# EDGAR Filing Document

**Accession Number:** 0001712356
**File Stem:** 0001712356-23-000013
**Filing Date:** 2023-2
**Character Count:** 43926
**Document Hash:** 3804dc761b2a50d9a301b071ea081bd6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001712356-23-000013.hdr.sgml**: 20230214

**ACCESSION NUMBER**: 0001712356-23-000013

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 4

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230214

**DATE AS OF CHANGE**: 20230214

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Hydro One Ltd
- **CENTRAL INDEX KEY:** 0001712356
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRIC SERVICES [4911]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A6
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 333-225519-01
- **FILM NUMBER:** 23622271

**BUSINESS ADDRESS:**
- **STREET 1:** 483 BAY STREET, 8TH FLOOR, SOUTH TOWER
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5G 2P5
- **BUSINESS PHONE:** 416-345-5000

**MAIL ADDRESS:**
- **STREET 1:** 483 BAY STREET, 8TH FLOOR, SOUTH TOWER
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5G 2P5

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**Pursuant to Rule 13a-16 or 15d-16 under**

**the Securities Exchange Act of 1934**

**For the month of: February 2023**

**Commission File Number: 333-225519-01**

**HYDRO ONE LIMITED**

**(Translation of Registrant's name into English)**

**483 Bay Street, South Tower, 8th Floor, Toronto Ontario M5G 2P5 Canada**

**(Address of principal executive offices)**

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

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**EXHIBIT INDEX**

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| | |
|:---|:---|
| <u>[99.1](a2022yeholpr.htm)</u> | Hydro One Limited news release dated February 14, 2023 |

---

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**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| **HYDRO ONE LIMITED** | **HYDRO ONE LIMITED** |
| /s/ Christopher Lopez | /s/ Christopher Lopez |
| Name: Christopher Lopez | Name: Christopher Lopez |
| Title: Chief Financial Officer | Title: Chief Financial Officer |
| Date: | February 14, 2023 |

---

## Exhibit 99.1

![hydroonelogo3a.jpg](hydroonelogo3a.jpg)

**Hydro One Reports Fourth Quarter Results** 

The Company appointed David Lebeter as its President and Chief Executive Officer (CEO), demonstrating the depth of talent within the Company's management team.

TORONTO, February 14, 2023 - Hydro One Limited (Hydro One or the Company) today announced its financial and operating results for the fourth quarter ended December 31, 2022.

**Fourth Quarter Highlights** 

&nbsp;&nbsp;&nbsp;&nbsp;• Fourth quarter basic earnings per share (EPS) of $0.30 was 11.1% higher compared to EPS of $0.27 for the same period in 2021. For the full year, basic EPS of $1.75 was 8.7% higher than basic EPS of $1.61 in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;• EPS for the quarter was higher year over year primarily due to approved rates for the transmission and distribution segments, the impact of regulatory adjustments including the recognition of Conservation and Demand Management (CDM) revenues and lower earnings sharing, as well as lower depreciation, amortization and asset removal costs as a result of a gain realized on the sale of surplus property, which were partially offset by higher work program expenditures.

&nbsp;&nbsp;&nbsp;&nbsp;• Hydro One restored power to approximately 550,000 customers during the December winter storm in the middle of the holiday season.

&nbsp;&nbsp;&nbsp;&nbsp;• Hydro One reinforced its commitment to support customers by relaunching its Winter Relief Fund.

&nbsp;&nbsp;&nbsp;&nbsp;• The Company received approval from the Ontario Energy Board (OEB) for its 2023-2027 Joint Rate Application (JRAP) on November 29, 2022 (JRAP Decision).

&nbsp;&nbsp;&nbsp;&nbsp;• With the approval of the 2023-2027 JRAP, the Company is providing an EPS guidance range for 2027 of $2.05 to $2.26. This range translates into a compounded annual growth rate (CAGR) of 5%-7% over the period 2023-2027, relative to a normalized 2022 earnings.

&nbsp;&nbsp;&nbsp;&nbsp;• Annual productivity savings of $374 million represents an 8.6% increase year-over-year. Total productivity savings since 2015 amounts to $1,456 million.

&nbsp;&nbsp;&nbsp;&nbsp;• Hydro One was recognized as one of Canada's Best Employers for 2023 by Forbes for the 8th consecutive year.

&nbsp;&nbsp;&nbsp;&nbsp;• Hydro One received an award for its recovery efforts during the May 2022 Derecho windstorms from the Edison Electric Institute.

