externally driven various accounts.

I'm also pleased to report that we declared a first quarter dividend to common shareholders in the amount of $29.64 per share.

Speaker Change: Lastly, I would like to thank Ali settlement, our former treasurer of many years, who has decided to retire.

Speaker Change: He has been with hydro one and its predecessor company for approximately 33 years. Most notable of these contributions to hydro one.

Speaker Change: His lead role in the creation of hydro and get financing platforms to which the company has successfully offered over $20 billion in debt financing since 2000.

Chris Lopez: We continue to be pleased with the stability of our balance sheet and robust investment grade credit rating. As we look forward, we will continue to access the debt markets opportunity. Income tax expense in the quarter was $13 million compared to $41 million in the same quarter last year.

Speaker Change: Most recently he spearheaded the company's creation of its sustainable financing framework.

Speaker Change: I'm also happy to announce Arthur <unk> has joined hydro one as treasurer.

Arthur: They come to us with extensive financing capital markets experienced an exceptional record of building high performing teams and fostering cross functional alignment to deliver results.

Chris Lopez: The decrease in income tax expense was primarily due to higher deductible timing differences compared to the prior year, as well as the cessation of the DTA recovery at the end of June and normal course regulatory adjustments, which, as described previously, are net income neutral. As a result, the effective tax rate this quarter was $6.6 billion, versus the effective tax rate last year of $18.5 million. For the full year 2023, the effective tax rate was 14% versus 21.4% in 2022. This rate is consistent with our guidance of 13 to 16. We reaffirm this guidance range for the remainder of the JGAT. Moving on to investing activities. In the fourth quarter, we placed 975 million assets in service for our customers, which was a decrease of 10.6% compared to the prior year. The decrease was primarily attributable to transmission and resulted from the completion of large replacements for end-of-life airbright circuits.

Arthur: Many of you may already know awesome.

Arthur: Recent roles as treasurer and CFO.

Arthur: On behalf of the organization I would like to thank Ali for his passion dedication and leadership and wish him well in his next chapter.

Speaker Change: I would also like to welcome also to hydro one and wish him the best in his new role.

Speaker Change: I'll stop there and we'll be pleased to take your questions.

Speaker Change: Thank you, David and Chris we ask the operator to explain how they'd like to organize the Q&A polling process.

Speaker Change: In case, we can address your questions today my team and I are always available to respond to follow up questions.

Speaker Change: Ask that you limit your questions to one question and one follow up.

If you have additional questions. We request you to rejoin the queue. Please go ahead.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

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

Robert Hope: Hi, good morning, everyone.

Robert Hope: First question is on the earning sharing that we saw in 2023 $45 million. It looks like results may have been a little bit stronger than you would have anticipated at the beginning of the year, especially given the early stages of the Jay Rob when you take a look at kind of the buckets that drove the outperformance versus the 100 basis points.

Chris Lopez: Timing of assets placed in service for customer connections, refurbishment and replacement of transmission lines and associated infrastructure, and timing of IT initiatives. In the distribution segment, in-service additions increased from the prior year as higher volumes of work on customer connections, line refurbishments, and wood pole replacements, as well as investments in Ontario's broadband initiatives were offset by a low volume of storm-related asset replacement. For the full year, we placed $2.324 billion of assets in service for our customers, which was an increase of 2.5% compared to the full year 2022. The increase year-over-year was due to higher distribution in-service additions, including higher volume of IT and customer connections, offset by lower volume of storm-related asset replacements and lower transmission in-service..., primarily relating to timing of incidents.

Robert Hope: Do you think of it with productivity whether or not.

Robert Hope: The increase in demand that continues to be strong in Ontario.

Chris Lopez: Hi, Rob its Chris.

Good question.

Chris Lopez: You'll notice that our volumes were up so it was a combination of stronger economic activity driving consumption and also partly with us.

Chris Lopez: 22 was a strong year in 2023 was even stronger again, so a big chunk of it was the <unk>.

Chris Lopez: M&A costs were roughly in line. So we've actually reinvested a lot of that productivity benefit back into the business. So the main driver here was on the volume side.

Speaker Change: Alright, I appreciate that and then maybe just switching over to the telecom.

Chris Lopez: In terms of our capital investments, for the fourth quarter, we invested $745 million, which is an increase of 30.7% from the fourth quarter of 2022. The increase resulted from both the transmission and distribution segments on account of higher volumes of customer connections, higher volumes of refurbishments and replacements of critical infrastructure, as well as investments in new transmission lines and new infrastructure.

Speaker Change: Upside or potential upside it looks like hydro one is ready, but the telecoms have been slower than expected and kind of crossing the line. There. So can you maybe update us on where we are in discussions and kind of what the key sticking points are and when we could see some alteration there.

Speaker Change: Good morning, Robert David leave it or.

Speaker Change: Due date for that program has not changed is still December 31, 2025, we are seeing an uptick in activity, but all the telcos.

Speaker Change: Whereas we had hoped it might be spread over the full 335 years to make the work a little bit more manageable, there's definitely going to be backend loaded right now and I remain optimistic they're going to be able to provide some updates later on this year as I said, we are starting to see a pickup in all the telcos that I've spoken to their executive teams remain committed to the program.

Chris Lopez: These are passed, as I've said, by a lower spend on storm-related asset replacement due to fewer storms in the U.S. For the full year 2023, capital investments of $2.531 billion increased by nearly $400 million, or 18.7%, compared to 2022. You'll also know we've updated the Future Capital Investments profile for both segments. The primary reason was to reflect the adjusted timing and pacing of future capital investments and the Reprioritization of Work, including an overall increase in customer connections and up... You'll also see that we have the capital investment table until 2027, instead of in the past having five years out. This change is to align with our process of disclosing figures when applications are filed. This also aligns with our current guidance period. The table will be extended beyond 2027 once the next JRAP application is filed with the OEB.

Alright, I appreciate that thank you.

Speaker Change: Thank you.

Our next question comes from the line of Mark Jarvi with CIBC. Your line is now open.

Mark Jarvi: Mark Jamie Your line is open please check your mute button.

Mark Jarvi: Yes, thanks, good morning, everyone.

Mark Jarvi: Just curious if you guys think the implications of the Pickering nuclear Refurbishments would be on transmission build out over the next decade as that.

Mark Jarvi: Net negative or neutral or how do you view that.

Jamie: Good morning, Mark I view that as a neutral for our perspective, the transmission assets already existing stations are already there, but I view it as very positive when I look at Ontario, expanding on our generation fleet maintained the generation fleet and getting ready for actually not getting ready, but actually to accommodate the increased growth in demand that we have been seen in this province.

Jamie: So neutral for us overall positive for the products.

Chris Lopez: I want to briefly provide an update on Chapleau Hydro, which was announced in our third quarter. We filed an application with the OEB for approval of the Shapiro acquisition in November and continue to expect to close the transaction in the second half of 2024 with integration completed by the end of 2024. More broadly, we continue to engage with other local distribution companies and look for additional opportunities to facilitate further consolidation within the sector. On guidance, we reaffirm our previous target of 5% to 7% earnings per share growth through 2027 on the normalized 2022 EPS of $1.00. 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 Wasigan transmission, as well as any amounts from externally driven variants. I'm also pleased to report that we declared our first quarter dividend to common shareholders in the amount of $29.5 million.

Speaker Change: Got it and then obviously you have the nine transmission lines.

Speaker Change: Some are active right now Sameer sure waiting for updates on.

Speaker Change: I guess the question would be do you think anything can slot in.

Sameer: On top of the nine that you've outlined in terms of anything that <unk> sort of like late this decade or do you think everything that sort of comes incremental is 2030 and beyond.

Sameer: Oh, that's a really difficult question because it requires looking into the Crystal ball. There is still a lot of companies that are interested in locating their manufacturing operations into Ontario, So that could certainly drive some change in the plan that we have there.

Sameer: <unk> electric system, operator does take a long term view.

Sameer: Anticipated Nathan we haven't already discussed from them, but that doesn't preclude us I said economic activity elsewhere driving investment.

So just to follow on that Yeah go ahead, Chris.

Chris Lopez: I think when you're talking about would you expect that to come later, even if its announced today a follow on response would be that that would affect growth in the period beyond the current period, which is 2008 and beyond so if a new line was announced today, we're seeing a lot of interest.