&nbsp;&nbsp;&nbsp;&nbsp;• Subsequent to the quarter, demonstrating the depth of its management team, Hydro One appointed David Lebeter, its current Chief Operating Officer, as its President and CEO.

&nbsp;&nbsp;&nbsp;&nbsp;• Subsequent to the quarter, demonstrating its commitment to sustainability, Hydro One published a Sustainable Financing Framework, a first for a utility in Canada. The Company also successfully priced its inaugural offering of Medium-Term Notes (MTN) under the New Sustainable Financing Framework in the amount of $1,050 million. This is the largest aggregate amount issuance of sustainable bonds by a corporate issuer to date in Canada.

&nbsp;&nbsp;&nbsp;&nbsp;• The Company's capital investments and in-service additions for the year were $2,132 million and $2,267 million, respectively, compared to $2,125 million and $1,757 million in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;• Quarterly dividend declared at $0.2796 per share, payable March 31, 2023.

"I am excited to lead this great company and a strong team as we continue to deliver on our strategy of focusing on safety, reliability, customers and Indigenous communities to build a stronger and more prosperous Ontario," said David Lebeter, President and CEO of Hydro One. "With the approval of our 2023-2027 Investment Plan, we are pleased to provide EPS growth guidance of 5%-7% as we continue to execute on our existing strategic plan."

 1

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**Selected Consolidated Financial and Operating Highlights** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended December 31** | **Three months ended December 31** | **Year ended December 31** | **Year ended December 31** |
|<br>*(millions of Canadian dollars, except as otherwise noted)* | **2022** | **2021** | **2022** | **2021** |
| Revenues | 1862 | 1779 | 7780 | 7225 |
| Purchased power | 895 | 914 | 3724 | 3579 |
| Revenues, net of purchased power<sup>1</sup> | 967 | 865 | 4056 | 3646 |
| Net income attributable to common shareholders | 178 | 159 | 1050 | 965 |
| Basic EPS | $0.30 | $0.27 | $1.75 | $1.61 |
| Diluted EPS | $0.30 | $0.26 | $1.75 | $1.61 |
| Net cash from operating activities | 602 | 670 | 2260 | 2149 |
| Capital investments | 570 | 532 | 2132 | 2125 |
| Assets placed in-service | 1090 | 786 | 2267 | 1757 |
| Transmission: Average monthly Ontario 60-minute peak demand (MW) | 19020 | 19137 | 20368 | 19915 |
| Distribution: Electricity distributed to Hydro One customers (GWh) | 7826 | 7731 | 30803 | 29966 |

---

<sup>1</sup> "Revenues, net of purchased power" is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under United States (US) generally accepted accounting principles (US GAAP) used to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. See the section "Non-GAAP Financial Measures".

**Key Financial Highlights** 

<u>2022 Fourth Quarter Highlights</u>

The Company reported net income attributable to common shareholders of $178 million during the quarter, compared to $159 million in the same period of 2021. This resulted in EPS of $0.30, compared to EPS of $0.27 in the prior year.

Revenues, net of purchased power<sup>1</sup> of $967 million for the fourth quarter were $102 million higher than revenues, net of purchased power<sup>1</sup> for the fourth quarter of 2021. The increase is mainly due to revenues resulting from OEB-approved 2022 rates as well as positive regulatory adjustments, including the recognition of CDM revenues following receipt of the OEB decision on Hydro One's JRAP and lower earnings sharing. Revenues were also impacted by a regulatory adjustment associated with capitalized overheads approved in the JRAP settlement (Capitalized Overhead Tax Variance) which was partially offset by an adjustment to transmission revenue requirement and base distribution rates effective January 1, 2022 pursuant to the April 2021 OEB decision regarding the deferred tax asset (DTA) (DTA Implementation Decision). The impacts of the regulatory adjustment and the DTA Implementation Decision are offset by a net decrease in tax expense and are net income neutral in the period.

Operation, maintenance and administration (OM&A) costs in the fourth quarter of 2022 were higher than the prior year as a result of higher work program expenditures, including stations and line maintenance, emergency restoration and environmental expenditures, as well as higher corporate support costs.

Depreciation, amortization and asset removal costs for the fourth quarter of 2022 were lower than the prior year primarily due to a gain realized on the sale of surplus property which was partially offset by higher depreciation resulting from the growth in capital assets as the Company continues to place new assets in-service, consistent with its ongoing capital investment program and higher asset removal costs primarily resulting from storm-related asset replacements.