Chris Lopez: It's unlikely that those lines come in service before 2028.

Chris Lopez: Understood and then maybe just David on your comment about economic activity like where would you be in terms of dialogue in terms of talking to potential new entrants that came or the Ontario market.

Chris Lopez: Hi load growth.

Chris Lopez: Manufacturing side of things.

David: We are part of what I call team, Ontario, which is were working with the province, Im trying to attract economic activity into the province and that's.

Chris Lopez: Lastly, I would like to thank Ali Solomon, our former Treasurer of many years, who has decided to retire. He has been with Hydro One and its predecessor company for approximately 33 years. Most notable of his contributions to Hydro One was his lead role in the creation of Hydro One's debt financing platforms through which the company has successfully offered over $20 billion in debt financing since 2000. Most recently, he spearheaded the company's creation of its sustainable financing framework. I'm also happy to announce Arthur Kaprzak has joined Hydro One as treasurer. Arthur comes to us with extensive finance and capital markets experience and an exceptional record of building high-performance teams and fostering cross-functional alignment to deliver results. Many of you may already know Arthur from his most recent roles as Treasurer and CFO.

Chris Lopez: That trial is very active.

David: Okay. Thanks, Ron.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Maurice Choy with RBC capital markets. Your line is now open.

Maurice Choy: Thanks, and good morning, everyone I just want to follow up on discussion about broadband in guidance a little bit.

Maurice Choy: I know you mentioned that broadband you would expect some news later on this year.

Can you discuss a little bit more about the size of this and constitute a potential the guidance increase any of the items that we should be watching out for that could push your guidance to be proved.

As well as any drag to EPS growth such as the higher yield environment. For example, thank you.

Chris Thanks for the question I think I've been fairly consistent.

Last year. So we opened the guidance of five to seven when we announced once again, we said that put us to the upper end of guidance with still there today.

Chris Lopez: On behalf of the organization, I would like to thank Ali for his passion, dedication, and leadership and wish him well in his next chapter. I'd also like to welcome Arthur to Hydro One and wish him the best in his new role. I'll stop there, and I'll be pleased to take your questions. Thank you, David and Chris.

Speaker Change: Right at the top of that we expect to stay they don't see.

Speaker Change: Any significant downward pressure on that.

Speaker Change: What would cause us to go above that would be the broadband.

Speaker Change: Ed.

Operator: 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.

Speaker Change: Amount.

Speaker Change: Certainly there was just what is the size of it is it half a billion is it a $1 billion and the other one would be LDC consolidation. So.

Speaker Change: It's been slower than we would like but we have seen an uptick in activity recently and thats promising. So if that comes through the way we expect that that's what's going to push you. It's the combination of those 201 and that could push you into that range of 6% to 8% that's what I would expect.

Speaker Change: Thanks, and I wanted to also jump on the call.

Robert Hope: If you have additional questions, we request you to rejoin the line. Please go ahead. Thank you. As a reminder, to ask a question, please press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Robert Hope with Scotiabank. Your line is now open. Good morning, everyone.

Speaker Change: Our current CFO search update on that including what are some of the attributes that you're seeking whether that be to help maintain your financing strategy or even to reinvent it given the significant capex that you have in the outer years. This decade.

Speaker Change: Thanks, Martin David leave it here.

Martin David: Search is going well and of course I was disappointed as I said earlier on in my comments, when Chris decided to leave the organization, but we jumped on that right away. Our objective is to have someone in the seat before Chris leaves at the end of June and we don't plan any significant changes. So it's not a signal that we're planning on changing our financial structure our approach to the market that's been very successful.

Chris Lopez: The first question is on the earnings sharing that we saw in 2023, the $45 million. It looks like results may have been a little bit stronger than you would have anticipated at the beginning of the year, especially given the early stages of the JRAP. When you take a look at kind of the buckets that drove the outperformance versus the 100 basis points, you know, how much do you think it was productivity, whether or, you know, just an increase in demand that continues to be strong in Ontario? Hi Robert, Chris, good question. You'll notice that our volumes were up. So it was a combination of stronger economic activity driving consumption and also partly weather. So 2022 was a strong year, and 2023 was even stronger again. So a big chunk of it was there.

Martin David: We have a strong balance sheet, we're going to maintain that approach.

Speaker Change: Very clear thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Linda <unk> with TD Cowen. Your line is now open.

Linda: Thank you.

Linda: Wondering if you could give us a sense of what maybe.

Linda: Could prompt LDC activity to further accelerate.

Linda: It could.

Interest rates the factor kind of weighing on.

Linda: Any sort of discussions you're having.

Chris Lopez: Our OM&A costs were roughly in line, so we've actually reinvested a lot of that productivity benefit back into the business. So the main driver here was on the volume side.

Linda: Or are there any political considerations.

Linda: Our other priorities that these.

Linda: <unk> are having can you just help us understand kind of some of the moving parts around sentiment about what might be.

David Liebeter: All right, I appreciate that. And then maybe just switching over to the telecom upside or potential upside. You know, it looks like Hydro One is ready, but the telecoms have been slower than expected in kind of crossing the line there. So can you maybe update us on where we are in the discussions and kind of what the key sticking points are and when we could see some alteration there? Good morning, Robert, David Liebetter. The due date for that program has not changed.

Linda: Affecting the pace.

Linda: With deal flow.

Speaker Change: Yes, good morning, Linda Thanks for the question David leave it or it's really interesting and we've gotten a lot better at understanding the drivers for why a municipality might wanted to fill their local distribution company.

Speaker Change: Sometimes it is they have a better use for the funds. So they might want to regenerate their downtown core that might have a project. They want to take on in other cases, it might be that they are unable to raise sufficient funds for investments at their local distribution company has to make some of those investments can be driven by the weather event.

David Liebeter: It's still December 31st, 2025. We are seeing an uptick in activity by all the telcos, whereas we had hoped that it might be spread over the full three, three and a half years to make the work a little bit more manageable. This is definitely going to be back in the news right now, and I remain optimistic that we're going to be able to provide some updates later this year. As I said, we are starting to see a pickup, and all the telcos that I've spoken to, their executive teams remain committed to the program. All right.

Speaker Change: Catches enough guard other times it could be driven by maintaining the system quality, which is one of the things we saw with <unk>. So it is a range of things that tend to drive.

People wanting to sell their LDC as we have seen a little bit more interest from from the council and the mirrors are more people are talking to us, but as of yet no. One has actually put a process in place to move forward, but we anticipate that just given we are seeing an uptick in interest and look exploring where they would want a silver LPC.

Mark Jarvie: I appreciate that. Thank you. Thank you. Our next question comes from the line of Mark Jarvie with CIBC. Your line is now open. Mark Jarvie, your line is open. Please check your mute button.

Speaker Change: Linda interest rates interest rates are part.

Speaker Change: Part of that because that constrains the actual budget. So we are seeing part of that but as David said.

Speaker Change: So very where we have improved our processes to meet the municipality with where they're at.

Mark Jarvie: Yeah, thanks. Good morning, everyone. Just curious, what do you guys think the implications of the Pickering nuclear refurbishments would be on transmission build out over the next decade? Is that a net negative or neutral? Or how do you view that? Good morning, Mark.

Speaker Change: Is it a service quality issue is it maintaining the youth.

Speaker Change: Utility over the longer period because of energy transition.

Speaker Change: It.

Speaker Change: Another sort of opportunity that they're interested in and so we are very versatile and how to partner with them and achieve that including taking minority Stakes if we need to.

David Liebeter: I view that as neutral. From our perspective, the transmission assets already exist, the stations are already there, but I view it as very positive when I look at Ontario and expanding our generation fleet, maintaining the generation fleet, and getting ready, or actually not getting ready, but actually accommodating the increased growth and demand that we've been seeing in this province. So, neutral for us, overall positive for the province. Got it. And then obviously, you have the nine transmission lines; some are active right now, some you're waiting for updates on. I guess the question would be, do you think anything can slot in?

Speaker Change: So we have been much more.

Speaker Change: Flexible in our approach to that process and also conscious of the fact of the election timing. So it's taken a little longer for them to come out of their space, but like I said the activities increased more nor of recent times.

Speaker Change: Thank you.

Speaker Change: And recognizing that you've got so.

Speaker Change: A lot of visible organic growth I'm, just wondering with your.

Speaker Change: Strong financial position are there any other.

Chris Lopez: on top of the nine that you've outlined in terms of anything that can come forward sort of late this decade, or do you think everything that sort of comes gradually is 2030 and beyond? That's a really difficult question because it requires looking into the crystal ball. There are still a lot of companies that are interested in locating their manufacturing operations in Ontario, so that could certainly drive some change in the plan that we have there. The Independent Electric System Operator does take a long-term view, so I'm not anticipating anything that they haven't already discussed with them, but that doesn't preclude, as I said, economic activity elsewhere driving investment. Just to add there, Mark, I think when you're talking about whether you expect that to come later, even if it's announced today, a follow-on response would be that that would affect growth for a period beyond the current JRAP period, which is 28 and beyond. So if a new line was announced today, we're seeing a lot of interest. It's unlikely that those lines will come into service before 2028.

Speaker Change: Areas of growth beyond LDC consolidation additional transmission transmission lines and broadband development that you are contemplating at this point.

Speaker Change: Linda it's David not at this point, we're focused on our organic growth and executing the plan we have in front of us which is a very aggressive plan.

Speaker Change: Okay cool.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question at this time. Please press star one one our intention telephone.

Speaker Change: Our next question comes from the line of Ben Pham with BMO. Your line is now open.

Ben Pham: Hi, Thanks, Good morning, I wanted to ask on your Capex cable and.

Ben Pham: That's on a prior question on projects costs that TBD.

Ben Pham: Are you able to.

Perhaps quantify or provide relative context of how much capex or maybe some real Samsung Heather.

To place a figure on those projects and then.

Ben Pham: And also comment on how much do you think you can fund.

Ben Pham: Self funding on your balance sheet, each each year in terms of annual Capex figures.

Speaker Change: Hi, Brian Thanks for the question.

Speaker Change: Hi, I think.

Chris Lopez: And then maybe just, David, on your comment about economic activity, like where would you be in terms of dialogue, in terms of talking to potential new entrants that come into the Ontario market from the high load growth manufacturing side of things? And we're part of what I call Team Ontario, which is where we work with the province. I'm trying to attract economic activity into the province, and that file is very active.

Speaker Change: Your first question around when do we provide guidance on the actual transmission line. It's usually at the time, we announced 692, so thats when we go for approval.

Speaker Change: Of construction. So it leaves constructed scope, so thats why youre not seeing it on the we sometimes put some development costs have been incurred but we won't see the actual total construction cost until we do that.

Speaker Change: I think you can take it offline with talking about there might be some.

Speaker Change: Rules of thumb that we can provide the only thing I'll caution you on there is that no two lines at the same it would dip.

Speaker Change: And on.

Speaker Change: The contour of the land, where it's located and so on so it's difficult to provide those rules of thumb, but Omar can give you some guidance offline. So that's the first question when will you see it youll see it doing 692.

David Liebeter: Okay, thanks, everyone. Thank you. Our next question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open. Good morning, everyone.

Maurice Choi: I just want to follow up on the discussion about broadband and guidance a little bit. I know you mentioned that you would expect some news about broadband later this year. Can you discuss a little bit more about the size of this in regards to the potential guidance increase, any other items that we should be watching out for that could push your guidance to be improved, as well as any drag on EPS goals, such as the high-EU environment, for example? Thank you. Hi Maurice, it's Chris.

Speaker Change: I think for everything on the table you should see most of those in the next couple of years here. The construction time will be four to five years, but you should start to see some estimates come out. The reason why you don't have them yet as those non more announced in pretty short time.

Speaker Change: Once again was one that we will quite well advanced on silica pull that forward.

Speaker Change: The second question on how are we going to fund it and what's that capacity I have said continuously that there is no need for new equity now through the end of <unk>. Since 2027 that still remains the case that we have to play to date.

Chris Lopez: Thanks for the question. I think I've been fairly consistent last year. So we opened the guidance at five to seven. When we announced the loss again, we said that put us at the upper end of guidance. We're still there today.

Speaker Change: But their teams. So that's about 300 basis points of that capacity day. So all of our construction now through 2027 that we've announced it.

Speaker Change: Can be funded on balance sheet.

Speaker Change: Okay. That's great. Thanks, Thanks for that.

Chris Lopez: We're right at the top of that. We expect to stay there. I don't see any significant downward pressure on that. What would cause us to go above that would be the broadband amount. The uncertainty there is just what the size of it is.

Speaker Change: And maybe to follow on the question around the EPS CAGR you've mentioned.

Speaker Change: Being at the top end of the range or at the top end.

Speaker Change: <unk>.

Speaker Change: Just looking at your 23 growth EPS, 3%, but I guess I guess here.

Chris Lopez: Is it half a billion? Or is it a billion? And the other one would be LDC consolidation. So it's been slower than we would like, but we have seen an uptick in activity recently, and that's promising. So if that comes through the way we expect, that's what's going to push you. It's the combination of those two or one that could push you into that range of six to eight percent. That's what I would expect.

Speaker Change: Look at normalized EPS, it's this morning at 10%.

Speaker Change: Our price range.

Speaker Change: When you frame or talked about that CAGR are you are you adjusting for some of the volume upside.

Speaker Change: That you saw during 'twenty three and maybe.

Speaker Change: What you could be seeing going forward.

Speaker Change: In short we have not changed our guidance Ben from the normalized 2023 number so that would say no we have not adjusted but thats, what it gives us a much higher level of confidence of being at that upper end of seven which we were before through once again.

David Liebeter: Thanks, and I want to also jump on the current CFO search update on that, including what are some of the attributes that you're seeking, whether that be to help maintain your financing strategy or even to reinvent it, given the significant capex that you have in the out-of-years this decade. Thanks, Maurice. David Liebherr here.

Speaker Change: And now when we announced broadband even if it doesn't come in.

Speaker Change: Brian does that range. It gives us a lot more confidence to change the guidance.

Speaker Change: The 6% to 8% range. So I think we factored that volume piece when we have the next announcement and we said we were tied to that.

Speaker Change: Okay got it thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Patrick Kenny with National Bank Financial Your line is now open.

Speaker Change: Yes.

David Liebeter: The search is going well. Of course, I was disappointed, as I said earlier in my comments, when Chris decided to leave the organization, but we jumped on that right away. Our objective is to have someone in the seat before Chris leaves at the end of June, and we don't plan any significant changes.

Patrick Kenny: Good morning, everybody just to follow up on the balance sheet here in.

Patrick Kenny: Even though cash flow was down just slightly year over year.

Patrick Kenny: <unk> to debt ratio still very healthy at year end.

Patrick Kenny: Just under 14%.

Speaker Change: Wondering if you could help us translate that cushion.

David Liebeter: So it's not a signal that we're planning on changing our financial structure, our approach to the market. It's been very successful. We have a strong balance sheet. We're going to maintain that approach. Very clear. Thank you very much.

Patrick Kenny: Bob your 11% threshold into.

Patrick Kenny: A quantum of dry powder for accelerating some of your near term organic or consolidation opportunities.

Patrick Kenny: Hi patents, Chris I don't have the number in front of me, but I'll just reiterate we reiterate my my answer to a prior question, which is we have sufficient debt capacity to fund the growth now through 2027, Thats been announced so there's no need for new equity that's pretty the clearest way I can say it.

Linda Ezergailis: Thank you. Our next question comes from the line of Linda Ezergailis with TD Coward. Thank you. I'm wondering if you could give us a sense of what maybe could prompt LDC activity to further accelerate.

David Liebeter: Could interest rates be a factor kind of weighing on any sort of discussions you're having, or are there any political considerations or other priorities that these municipalities are having? Can you just help us understand kind of some of the moving parts around sentiment about what might be affecting the pace of deal flow? Yeah, good morning, Linda. Thanks for the question. It's David Liebetter.

Patrick Kenny: You can do your own calculation of about 300 basis points of it before it gives you.

Patrick Kenny: Remember that a lot of the growth that we're going to have.

Patrick Kenny: The organic growth goes into rate base, we get funding for that but if you look at the new transmission lines. If they don't go into service effectively we get interest during construction on those projects. So you guys will be able to work that fairly fairly quickly.