Income tax expense for the fourth quarter of 2022 was lower than the prior year primarily due to the tax recovery associated with the Capitalized Overhead Tax Variance and higher deductible timing differences, which were partially offset by incremental income tax expense pursuant to the DTA Implementation Decision and higher pre-tax earnings compared to the fourth quarter of the prior year.

<sup>1</sup> Revenues, net of purchased power, is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under US GAAP used to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. See the section "Non-GAAP Financial Measures".

---

| | |
|:---|:---|
| 2 | ![hydroonelogo3a.jpg](hydroonelogo3a.jpg) |

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Hydro One continues to invest in the reliability and performance of Ontario's electricity transmission and distribution systems by addressing aging power system infrastructure, facilitating connectivity to new load customers and generation sources, and improving service to customers. The Company made capital investments of $570 million during the fourth quarter of 2022 and placed $1,090 million of new assets in-service.

<u>2022 Annual Highlights</u>

For the twelve months ended December 31, 2022, the Company reported net income attributable to common shareholders of $1,050 million compared to $965 million in 2021, an increase of $85 million compared to the prior year. This resulted in EPS for the period of $1.75 compared to EPS of $1.61 in 2021. Annual results were primarily impacted by the same factors as noted above, as well as higher average monthly peak demand and energy consumption.

For the full year, the Company placed $2,267 million of assets into service in 2022 compared to $1,757 million in 2021.

**Selected Operating Highlights** 

The OEB approved the settlement agreement for the Company's JRAP, which includes the 2023-2027 Investment Plan for the Company's transmission and distribution systems. The Investment Plan, informed by customer feedback, serves to reduce the impacts of power outages, renew and replace critical transmission and distribution infrastructure, enable economic growth and prepare for climate change.

Hydro One reinforced its commitment to support customers in financial need with its Winter Relief Fund. As part of the Company's commitment to customers, those in need of financial assistance as well as increased payment flexibility are encouraged to contact Hydro One for support. Since 2020, the Company has helped tens of thousands of customers access approximately $11 million in financial relief from both Hydro One and government programs.

Hydro One's Board of Directors announced the appointment of David Lebeter as the Company's new President and CEO. Mr. Lebeter is a highly regarded leader with deep industry experience, strong people leadership skills and proven results in improving safety, productivity, operational performance, and customer experience. With more than 40 years of experience in the utility and forestry sectors, he currently serves as the Company's Chief Operating Officer with responsibility for transmission and distribution operations including construction, maintenance and vegetation management, as well as system operations, asset planning and engineering.

Hydro One published a Sustainable Financing Framework (Framework), a first for a utility in Canada. The Framework allows Hydro One and its subsidiaries to issue sustainable financing instruments, such as sustainable and green bonds, and allocate the net proceeds to investments in eligible green and social project categories. The project categories include: clean energy, energy efficiency, clean transportation, biodiversity conservation, climate change adaption, socio-economic advancement of Indigenous peoples and access to essential services (such as the electrical grid and enablement of high-speed broadband internet).

In January, the Company's wholly-owned subsidiary, Hydro One Inc. priced its inaugural offering of $1,050 million MTN under its new Framework consisting of $300 million aggregate principal amount of 3.93% MTN, Series 53, due 2029, $450 million aggregate principal amount of 4.16% MTN, Series 54, due 2033 and $300 million aggregate principal amount of 4.46% MTN, Series 55, due 2053. The net proceeds from the issuance of the Notes will be approximately $1,045 million. The Company intends to allocate an amount equal to the net proceeds from the sale of the Notes to finance and/or refinance, in whole or in part, new and/or existing eligible green and social projects that meets the eligibility criteria described in the Framework.

---

| | |
|:---|:---|
| 3 | ![hydroonelogo3a.jpg](hydroonelogo3a.jpg) |

---

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**Common Share Dividends**

Following the conclusion of the fourth quarter, on February 13, 2023, the Company declared a quarterly cash dividend to common shareholders of $0.2796 per share to be paid on March 31, 2023 to shareholders of record on March 15, 2023.