David Liebeter: It's really interesting, and we've gotten a lot better at understanding the drivers for why a municipality might want to sell their local distribution company. Sometimes it is because they have a better use for the funds, so they might want to regenerate their downtown core. They might have a project they want to take on. In other cases, it might be that they're unable to raise sufficient funds for the investments that the local distribution company has to make.

Clean message here is we don't need equity through 2027 for the growth that's been announced.

Patrick Kenny: That will be funded on the balance sheet with that capacity.

Patrick Kenny: And then I guess just in terms of.

Patrick Kenny: The longer potentially longer.

Patrick Kenny: Higher for longer inflationary environment.

Patrick Kenny: Perhaps wanting to remain above that 11% threshold.

Patrick Kenny: Just in case certain cash items might come in higher than you might expect whether it's pension contributions or M&A capex estimates.

David Liebeter: Sometimes those investments can be driven by a weather event that catches them off guard. Other times, they could be driven by maintaining system quality, which is one of the things we saw with Chapleau. So there is a range of things that tend to drive people wanting to sell their LDCs. We have seen a little bit more interest from the councils and the mayors. More people are talking to us, but as of yet, no one's actually put a process in place to move forward. But we anticipate that, given that we are seeing an uptick in interest, and look at exploring what they would want to sell their LDCs. Linda, interest rates are a part of that because that constrains their actual budget, so we are seeing part of that, but as David said, it's so varied. Where we have improved our process is to meet the municipality where they're at. Is it a service quality issue? Is it maintaining the utility over a longer period because of the energy transition?

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Speaker Change: Can you just give us a sense as to.

Speaker Change: Where you'd like to remain.

Speaker Change: Above that 11% threshold kind of through the.

The foreseeable future.

Speaker Change: Yes, so we're not going to go into a 11% we're not going to attempt to our friends at the rating agencies to take some action.

Speaker Change: It'll be there'll be a sufficient cushion there for those.

Speaker Change: Items that you described.

Speaker Change: Is that 11 five to 12 it'll depend on the situation at the time and have certainly.

Speaker Change: The growth rates that are coming to.

Speaker Change: Today like I said, we can we can keep that comfort level as well as fund our growth on the balance sheet with what's been announced today.

Speaker Change: Okay, that's great and congratulations Chris all the best in your future endeavors.

Chris Lopez: Thanks, very much Pat.

Speaker Change: Thank you.

Speaker Change: Our last question comes from the line of Jonathan Lamers with Laurentian Bank Securities. Your line is open.

Chris Lopez: It is, you know, another sort of opportunity that they're interested in. So we are very versatile in how to partner with them and achieve that, including taking minority stakes if we need to. So we have been much more flexible in our approach to that process. And also conscious of the fact of election timing. So it's taken a little longer for them to come out of their space.

Jonathan Lamers: Good morning.

Jonathan Lamers: Like to ask on the productivity initiatives.

Jonathan Lamers: Could you provide us with an update on.

How visible the 100 basis points.

Jonathan Lamers: Savings from that.

Jonathan Lamers: For 2024, and the balance of your.

Jonathan Lamers: Great program with under the <unk> through 2027.

Speaker Change: Hi, Jonathan increase.

Jonathan Lamers: Yes, so our confidence level, what we've typically targeted is around 2% of our total spend and this year. We achieved the 114 million is approximately 3% of total spend. So we're ahead of the game as we as we sit today.

David Liebeter: But like I said, the activities have increased more in recent times. Thank you. And recognizing that you've still got a lot of visible organic growth, I'm just wondering, with your strong financial position, are there any other areas of growth beyond LDC consolidation, additional transmission lines, and broadband development that you're contemplating at this point? Linda, it's David.

Speaker Change: Right and that drives.

Speaker Change: Are those the earning sharing.

Linda Ezergailis: Not at this point. We're focused on our organic growth and executing the plan we have in front of us, which is a very aggressive plan. Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchtone telephone. Our next question comes from the line of Ben Pham with BMO. Your line is now open. Hi, thanks, good morning.

Speaker Change: I will share with consumers is volume.

Speaker Change: There was another question on <unk>.

Speaker Change: How confident are we on volumes so about half of that volume benefit this year, where they can be flexible, but the actual underlying economic development.

Speaker Change: That's sticky so that is going to be an upward pressure on upward tayo.

Speaker Change: Tailwind if you like on our ability to continue to meet those earning sharing targets like we said 100, ova and anything above that without without the consumers of our customers.

Ben Pham: I wanted to ask about your CapEx table and some of the prior transmission projects cost TBD. Are you able to perhaps quantify or provide relative context of how much CapEx or maybe some rules on how to place a figure on those projects? And then can you also comment on how much you think you can fund? self-fund on your balance sheet each year in terms of annual capex figures?

Speaker Change: So fairly confident.

Speaker Change: <unk> I'll just remind you includes the 100 <unk>.

Speaker Change: Throughout the period, so our confidence level will be higher today than it was at the beginning of the rate period.

Speaker Change: Okay and do you believe there is another leg of opportunity for productivity beyond 2027 based on what you can see today.

Speaker Change: Look Jonathan I would say yes.

Chris Lopez: Hi Ben, thanks for the question. I think your first question around when do we provide guidance on the actual transmission line is usually at the time we announce section 92. So that's when we go for approval of construction. So it leads to construction, it's called. So that's why you're not seeing it on there. We sometimes put in some development costs if they've been incurred, but you won't see the actual total construction cost until we do that. I think you can take that offline with OMA.

Speaker Change: <unk> had this productivity program since 2015, we've targeted 2% every year, we're now achieving more than that 3%. So I know there was some questions around could you continue to do it and we've shown that we've just changed right periods. When we've done it again.

Speaker Change: We see that as a long runway into the future and really it comes from Ids, Jonathan that new technologies come along and how do you use them across the whole.

Speaker Change: Business. So we can't tell you exactly how it will come in say 2008 and beyond but we have every confidence that the programs work since 2015 and will continue to work well into the future.

Chris Lopez: There might be some rules of thumb that we can provide. The only thing I'd caution you on there is that no two lines are the same. It would depend on, you know, the contour of the land, where it's located, and so on.

Speaker Change: Jonathan I would just add on that David.

Jonathan Lamers: Our executive team doesn't CNN to this runway, we continue to be focused on it and see opportunities.

Speaker Change: Okay, great and thanks for outlining in this slide some of the examples of the initiatives last year.

Chris Lopez: So it's difficult to provide those rules of thumb, but OMA can give you some guidance offline. So that's the first question, you know; when will you see it? You'll see it during section 92.

One other question if I may just on the dividend.

Speaker Change: So 2023 with a relatively slower year for reported EPS, but as you outlined.

Chris Lopez: I think for everything on that table, you should see most of those in the next couple of years here. The construction time will be four or five years, but you should start to see some estimates come out. The reason why you don't have them yet is that those nine were announced at a pretty short notice, and Wossigan was one that we were quite well advanced on, so we could pull that forward.

Speaker Change: There were some onetime items.

Speaker Change: Looking year over year so.

Speaker Change: <unk>.

Speaker Change: Market expect us to be a slower year for dividend growth or with the board.

Speaker Change: Look to the.

Speaker Change: Overall trajectory under your guidance.

Speaker Change: Considered by the J REIT plan.

Jonathan Chris: Hi, Jonathan Chris again.

Jonathan: Last year, we increased 2015 through is increasing.

Jonathan Chris: Increasing roughly inline with rate base at 5% last year, the dividend increase was 6%.

The board will take all of that into consideration when they make a decision we normally do it customarily here in May. So you can expect that answer in may.

Chris Lopez: The second question is how we're going to fund it, and what our capacity is. I've continuously said that there is no need for new equity now through the end of JRAP, so that's 2027. That still remains the case; our FFO to debt is at the upper 13s, so that's about 300 basis points of debt capacity there. So all of our construction now through 2027 that we've announced can be funded on balance sheets. Okay, that's great. Thanks. Thanks for that. And maybe to follow on the question around the EPS keg, you mentioned being at the top end of the range at the top end, and just looking at your 23 growth EPS 3%, but I guess you look at normalized EPS, it's more than a 10% plus range. When you frame or talk about that K, are you adjusting for some of the volume upside?

Jonathan Chris: We make the recommendation to the board a rate base growth Hasnt changed so.