**Supplemental Segment Information**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended December 31** | **Three months ended December 31** | **Year ended December 31** | **Year ended December 31** |
|<br>*(millions of Canadian dollars)* | **2022** | **2021** | **2022** | **2021** |
| **Revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 480 | 421 | 2077 | 1824 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 1371 | 1347 | 5660 | 5359 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 11 | 11 | 43 | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenues | **1862** | **1779** | **7780** | **7225** |
| **Revenues, net of purchased power**<sup>1</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 480 | 421 | 2077 | 1824 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 476 | 433 | 1936 | 1780 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 11 | 11 | 43 | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenues, net of purchased power<sup>1</sup> | **967** | **865** | **4056** | **3646** |
| **Operation, maintenance and administration costs** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 143 | 103 | 445 | 397 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 222 | 161 | 739 | 658 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 23 | 15 | 74 | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operation, maintenance and administration costs | **388** | **279** | **1258** | **1112** |
| **Income before financing charges and taxes** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 213 | 188 | 1123 | 942 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 149 | 158 | 749 | 694 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (14) | (7) | (40) | (24) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total income before financing charges and taxes | **348** | **339** | **1832** | **1612** |
| **Capital investments** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 310 | 303 | 1209 | 1320 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 253 | 221 | 899 | 787 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 7 | 8 | 24 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total capital investments | **570** | **532** | **2132** | **2125** |
| **Assets placed in-service** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission | 761 | 526 | 1405 | 1008 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distribution | 326 | 257 | 853 | 738 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 3 | 3 | 9 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets placed in-service | **1090** | **786** | **2267** | **1757** |

---

<sup>1</sup> Revenues, net of purchased power, is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under US GAAP used to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. See the section "Non-GAAP Financial Measures".

---

| | |
|:---|:---|
| 4 | ![hydroonelogo3a.jpg](hydroonelogo3a.jpg) |

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**Summary of Fourth Quarter Results of Operations**

**Net Income**

Net income attributable to common shareholders for the quarter ended December 31, 2022 of $178 million is an increase of $19 million, or 11.9%, from the prior year. Significant influences on net income included:

&nbsp;&nbsp;&nbsp;&nbsp;• higher revenues, net of purchased power,<sup>2</sup> primarily resulting from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in transmission and distribution OEB-approved 2022 rates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• positive regulatory adjustments, including the recognition of CDM revenues following the receipt of the JRAP Decision and a lower deferred adjustment as a result of the Earnings Sharing Mechanism in 2022.

&nbsp;&nbsp;&nbsp;&nbsp;• higher OM&A costs primarily resulting from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher work program expenditures including stations and lines maintenance, environmental management, IT initiatives and storm restoration; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher corporate support costs.

&nbsp;&nbsp;&nbsp;&nbsp;• lower depreciation, amortization and asset removal costs primarily resulting from a gain realized on the sale of surplus property, partially offset by higher depreciation resulting from the growth in capital assets as the Company continues to place new assets in-service, consistent with its ongoing capital investment program, and higher asset removal costs.

&nbsp;&nbsp;&nbsp;&nbsp;• lower income tax expense primarily resulting from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher deductible timing differences compared to the prior year; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher pre-tax earnings.

**EPS** 

Basic EPS was $0.30 in the fourth quarter of 2022, compared to basic EPS of $0.27 in the fourth quarter of 2021.

**Revenues**

The year-over-year increase of $59 million or 14.0% in transmission revenues during the quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• positive regulatory adjustments, including the recognition of CDM revenues following receipt of the JRAP Decision, partially offset by a deferred adjustment associated with the OEB-approved Earnings Sharing Mechanism; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher revenues resulting from OEB-approved 2022 rates; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• a regulatory adjustment associated with the Capitalized Overhead Tax Variance and an adjustment to transmission revenue requirement effective January 1, 2022 to cease sharing of DTA amounts pursuant to the DTA Implementation Decision, the net impact of which is offset by a decrease in income tax and therefore net income neutral.

The year-over-year increase of $24 million or 1.8% in distribution revenues during the quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• higher revenues resulting from OEB-approved 2022 rates; and

&nbsp;&nbsp;&nbsp;&nbsp;• positive regulatory adjustments including a lower adjustment to the Earnings Sharing Mechanism in 2022; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• lower purchased power costs, which are fully recovered from ratepayers and are thus net income neutral; and

<sup>2</sup> Revenues, net of purchased power, is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under US GAAP used

&nbsp;&nbsp;&nbsp;&nbsp;to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. See the section "Non-GAAP Financial

&nbsp;&nbsp;&nbsp;&nbsp;Measures".