And around that 6% range is probably what you should expect but that decision will be will be made in may.

Speaker Change: Okay. Thank you for your comments.

Speaker Change: Thank you.

Speaker Change: 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.

Omar Chavez: 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 your and your ownership. If 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.

Speaker Change: 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.

Chris Lopez: that you saw during 23 and maybe what you could be seeing going forward. In short, we've not changed our guidance, Ben, from the normalized 2022 numbers, so that would say no, we have not adjusted for that. What it gives us, Ben, is a much higher level of confidence about being at that upper end of seven, which we were before through Watsongan. And now, when we announce broadband, even if it doesn't come in at the upper end of that range, it gives us a lot more confidence to change the guidance into the six to eight percent range. So, I think we'd factor that volume piece when we have the next announcement, and we said we would tie it to that. Okay, got it.

Speaker Change: [music].

Speaker Change: Okay.

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Speaker Change: Yes.

Speaker Change: Yes.

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Patrick Kenny: Thank you. Thank you. Our next question comes from the line of Patrick Kenny with National Bank Financial. Your line is now open.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Chris Lopez: Good morning, everybody. Just to follow up on the balance sheet here, and even though cash flow was down just slightly year over year, the FFO, the debt ratio, was still very healthy at year end, just under 14%. Just wondering if you could help us translate that cushion above your 11% threshold into, you know, a quantum of dry powder for accelerating some of your near-term organic or consolidation opportunities. Hi Pat, it's Chris.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

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Speaker Change: Okay.

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Speaker Change: Yes.

Speaker Change: [music].

Chris Lopez: I don't have the number in front of me, but I'll just reiterate my answer to a prior question, which is that we have sufficient debt capacity to fund the growth now through 2027 that's been announced. So there's no need for new equity, that's the clearest way I can say it. You can do your own calculation on what 300 basis points of FFO gives you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Chris Lopez: Remember that a lot of the growth that we're going to have, the organic growth goes into rate base; we get funding for that. But if you look at the new transmission lines, if they don't go into service, effectively, we get interest during construction on those projects. So you guys will be able to work that out fairly quickly. The clear message here is we don't need equity through 2027 for the growth that's been announced. The debt will be funded on the balance sheet with that capacity. And then I guess just, you know, in terms of the longer, potentially longer, higher for longer inflationary environment and, you know, perhaps wanting to remain above that 11% threshold.

Speaker Change: Thank you.

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Yes.

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Chris Lopez: Just in case certain cash items might come in higher than you might expect, whether it's pension contributions, OM&A, CapEx estimates, you name it. Can you just give us a sense as to where you'd like to remain above that 11% threshold kind of through the foreseeable future? Yeah, so we're not going to go to 11%. We're not going to tempt our friends at the rating agency to take any action. So there'll be a sufficient cushion there for those items that you described, Pat. So is that 11.5 or 12?

Speaker Change: Okay.

Speaker Change: [music].

Chris Lopez: It'll depend on the situation at the time and how certain we are of the growth rates that are coming. Today, like I said, we can keep that comfort level as well as fund our growth on the balance sheet with what's been announced today. Okay, that's great.

Speaker Change: Yes.

Speaker Change: [music].

Chris Lopez: And congratulations, Chris, all the best in your future endeavors. Thanks very much, Pat. Thank you. Our last question comes from the line of Jonathan Lammers with Laurentian Bank Security. Your line is open, and Ashley Hogan.

Jonathan Lammers: Thank you. Please provide us with an update on how visible the 100 basis points are. Savings and Program under the J-ROB, Hi Jonathan, and Chris. Yeah, so our confidence level, what we've typically targeted is around 2% of our total spend, and this year, we achieved, that's $114 million, is approximately 3% of total spend. So we're ahead of the game, as we see today. The other item that drives earnings sharing, being able to share with consumers, is volume. And there was an earlier question on how confident we are on volume. So about half of that volume benefit will come this year. Whether it can be flexible, but the actual underlying economic development is sticky. So that is going to be an upward pressure, or an upward, a tailwind, if you like, on our ability to continue to meet those earnings sharing targets, like we said, 100 percent, and share anything above that with our consumers or our customers. So I am fairly confident.

Speaker Change: Yes.

Speaker Change: [music].

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Chris Lopez: Our guidance, I'll just remind you, includes the 100 over throughout the period. So our confidence level would be higher today than it was at the beginning of the rate period. And do you believe there's another leg of opportunity for productivity beyond 2027? Based on what you can see today, Jonathan, I would say yes.

Speaker Change: [music].

Chris Lopez: We've had this productivity program since 2015. We've targeted 2% every year. And we're now achieving more than that, 3%. So I know there were some questions around whether or not we could continue to do it.

Speaker Change: Okay.

Speaker Change: [music].

Chris Lopez: And we've shown that we've just changed rate periods, and we've done it again. We see that as a long runway into the future. And really, it comes from ideas, Jonathan, that new technologies come along, and how do you use them across the whole business? So we can't tell you exactly how it will come in, say, 28 and beyond.

Speaker Change: Okay.

Speaker Change: [music].

David Liebeter: But we have every confidence that the program has worked since 2015 and will continue to work well into the future. Jonathan, I would just add to that, David, that the entire executive team doesn't see an end to this runway. We continue to be focused on it and see opportunities. Okay, great, and thanks for outlining that in the slides.

Speaker Change: Okay.

Speaker Change: [music].

David Liebeter: One other question, if I may, just on the dividend. So 2023 was a relatively slower year for reported EPS, but, as you know, or there were some one time. Looking year-over-year, so should the market expect this to be a slower year for dividend growth, or would the board? You know, look, overall trajectory.

Speaker Change: Yes.

Speaker Change: [music].

Jonathan Lammers: Jay Rapp, Hi Jonathan, and Chris again. Last year we increased, so 2015 through was increasing roughly in line with the rate base at 5%. Last year the dividend increase was 6%. The board will take all of that into consideration when it makes a decision. We normally do it customarily here in May, so you can expect that answer in May. We'll make the recommendation to the board, and our rate base growth hasn't changed, so in and around that 6% range is probably what you should expect, but that decision will be made in May. Thank you. Okay, thank you very much.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Chris Lopez: Thank you. And that does conclude our Q&A session for today. I'd like to turn the call back over to Omar Javed for any further remarks. Thanks, Shannon.

Yes.

Speaker Change: Okay.

Speaker Change: [music].

Omar Javid: 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 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.

Okay.

Speaker Change: Thanks.

Operator: 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. Copyright 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. What you don't understand is the things you say and do. What you don't understand is the things you say and do. What you don't understand is the things you say and do.

Speaker Change: [music].

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Operator: Thank you for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? Good morning, ladies and gentlemen, and welcome to Hydro One Limited's fourth quarter 2023 Analyst Teleconference. At this time, all participants are in a listening 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 11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: Yes.

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Speaker Change: Yes.

Omar Javid: To withdraw your question, please press star 1 again. As a reminder, the call is being recorded. I would now like to introduce your host for today's conference, Mr. Omar Javid, Vice President, Communications, Marketing, and Investor Relations at Hydro One.

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Omar Javid: Good morning, and thank you for joining us on Hydro One's quarterly earnings call. Joining us today are our President and CEO, David Liebeter, and our Chief Financial Officer, Chris Lopez. In today's call, we will go over our quarterly and annual results and then spend most of the call answering as many of your questions as possible, as time permits. There are also several slides that illustrate some of our points, which we'll 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 Hydro One's website in the Investor Relations section under Events and Presentations. Today's discussions will likely touch on estimates and other forward-looking statements. 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 With that, I'll turn the call over to our President and CEO, David Lieberman. Thank you, Omar.

Speaker Change: Okay.

Thanks.

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David Liebeter: Good morning, and thank you for joining us on our fourth quarter earnings call. This morning, I will provide an update on our recent activities and reflect on the past year. Then Chris will take you through the financial results in greater detail.

Speaker Change: Thank you.

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David Liebeter: As I reflect on this past year as CEO of Hydro One, I am proud of the achievements that we have been able to accomplish across the business. We executed our strategy, investing in critical infrastructure to support our communities and energize life in Ontario. We grew our transmission pipeline to 9 transmission lines currently in development or under construction and are well positioned to play a vital role in the economic growth of the province. In 2023, we will continue to expand our strategic partnerships with First Nations. Communities, Government, and Industry

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David Liebeter: Partnerships remain at the heart of everything we do. Economic reconciliation efforts with indigenous communities through our First Nations Equity Partnership model ensure that they can participate in and benefit from our transmission investments. We also continue to deliver on the commitments to our customers and the communities we serve. I am proud of the hard work and dedication our teams bring to the job every day. Their drive, Thank you very much.

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Speaker Change: Thanks.

David Liebeter: At Hydro One, success is more than delivering power. It's about being there when our customers need us most. As we move into 2024, we continue to invest in critical infrastructure to support economic growth across the province. Looking ahead, in the coming years, we expect to see a significant increase in the demand for electricity infrastructure and new customer connections.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Good morning, ladies and gentlemen, and welcome to Hydro one limited's fourth quarter 2023 analysts teleconference. At this time all participants are in a listen only mode.

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

Speaker Change: To ask a question. During this session you will need to press star one on one on your telephone you will then hear an automated message revising your hand is raised.

David Liebeter: This growth provides tremendous opportunities for Hydro One to make additional investments in critical infrastructure that will energize life, support growing communities and businesses, and help move Ontario to a cleaner energy future. I am proud to report that we had another great year of safety results in 2023. Recordable injury and high energy serious injury frequency rates continue to be below our annual targets, in large part due to the relentless pursuit of zero safety incidents by our employees.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: As a reminder, the call is being recorded.

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

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

Omar Javaid: Joining us today are president and CEO David Liberator.

David Liebeter: In 2023, Hydro One achieved a recordable injury rate of.56 for 200,000 hours, which remains well below the world-class benchmark of 1.0. This result demonstrates what can be achieved when the entire organization rallies around a challenge. In November, this outstanding result was recognized by Electricity Canada when they presented Hydro One with an award for excellence in transmission safety. With continued focus, I'm confident we can eliminate all serious injuries and fatalities.

Omar Javaid: And our Chief Financial Officer, Chris Lopez and.

On the call today, we will go over our quarterly and annual results and then spend most of the call answering as many of your questions as time permits.

Omar Javaid: There are also several slides that illustrate some of our clients. 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.

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

David Liebeter: Our focus on safety goes hand-in-hand with our commitment to our customers and Ontario. This dedication is deeply rooted in our belief that being there when customers and communities need us the most is what matters. This January, our teams restored power to over 125,000 customers impacted by the snowstorm.

Omar Javaid: 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.

They all apply to this call.

David: With that I'll turn the call over to our President and CEO David leader.

David: Thank you Omar good morning, and thank you for joining us on our fourth quarter earnings call. This morning, I will provide an update on our recent activity.

David Liebeter: We know that electricity is critical to our lifestyle and maintaining high levels of availability for our customers to meet their needs supports your customer strategy. It is with great pride that our response efforts continue to be recognized by others. This past year, Hydro One was recognized with the Edison Electric Institute Award for Emergency Response.

David: On the past year, and Chris will take you through the financial results in greater detail.

David: I reflect on this past year as CEO of Hydro one I am proud of the achievements that we have been able to accomplish across the business. We executed our strategy investing in critical infrastructure to support our communities and energize life in Ontario, We grew our transmission pipeline. The <unk> transmission line currently in development or under construction and are well positioned to play a vital role.

David Liebeter: This award is our 14th emergency response award and recognizes how our teams continue to show up and get the job done when customers and communities need us the most. We continue to make the capital investments necessary to maintain the safety, reliability, and resilience of our transmission and distribution systems but also provide the ongoing growth and modernization required to meet the expanding and evolving needs of our customers. Once again, we executed our capital program and met our capital investment commitments for 2023. This past year, we deployed approximately $2.5 billion of capital and in-service $2.3 billion of assets.

And the economic growth in the province.

David: In 2023, we continued to expand our strategic partnership with first nations communities government and industry partnerships remain at the heart of everything we do economic reconciliation efforts with indigenous communities through our first nations equity partnership model ensures they can participate in and benefit from our transmission.

David: Yes.

David: We also continued to deliver on the commitments to our customers and the communities. We serve I am proud of the hard work and dedication of our teams bring to the job every day their drive and execution, coupled with our commitment to safety and operational excellence has allowed us to achieve success in meeting customer expectations and the needs of all Ontario's.

David: At hydro one successes more than delivering power, it's about being there when our customers need us most.

David: As we move into 2024, we continued to invest in critical infrastructure to support economic growth across the province looking.

David: Looking ahead in the coming years, we expect to see significant increase in the demand for electricity infrastructure and new customer connections. This growth provides tremendous opportunities for hydro one to make additional investments in critical infrastructure, the <unk> support growing communities and businesses and help move, Ontario to a cleaner energy future.

David Liebeter: These investments will supply the critical infrastructure needed to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario's economic growth. I am pleased to say we have done this with a focus on continuous improvement to enhance customer service, efficiency, productivity, and reliability. Every dollar we invest is done so with our customers in mind, which is why we are committed to spending wisely. Continually Improving Productivity In 2023, we had another year of strong product use savings, with a savings of $114 million. As I mentioned in my opening remarks, we have grown our project pipeline to nine new transmission lines in development for construction. Three of these transmission lines, which are situated in northeastern and eastern Ontario, were awarded to Hydro One in the fourth quarter. These lines include the Mississaugi, the third line, the Hamner to Mississaugie Line, and the Greater Toronto Area East Line.

David: I am proud to report that we had another great year safety results in 2023, our recordable injury and high energy serious injury frequency rate continue to be below our annual targets, but large part due to the relentless pursuit of zero safety incidents by our employees.

David: In 2023, hydro and achieved a recordable injury rate of <unk> $5 six per 200000 hours, which remains well below the world class benchmark of 1.0.

David: This result demonstrates what can be achieved when the entire organization rallies around the challenge in.

David: In November this outstanding result was recognized by electricity, Canada. When they presented a hyper won an award for excellence in transmission safety.

David: Continued focus on confident we can eliminate all serious injuries and fatalities.

David: Our focus on safety goes hand in hand, with our commitment to our customers and Ontario. This dedication is deeply rooted in our belief that being there and customers and communities need us. The most is what matters.

David: In January our teams restored power to over 125000 customers impacted but those stores.

David Liebeter: The three lines will support the continued economic growth in northern communities and facilitate the growing electricity demand in transportation, mining, steel, and manufacturing industries in the northeast and eastern parts of the province. This result highlights how our superior execution continues to be a critical aspect of why Hydro One remains a transmitter of choice for the development, construction, and operation of priority projects in Ontario. Our commitment to growing our network of strategic partnerships with First Nations, communities, government, and industry partners underpins our approach to building critical infrastructure. These partnerships ensure proper engagement on the planning, development, and execution of projects, while allowing for the sharing of economic benefits from these investments. In December, we expanded our strategic partnerships through the signing of an Initial Partnership Agreement with the Five Nations Development Program, a wholly owned subsidiary of Five Nations Energy.

David: No that electricity is critical to our lifestyle and maintaining high levels of availability for our customers to meet their needs was core to our customer strategy.

David: It's with great Pride that our response efforts continue to be recognized by others. This past year <unk> was recognized by the Edison Electric Institute Award for Emergency response. This award is a 14th Emergency response award and recognize our teams continue to show up and get the job done when the customers and communities need us the most.

David: We continue to make the capital investments necessary to maintain the safety reliability and resilience of our transmission and distribution systems.

David: Also provides the ongoing growth and modernization required to meet the expanding and evolving needs of our customers.

David: Once again, we executed our capital program and met our capital investment commitments for 2023. This past year, we deployed approximately $2 5 billion of capital and in service $2 3 billion of assets.

David: These investments will supply the critical infrastructure needed to energize life and accelerate the adoption of sustainable electricity solutions that will contribute to Ontario economic growth.

David: I am pleased to say we have done this with a focus on continuous improvement to enhance customer service efficiency productivity and reliability. Every dollar we invest in has done some of our customers in mind, which is why we are committed to spending wisely and continually improving productivity and.