---

| | |
|:---|:---|
| 5 | ![imagea.jpg](imagea.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;• a regulatory adjustment associated with the Capitalized Overhead Tax Variance and an adjustment to base distribution rates effective January 1, 2022 to cease sharing of DTA amounts pursuant to the DTA Implementation Decision, the net impact of which is offset by a decrease in income tax and therefore net income neutral.

Distribution revenues, net of purchased power,<sup>3</sup> increased by 9.9% during the fourth quarter of 2022 compared to the prior year, primarily due to the reasons noted above, adjusted for the recovery of purchased power costs.

**OM&A Costs**

The year-over-year increase of $40 million or 38.8% in transmission OM&A costs during the quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• higher work program expenditures, including higher volume of maintenance work on stations, as well as higher spend on lines and facilities;

&nbsp;&nbsp;&nbsp;&nbsp;• higher corporate support costs; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher property taxes; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• lower project write-offs.

The year-over-year increase of $61 million or 37.9% in distribution OM&A costs during the quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• higher work program expenditures, including higher volume of emergency restoration and environmental management as well as higher spend associated with IT initiatives and customer programs;

&nbsp;&nbsp;&nbsp;&nbsp;• higher corporate support costs;

&nbsp;&nbsp;&nbsp;&nbsp;• higher project write-offs; and

&nbsp;&nbsp;&nbsp;&nbsp;• costs related to storm restoration efforts that have been recovered from third parties and are offset in revenue, therefore net income neutral.

**Depreciation, Amortization and Asset Removal Costs**

The decrease of $16 million or 6.5%, in depreciation, amortization and asset removal costs in the fourth quarter of 2022 was primarily due to a gain realized on the sale of surplus property, partially offset by higher depreciation resulting from the growth in capital assets as the Company continues to place new assets in-service, consistent with its ongoing capital investment program, and higher asset removal costs.

**Financing Charges** 

The $5 million or 4.1% increase in financing charges for the quarter ended December 31, 2022, was primarily due to higher weighted-average interest rates on short-term notes, partially offset by gains on interest rate swap agreements.

**Income Taxes**

Income tax expense for the fourth quarter of 2022 decreased by $14 million compared to the same period in 2021. This resulted in a realized effective tax rate of approximately 18.6% in the fourth quarter of 2022, compared to approximately 25.5% in the fourth quarter of the prior year.

The decrease in income tax expense for the three months ended December 31, 2022 was primarily attributable to:

&nbsp;&nbsp;&nbsp;&nbsp;• higher deductible timing differences compared to the prior year; and

<sup>3</sup> Revenues, net of purchased power, is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under US GAAP used

&nbsp;&nbsp;&nbsp;&nbsp;to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. See the section "Non-GAAP Financial

&nbsp;&nbsp;&nbsp;&nbsp;Measures".

---

| | |
|:---|:---|
| 6 | ![imagea.jpg](imagea.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;• net income neutral items, including incremental tax recovery relating to the Capitalized Overhead Tax Variance which was partially offset by the tax expense relating to the DTA Implementation Decision. This decrease in tax expense is offset by a corresponding decrease in revenue and therefore net income neutral; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• higher earnings adjusted for the DTA Implementation Decision and impacts of the JRAP Decision.

**Assets Placed In-Service**

The increase in transmission assets placed in-service during the fourth quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• substantial completion of the end-of-life air blast circuit breakers replacement at Bruce B Switching Station;

&nbsp;&nbsp;&nbsp;&nbsp;• higher investments associated with customer connections placed in-service;

&nbsp;&nbsp;&nbsp;&nbsp;• timing of investments placed in-service for information technology initiatives; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of transmission line refurbishments and replacements; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• timing of investments placed in-service for major development projects.

The increase in distribution assets placed in-service during the fourth quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• partial in-service of South Middle Road feeder development project;

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of storm-related asset replacements;

&nbsp;&nbsp;&nbsp;&nbsp;• timing of investments placed in-service for information technology initiatives; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of assets placed in-service associated with customer connections; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• lower volume of line refurbishments and replacements.

**Capital Investments**

The increase in transmission capital investments during the fourth quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of refurbishment and replacement work on transmission stations and lines; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of work on wood poles; partially offset by

&nbsp;&nbsp;&nbsp;&nbsp;• lower volume of work on customer connections.

The increase in distribution capital investments during the fourth quarter was primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• higher spend on storm-related asset replacements; and

&nbsp;&nbsp;&nbsp;&nbsp;• higher volume of work on customer connections.