David Liebeter: Through the agreement, we will work together to meet the growing electricity demands in Northeastern Ontario while increasing Indigenous participation in the energy sector. This agreement is part of our strong commitment and efforts to build mutually beneficial relationships with Indigenous partners. For the ninth year in a row, Forbes has recognized Hydro One on their annual list of Canada's Best Employers for 2024. Ranking is determined by the recommendations made by employees and other professionals who would recommend Hydro One as a desirable employer. The rankings are based on independent surveys of over 40,000 employees working for companies employing at least 500 people in Canada.

David: In 2023, we had another year of strong productivity savings achieving savings of $114 million.

David: As I mentioned in my opening remarks, we have grown our project pipeline for nine new transmission lines and development or construction.

David: Three of these transmission lines, which are situated north eastern and eastern Ontario were awarded to hydro one in the fourth quarter. These.

David: These lines include the Mr Slogging to third line.

David: The hamner to Mr. Slogging line in the greater Toronto area East line for.

David: The three lines will support the continued economic growth in northern communities and facilitate the growing electricity demand in transportation mining steel and manufacturing industries in the northeast and eastern parts of the province.

David Liebeter: Receiving recognition as one of Canada's Best Employers is a testament to our continued success in building a safe workplace where our teams feel heard, valued, and have a true sense of belonging. This award follows our recognition by Corporate Knights as one of the best 50 corporate citizens in Canada for 2020. The award celebrates our relentless commitment to sustainability and environmental stewardship. This recognition is a testament to the dedication of our teams in driving our sustainability initiatives and adopting best practices throughout our operations. We are humbled and inspired by these accolades.

David: This result highlights our superior execution continues to be a critical aspect of our hydro one remains a transmitter choice for the development construction and operation of priority project in Ontario.

David: Our commitment to growing our network of strategic partnerships with first nations communities government and industry partners underpins our approach to building critical infrastructure. These.

David: These partnerships ensure proper engagement planning development and execution of projects, while allowing for the sharing of economic development benefits from these investments in.

David: In December we expanded our strategic partnership through the signing of initial partnership agreement with five Nations Development, Inc. A wholly owned subsidiary of five Nations energy.

David Liebeter: These recognitions are a testament to the collective efforts of our employees, partners, and stakeholders. In other news, we continue working with the tailcoast to advance the delivery of high-speed internet to some 700,000 Ontarians. As we have mentioned on previous calls, Hydro One is prepared and has been for some time. We have made investments in labor and training, strengthened our supply chains, streamlined our joint use processes, relaxed standards, onboarded contractors, and purchased materials in preparation for this initiative. We understand the importance of connectivity to everyday life for families and individuals, many of whom are our customers. As many of you know, Prusa has made the decision to leave Hydro One to pursue other operations, who's joining Hydro One in 2016.

David: Judy agreement, we will work together to meet the growing electricity demand in the northeast material, while increasing indigenous participation in the energy sector.

David: This agreement is part of our strong commitment and effort to build mutually beneficial relationships with indigenous partners.

David: For the ninth year in a row Forbes has recognized 501 in their annual list of Canada's best employers for 2024 ranking as determined by the recommendations made by employees and other professionals, who we recommend hydro one as a desirable employer.

David: Rankings are based on the independent surveys of over 40000 employees working for companies employed at least 500 people in Canada, receiving recognition as one of Canada's best employers are a testament to our continued success in building a safe workplace.

David: <unk> heard valued I'd have a true sense of belonging.

David: This will work almost a recognition by corporate Knights as one of the best 50 corporate citizens in Canada. During 2023 award celebrates our relentless commitment to sustainability and environmental stewardship. This recognition is a testament to the dedication of our teams in driving our sustainability initiatives and adopting best practices throughout our operations.

David Liebeter: Chris has played an instrumental role in shaping the company into what it is today. He has built a deep bench of experienced leaders within the organization and has overseen significant improvements in equity and bond investor confidence, share price performance, and productivity savings. While I am sad to see Chris go, I fully understand and support his appetite to try other challenges.

David: <unk> been inspired by the accolades. These recognitions are a testament to the collective efforts of our employees partners and stakeholders.

David: In other updates we continue working with the telcos divest the delivery of high speed Internet to some 700 barrels of Ontario.

David: As we have mentioned on previous calls hydro one is prepared and has been for some time, we made investments in labor and training strengthened our supply chain streamlined our joint use processes relax standards.

Chris Lopez: On behalf of the company, and our employees, the executive team, and myself, I want to thank Chris for his service to the company, shareholders, partners, customers, and stakeholders. With that, I'll turn it over to Chris to discuss our financial results. Chris, over to you.

Onboard of contractors and purchase materials in preparation for this initiative.

David: We understand the importance of connectivity to everyday life for families and businesses many of whom are our customers.

Speaker Change: As many of you know Chris has made the decision to leave <unk> to pursue other opportunities.

Speaker Change: Joining hydro one and 2016 versus played an instrumental role in shaping the company to what it is today. He has built a deep bench of experienced leaders within the organization and as always seeing significant improvements in equity and bond investor confidence share price performance and productivity savings.

Chris Lopez: Good morning, and thank you for joining us today. David, thank you for your kind words. I'm extremely proud of the many accomplishments we achieved together over the years. We enhanced the finance, regulatory, and shared services functions to meet the moment and continue to energize life for all Ontarians well into the future. Most recently, we added our Sustainable Financing Framework, a first for a Canadian utility. This framework aligns our funding goals with our sustainability strategy and allows us to generate modest cost savings while investing in critical infrastructure. With a deep bench of talent across the organization and a strong balance sheet to support our growth plans, I felt this was the right time for me to pursue other challenges.

Speaker Change: While I am sad to see Chriscoe I fully understand and support his appetite to try other challenges on behalf of the company and our employees the executive team and myself I want to thank Chris for service to the company its shareholders partners customers and stakeholders.

Speaker Change: That I will turn it over to Chris to discuss our financial results Chris over to you.

Chris Lopez: Good morning, and thank you for joining us today, David. Thank you for your kind words I am extremely proud of the many accomplishments we achieved together over the years, we enhanced the finance regulatory and shared services functions to meet the moment and continue to energize life for all ontarian well into the future.

Chris Lopez: Most recently, we added a sustainable financing framework a first for Canadian utility. This framework aligns our funding goals without sustainability strategy and allows us to generate modest cost savings while investing in critical infrastructure.

Chris Lopez: I want to thank all the hardworking employees at Hydro One who I have had the pleasure of working with during my time here. I also want to thank all of our stakeholders and partners for their support and confidence as we continue to deliver power to drive economic growth across Ontario. Turning to our financial results for the quarter, earnings per share was $0.30, consistent with the fourth quarter last year. For the full year, earnings per share was $1.81 compared to $1.75 last year.

Speaker Change: With a deep bench of talent across the organization and a strong balance sheet to support our growth plan I felt this was the right time for me to pursue other challenges.

Speaker Change: Want to thank all the hardworking employees at Hydro one who I've had the pleasure of working with during my time here.

Speaker Change: I also want to thank all of our stakeholders and partners for their support and confidence as we continue to deliver power to drive economic growth across Ontario.

Turning to our financial results for the quarter earnings per share was <unk> 30, <unk> consistent with the fourth quarter last year for the full year earnings per share was $1 81 compared to $1 75 last year.

Chris Lopez: The key drivers of higher earnings for the full year were consistent with our experience throughout most of the year. They were higher revenues on account of Ontario Energy Board or OEB-approved rates, which considers the annual investment in the grid and power... and Strong Electricity Demand, experienced throughout, partially offset by the recognition of Conservation Demand Management, or CDM, revenues, a one-time item in the fourth quarter of 2022, and lower income tax due to high deductible timing. These drivers were partially affected by higher operations, maintenance, and administration (OM&A) expenses on account of higher work programming, including Forecast Environmental Expenditure Provision and IT Initiatives, as well as higher corporate support. High depreciation, amortisation, and asset removal costs as we continue to invest in and grow our capital assets, coupled with the Galen Sailor's Surface Fixed Assets in the fourth quarter of 2022. And finally, higher year-over-year financing charges resulting from a higher weighted average interest rate on our long-term debt and short-term notes, as well as having a higher volume of long-term debt.

Speaker Change: The key drivers of higher earnings for the full year were consistent with our experienced throughout most of the year. They were higher revenues on account of Ontario Energy Board of OSB approve rates, which considered the annual investment in the grid and power system and strong electricity demand experienced throughout the year, partially offset by the recognition of conservation demand management will CDN revenues.

Speaker Change: A one time item in the fourth quarter of 2022 and.

Speaker Change: And lower income tax due to high deductible timing differences.

Speaker Change: These drivers were partially offset by higher operations and maintenance and administration will M&A expenses on account of high WAC programming expenditures, including forecast environmental expenditures provision and initiatives as well as higher corporate support costs.

Speaker Change: Higher depreciation amortization asset removal costs as we continue to invest and grow our capital assets, coupled with the gain on sale of certain fixed assets in the fourth quarter of 2022, and finally higher year over year financing charges, resulting from higher weighted average interest rate on our long term debt and short term notes.

Speaker Change: <unk> as well as having a higher volume of long term debt.

Chris Lopez: As a reminder, we adjusted the amounts pertaining to the Deferred Tax Asset, or DTA, recovery, which expired at the end of June, resulting in a reduction in both revenue and income, making it income neutral. Similarly, we adjusted for the OEB-approved recovery of historical cost deferrals following the JREP decision, which resulted in an increase in revenue that is offset by an increase in OM&A and income. Once again, it is Net Income YouTube. While I pop in for hi this year, I do want to echo David's comments that we continue to be highly...

Speaker Change: As a reminder, we adjusted the amount pertaining to the deferred tax asset or DTA recovery, which expired at the end of June resulting in a reduction in both revenue and income tax expense, making them net income neutral similar.

Speaker Change: Similarly, we adjusted for the OMB approved recovery of historical cost deferrals. Following the tariff decision, which resulted in an increase in revenue that is offset by an increase in M&A and income tax expense. Once again it is net income neutral.

Speaker Change: While our costs were higher this year I do want to Echo David's comments that we continue to be highly productive both our transmission and distribution segment performed well this year and as a result of our efforts. We were pleased to give back approximately $45 million to our customers by the earnings sharing mechanism.

Chris Lopez: Both our transmission and distribution segments performed well this year, and as a result of our efforts, we were pleased to give back approximately $45 million to our customers via the earnings sharing mechanism. On the productivity front, we are pleased to have achieved $114 million in productivity savings in 2023. We saw meaningful increases in productivity in areas such as operations and supply chain management. However, the productivity savings were weighted slightly more towards capital versus OM&A and REIT. Through these achievements, we are delivering on our multi-year commitment to keep costs as low as possible.

Speaker Change: On the productivity front, we are pleased to have achieved $140 million in productivity savings in 2023.

Speaker Change: We saw meaningful increases in productivity in areas, such as operations and supply chain management.

Speaker Change: The productivity savings, we're weighted slightly more towards capital versus <unk> and revenue.

Speaker Change: These achievements, we are delivering on a multiyear commitment to keep cost as low as possible.

Chris Lopez: In the past, we provided a cumulative productivity savings figure. However, as part of JRAP, we rebased our productivity to align with our JRAP application, and as such, the cumulative productivity savings figures we used to provide are no longer comparable to current. The previously reported cumulative productivity savings figure of approximately $1.5 billion covered savings generated from our initial public offering in 2015 to the end of 2022. We will continue to look for ways to be more productive as these savings will eventually flow back to ratepayers in the next freight period. Net income to shareholders in the fourth quarter was relatively unchanged from a year ago.

Speaker Change: In the past, we provided accumulative productivity savings Sika, however, as part of J REIT, we rebased, our productivity to align with our <unk> application and as such the cumulative productivity savings figures, we used to provide and then longer comparable to current figures.

Speaker Change: The previously reported cumulative productivity savings figure of approximately $1 5 billion, Kevin savings generated from our initial public offering in 2015 to the end of 2022.

Speaker Change: We will continue to look for ways to be more productive as these savings will eventually flow back to rate payers in the next rate period.

Speaker Change: Net income to shareholders in the fourth quarter was relatively unchanged from a year ago.

Chris Lopez: The key drivers behind the results this quarter were similar to the full-year variants and include high revenues driven by higher peak demand and energy consumption, coupled with OEB approved rates, and lower income taxes due to high deductible timing, which were offset by higher financing charges resulting from higher weighted average interest rates and volume of long-term debt, and Hyde Appreciation following the gain and sale of surplus fixed assets in the fourth quarter of 2022. Our fourth quarter revenue, net of purchase power, was higher year over year by 2.3%. The increase is mainly due to higher peak demand, energy consumption, and OEB-approved 2023 transmission. Pass your set by CDN Revenues.

Speaker Change: The key drivers behind the results this quarter was similar to the full year guidance and include.

Speaker Change: Revenues, driven by higher peak demand and energy consumption, coupled with OLED approved rates.

Speaker Change: And lower income taxes due to high deductible timing differences, which were offset by higher financing charges, resulting from higher weighted average interest rates and volume of long term debt.

Speaker Change: Higher depreciation following the gain in sale of surplus fixed assets in the fourth quarter of 2022.

Speaker Change: Our fourth quarter revenue net of purchase power was higher year over year by two 3% the.

Speaker Change: The increase is mainly due to higher peak demand and energy consumption and <unk> through 2023 transmission rates, partially offset by CDN revenues recognized last year and higher earning sharing.

Chris Lopez: Recognise last and Higher Earnings Sharing. For the transition segment, revenues were higher by 5.4%. The increase was reflective of higher transmission revenues due to OEB-approved rates, coupled with stronger peak demand, which was 7.7% higher compared to last year. However, these higher revenues were partially offset by CDM revenues recognized in 2022 and higher earnings sharing this year. Distribution revenues net of purchase power decreased by 1.5%, mainly due to net income neutral items and higher earnings share. These were partially offset by higher customer count and energy consumption, which was higher by 2.7%. Both the transmission and distribution segments had net income neutral items in revenue, including the cessation of the DTA recovery and normal course regulatory adjustments. There were corresponding offsets in tax expense and OM&A, making them the income unit.

Speaker Change: For the transmission segment revenues were higher by five 4%. The increase was reflective of higher transmission revenues due to only be approved rates, coupled with stronger peak demand, which was seven 7% higher compared to last year.

Speaker Change: These higher revenues were partially offset by CDN revenues recognized in 2022 and higher earnings sharing this year.

Speaker Change: Distribution revenues net of purchase power decreased by one 5%, mainly due to net income neutral items and higher earning sharing.

Speaker Change: These are partially offset by higher customer counts.

Speaker Change: In energy consumption, which was higher by two 7%.

Speaker Change: Both the transmission and distribution segment had net income mutual items in revenue, including the cessation of the DTA recovery and normal course regulatory adjustments.

Speaker Change: They have a corresponding offsetting tax expense and M&A, making them net income neutral.

Chris Lopez: On the cost front, operating maintenance and administration expenses in the quarter increased by approximately 2.3% year-over-year. The quarterly variance was due to high work program expenditures, offset by lower corporate support costs on account of a higher rate of capitalization of overhead. On transmission, costs were lower by 1.4%, mainly due to lower corporate support. As the capital program ramped up in the back half of the year, we capitalised common costs at a higher rate, which substantially offset the increase in corporate support costs in the front half of the year. This was partially offset by a higher work program expected, primarily related to vegetation. Distribution costs were higher by 3.6% due to higher work program expenditures, including an increase in the forecast environmental expenditures provisioned in the period and higher IT and emergency restoration. However, these were partially offset by lower vegetation management expenditures and lower corporate support costs, for the same reasons outlined previously.

Speaker Change: On the cost front operating maintenance and administration expenses in the quarter increased by approximately two 3% year over year.

Speaker Change: The quarterly variance was due to highway program expenditures offset by lower corporate support costs on account of a higher rate of capitalization of overheads.

Speaker Change: On transmission costs were lower by one 4%, mainly due to lower corporate support costs.

Speaker Change: As the capital program ramped up in the back half of the year, we capitalized common costs at a higher rate, which substantially offset the increase in corporate support costs in the front half of the year.

Speaker Change: This was partially offset by higher work program expenditures.

Speaker Change: Primarily related to vegetation management.

Speaker Change: Distribution costs were higher by three 6% due to highway program expenditures, including an increase in the forecast environmental expenditures provisions in the period and higher <unk> and emergency restoration costs.

Speaker Change: These were partially offset by lower vegetation management expenditures and lower corporate support costs for the same reasons outlined previously.