---

| | |
|:---|:---|
| 7 | ![imagea.jpg](imagea.jpg) |

---

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**Consolidated Income Statements**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three months ended December 31,** | **Three months ended December 31,** | **Three months ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
| *(millions of Canadian dollars, except per share amounts)* | *(millions of Canadian dollars, except per share amounts)* | **2022** | **2021** | **2022** | **2021** |
| **Revenues** |  |  |  |  |  |
| Distribution |  | 1371 | 1347 | 5660 | 5359 |
| Transmission |  | 480 | 421 | 2077 | 1824 |
| Other |  | 11 | 11 | 43 | 42 |
|  |  | 1862 | 1779 | 7780 | 7225 |
| **Costs** |  |  |  |  |  |
| Purchased power |  | 895 | 914 | 3724 | 3579 |
| Operation, maintenance and administration |  | 388 | 279 | 1258 | 1112 |
| Depreciation, amortization and asset removal costs |  | 231 | 247 | 966 | 922 |
|  |  | 1514 | 1440 | 5948 | 5613 |
| **Income before financing charges and income tax expense** | **Income before financing charges and income tax expense** | **348** | **339** | **1832** | **1612** |
| Financing charges |  | 128 | 123 | 486 | 461 |
| **Income before taxes** |  | **220** | **216** | **1346** | **1151** |
| Income tax expense |  | 41 | 55 | 288 | 178 |
| **Net income** |  | **179** | **161** | **1058** | **973** |
| Other comprehensive income |  | 9 | 9 | 23 | 17 |
| **Comprehensive income** |  | **188** | **170** | **1081** | **990** |
| **Net income attributable to:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest |  | 1 | 2 | 8 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common shareholders |  | 178 | 159 | 1050 | 965 |
|  |  | **179** | **161** | **1058** | **973** |
| **Comprehensive income attributable to:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest |  | 1 | 2 | 8 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common shareholders |  | 187 | 168 | 1073 | 982 |
|  |  | **188** | **170** | **1081** | **990** |
| Basic EPS |  | $0.30 | $0.27 | $1.75 | $1.61 |
| Diluted EPS |  | $0.30 | $0.26 | $1.75 | $1.61 |

---

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| | |
|:---|:---|
| 8 | ![imagea.jpg](imagea.jpg) |

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**Consolidated Balance Sheets**

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| | | |
|:---|:---|:---|
| **As at December 31** *(millions of Canadian dollars)* | **2022** | **2021** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 530 | 540 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 767 | 699 |
| &nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | 282 | 284 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 281 | 303 |
|  | 1860 | 1826 |
| Property, plant and equipment | 25077 | 23842 |
| Other long-term assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Regulatory assets | 2964 | 3561 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets | 114 | 118 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | 608 | 570 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 373 | 373 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | 461 | 93 |
|  | 4520 | 4715 |
| **Total assets** | **31457** | **30383** |
| **Liabilities** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term notes payable | 1374 | 1045 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt payable within one year | 733 | 603 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other current liabilities | 1274 | 1064 |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | 271 | 266 |
|  | 3652 | 2978 |
| Long-term liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | 13030 | 13017 |
| &nbsp;&nbsp;&nbsp;&nbsp;Regulatory liabilities | 1123 | 362 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax liabilities | 715 | 367 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | 1545 | 2683 |
|  | 16413 | 16429 |
| **Total liabilities** | **20065** | **19407** |
| Noncontrolling interest subject to redemption | 20 | 20 |
| **Equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common shares | 5699 | 5688 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 34 | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 5562 | 5174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | 11 | (12) |
| &nbsp;&nbsp;&nbsp;&nbsp;Hydro One shareholders' equity | 11306 | 10888 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest | 66 | 68 |
| **Total equity** | **11372** | **10956** |
|  | **31457** | **30383** |

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| 9 | ![imagea.jpg](imagea.jpg) |

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**Consolidated Statements of Cash Flows**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three months ended December 31,** | **Three months ended December 31,** | **Three months ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
| *(millions of Canadian dollars)* | *(millions of Canadian dollars)* | **2022** | **2021** | **2022** | **2021** |
| **Operating activities** |  |  |  |  |  |
| Net income |  | 179 | 161 | 1058 | 973 |
| Environmental expenditures |  | (9) | (6) | (33) | (30) |
| Adjustments for non-cash items: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  | 194 | 218 | 831 | 815 |
| &nbsp;&nbsp;&nbsp;&nbsp;Regulatory assets and liabilities |  | 26 | 36 | 44 | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense |  | 34 | 59 | 260 | 154 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | 10 | 22 | 39 | 67 |
| Changes in non-cash balances related to operations | Changes in non-cash balances related to operations | 168 | 180 | 61 | 100 |
| **Net cash from operating activities** |  | **602** | **670** | **2260** | **2149** |
| **Financing activities** |  |  |  |  |  |
| Long-term debt issued |  | 750 |  | 750 | 900 |
| Long-term debt repaid |  | (2) | (2) | (603) | (804) |
| Short-term notes issued |  | 1745 | 1045 | 6335 | 4150 |
| Short-term notes repaid |  | (1880) | (960) | (6000) | (3905) |
| Dividends paid |  | (168) | (159) | (662) | (629) |
| Distributions paid to noncontrolling interest |  | (2) | (2) | (10) | (8) |
| Common shares issued |  |  |  | 3 |  |
| Costs to obtain financing |  | (5) |  | (10) | (7) |
| **Net cash from (used in) financing activities** |  | **438** | **(78)** | **(197)** | **(303)** |
| **Investing activities** |  |  |  |  |  |
| Capital expenditures |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment |  | (514) | (461) | (1966) | (1928) |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets |  | (39) | (46) | (120) | (143) |
| Capital contributions received |  | (1) | 5 | 12 | 14 |
| Other |  | 19 | (2) | 1 | (6) |
| **Net cash used in investing activities** |  | **(535)** | **(504)** | **(2073)** | **(2063)** |
| **Net change in cash and cash equivalents** |  | 505 | 88 | (10) | (217) |
| Cash and cash equivalents, beginning of period |  | 25 | 452 | 540 | 757 |
| **Cash and cash equivalents, end of period** |  | **530** | **540** | **530** | **540** |

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This press release should be read in conjunction with the Company's 2022 Consolidated Financial Statements and MD&A. These financial statements and MD&A together with additional information about Hydro One, can be accessed at <u>www.HydroOne.com/Investors</u> and <u>www.sedar.com</u>.

**Quarterly Investment Community Teleconference**

The Company's fourth quarter 2022 results teleconference with the investment community will be held on February 14, 2023 at 8 a.m. ET, a webcast of which will be available at <u>www.HydroOne.com/Investors</u>. Members of the financial community wishing to ask questions during the call should go to this link (<u>https://register.vevent.com/register/BIdb9075c0bf0a4bf4b0d6b5373e39c402</u>) prior to the scheduled start time to access Hydro One's fourth quarter 2022 results call. Media and other interested parties are welcome to participate on a listen-only basis. A webcast of the teleconference will be available at the same link following the call. Additionally, investors should note that from time to time Hydro One management presents at brokerage sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Hydro One's website at <u>www.HydroOne.com/Investors</u> and are posted generally at least two days before the conference.

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**Hydro One Limited (TSX: H)**

Hydro One Limited, through its wholly-owned subsidiaries, is Ontario's largest electricity transmission and distribution provider with approximately 1.5 million valued customers, approximately $31.5 billion in assets as at December 31, 2022, and annual revenues in 2022 of approximately $7.8 billion.

Our team of approximately 9,300 skilled and dedicated employees proudly build and maintain a safe and reliable electricity system which is essential to supporting strong and successful communities. In 2022, Hydro One invested approximately $2.1 billion in its transmission and distribution networks, and supported the economy through buying approximately $1.9 billion of goods and services.

We are committed to the communities where we live and work through community investment, sustainability and diversity initiatives. We are designated as a Sustainable Electricity Leader™ by Electricity Canada.

Hydro One Limited's common shares are listed on the TSX and certain of Hydro One Inc.'s medium term notes are listed on the NYSE. Additional information can be accessed at <u>www.hydroone.com</u>, <u>www.sedar.com</u> or <u>www.sec.gov</u>.

**For More Information**

For more information about everything Hydro One, please visit <u>www.hydroone.com</u> where you can find additional information including links to securities filings, historical financial reports, and information about the Company's governance practices, corporate social responsibility, customer solutions, and further information about its business.

**Non-GAAP Financial Measures**

Hydro One uses a number of financial measures to assess its performance. The Company presents "revenues, net of purchased power" to reflect revenues net of the cost of purchased power, which is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under GAAP used to prepare the Company's financial statements and might not be comparable to similar measures presented by other entities. They should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under US GAAP.

<u>Revenues, Net of Purchased Power</u>

Revenues, net of purchased power is defined as revenues less the cost of purchased power. Revenues, net of purchased power is used internally by management to assess the impacts of revenue on net income and is considered useful because it excludes the cost of power that is fully recovered through revenues and therefore net income neutral.

The following table provides a reconciliation of GAAP (reported) Revenues to non-GAAP (adjusted) Revenues, Net of Purchased Power on a consolidated basis.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended December 31** | **Three months ended December 31** | **Year ended December 31** | **Year ended December 31** |
|<br>*(millions of dollars)* | **2022** | **2021** | **2022** | **2021** |
| Revenues | 1862 | 1779 | 7780 | 7225 |
| Less: Purchased power | 895 | 914 | 3724 | 3579 |
| **Revenues, net of purchased power** | 967 | 865 | 4056 | 3646 |

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**Forward-Looking Statements and Information**

This press release contains "forward-looking information" within the meaning of applicable securities laws. Such information includes, but is not limited to, statements related to: the Company's EPS guidance range from 2023 to 2027, relative to a normalized 2022 earnings; the Company's filed settlement agreement on the JRAP, including anticipated outcomes and impacts; expectations regarding the Company's financing activities, including the anticipated use of an amount equal to the net proceeds from the issuance of medium term notes towards financing and/or refinancing new or existing eligible projects under the Sustainable Financing Framework; the Company's plans to improve reliability, including facilitating connectivity for new load customers and generation sources; the Company's ongoing and planned projects and expected capital investments, including anticipated outcomes and impacts; and payment of dividends. Words such as "expect," "anticipate," "intend," "attempt," "may," "plan," "will", "can", "believe," "seek," "estimate," and variations of such words and similar expressions are intended to identify such forward-looking information. In particular, the forward-looking information contained in this presentation is based on a variety of factors and assumptions including, but not limited to: the scope of the COVID-19 pandemic and duration thereof as well as the effect and severity of corporate and other mitigation measures on Hydro One's operations, supply chain or employees; no unforeseen changes in the legislative and operating framework for Ontario's electricity market or for Hydro One specifically; favourable decisions from the OEB and other regulatory bodies concerning outstanding and future rate and other applications; no unexpected delays in obtaining required approvals; no unforeseen changes in rate orders or rate setting methodologies for Hydro One's distribution and transmission businesses; the continued use and availability of US GAAP; no unfavourable changes in environmental regulation; a stable regulatory environment; no significant changes to Hydro One's current credit ratings; no unforeseen impacts of new accounting pronouncements; no changes to expectations regarding electricity consumption; no unforeseen changes to economic and market conditions; recoverability of costs and expenses related to the COVID-19 pandemic, including the costs of customer defaults resulting from the pandemic; completion of operating and capital projects that have been deferred; and no significant event occurring outside the ordinary course of business. We caution that all forward-looking information is inherently subject to change and uncertainty and that actual results may differ materially from those expressed or implied by the forward-looking information. A number of risks, uncertainties and other factors could cause actual results and events to differ materially from those expressed or implied in the forward-looking information or could cause our current objectives, strategies and intentions to change, and many of these factors are beyond our control and current expectation or knowledge. These statements are not guarantees of future performance or actions and involve assumptions and risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking information. Some of the factors that could cause actual results or outcomes to differ materially from the results expressed, implied or forecasted by such forward-looking information, including some of the assumptions used in making such statements, are discussed more fully in Hydro One's filings with the securities regulatory authorities in Canada, which are available on SEDAR at <u>www.sedar.com</u>. In this release, Hydro One also presents information about EPS growth guidance. The purpose of providing EPS guidance is in order to give context to the nature of some of Hydro One's future projections for the Company as of the date of this release. Actual results may vary and the guidance may not be appropriate for other purposes. Hydro One does not intend, and it disclaims any obligation, to update any forward-looking information, except as required by law.

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**For further information, please contact:**

<u>Investors</u>:

Omar Javed

Vice President, Investor Relations

<u>investor.relations@hydroone.com</u>

416-345-5943

<u>Media</u>:

Jay Armitage

Vice President, Communications and Marketing

<u>media.relations@hydroone.com</u>

416-345-6868

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| 13 | ![imagea.jpg](imagea.jpg) |

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