Hydro One Limited

Good morning, ladies and gentlemen, and welcome to the Hydro One Limited's fourth quarter 2020 analyst teleconference. At this time, all participants' lines 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 one on your telephone. 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, Investor Relations at Hydro One. Please go ahead.

Good morning, everyone, and thank you for joining us in Hydro One's fourth quarter earnings call. Joining us today are our President and CEO, Mark Proeska, and our Chief Financial Officer, Chris Lopez. In the call today, we will go over our fourth quarter results and then spend the majority of the time answering as many of your questions as time permits. There are also several slides that illustrate some of the points we'll discuss in a moment. They should be up on the webcast now, or if you've 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 information. You should review the cautionary language in today's earnings release and RMDNA, which we filed this morning regarding the various factors, assumptions, and risks that could all that could cause our actual results to differ as they all apply to this call. With that, I turn the call over to our President and CEO, Mark Poestra.

Thank you, Omar. Good morning, everyone, and thank you for joining us. This morning, I'd like to talk to you about our fourth quarter and annual achievements, and we'll then turn to Chris to review the financial results. When I think back to January of last year, we were entering the new year full of optimism. Having released our strategy with wind at our back, we were ready to charge forward in executing our vision and mission. Shortly after our successful inaugural investor day in March, the world was transformed. While the pandemic brought forward new challenges, it also presented opportunities for us to demonstrate our support for our customers and partners in Ontario. We leaned on our vision, mission, and strategy to help guide us on our way forward and set our two priorities to help us make decisions during this time. Firstly, to ensure the safety of our employees and the public. And secondly, to continue energizing life for Ontarians. And Hydro One has performed exceptionally well. But problem solving, innovating, and never losing sight of our vision of a better and brighter future for all, we were able to advance our strategy, complete our work programs, and have limited transmission of COVID amongst our employees. A dedicated and safe employee base allowed us to deliver on the strategy that was put forward at our investor day. We've continued to build the grid for the future by investing in our assets. We deployed $1.878 billion of capital and in-serviced $1.639 billion of assets, which is within 2% of our stated goals. This level of discipline and accuracy is commendable in most years, but exemplary when we consider the challenges posed by this past year. We continue to invest in technology to modernize the grid to harden, and to protect our assets. This led to transmission reliability being the second highest it has been in 12 years. We made sure our essential services, including hospitals, pharmacies, and grocery stores, kept their lights on. Safety and efficiency have always been a key priority for us. We launched our safety improvement team, which, after a thorough review, came back with concrete recommendations to improve the safety culture of our organization to eliminate serious injuries in Hydro One. We will put these recommendations to work in the coming years. One of the things my career in the utility sector has taught me is that a safe utility is an efficient utility. In 2020, we continued to drive operational efficiency and work towards optimizing all aspects of our business. We generated productivity savings of approximately $286 million, which represents a year-over-year increase in productivity of approximately 41%. We recognize that our success is dependent on us being a trusted partner and supporting First Nations, customers, and communities that we serve. The pandemic gave us an opportunity to further strengthen these partnerships. I am pleased to report that this year we further accelerated our spending with our Indigenous partners. During the pandemic, we have continued to expand the Indigenous supplier base and spent $43 million with Indigenous businesses for goods and services in 2020, the highest amount to date. And we were delighted to be recognized for the work we are doing by the Canadian Council for Aboriginal Business with silver level certification in progressive Aboriginal relations, advancing from our bronze level certification in 2017. Our goal is nothing short of achieving a gold level certification. Early in the pandemic, we reached out to the First Nations communities that we serve and asked, how can we support them? This resulted in us partnering with Global Medic to deliver over 13,000 kits of food and safety supplies to First Nations communities across Ontario. We also launched a new fund to help communities respond to new and urgent challenges. Charitable organizations, municipalities, and Indigenous communities can now apply for support towards pandemic response efforts and initiatives that improve physical and emotional safety. This is part of Hydro One's commitment to build safe communities across Ontario. The focus on customers and customer advocacy has resulted in us achieving our highest customer satisfaction score to date. This reflects the ongoing engagement with our customers and supporting them with programs such as the suspension, of late payment charges and returning security deposits, in addition to the pandemic relief measures we put in place. Just days after a global pandemic was declared, we put in place a pandemic relief program to assist customers affected by COVID-19, offering financial assistance and increased payment flexibility. We know people across the province are experiencing monumental challenges, and we have a responsibility to be there for them. That's why we recently extended the financial relief and flexibility to small businesses who have been experiencing hardship. We also recently launched the Connected for Life program. This is our promise to help customers stay connected to safe and reliable power while we help them access financial relief programs and more flexible service options. The events of the last year gave us the opportunity to advocate for our customers by encouraging and supporting greater customer choice with respect to time of use pricing, as well as temporary relief offered by the government. We applaud the government for their efforts to provide assistance during this challenging time. We also applaud the government for improving Ontario's competitiveness in the last budget by removing a portion of the global adjustment costs from the electricity bill for commercial and industrial companies. This action will save our commercial and industrial customers between 14 and 16 percent and will make electricity prices in Ontario competitive with other North American jurisdictions. The rate relief is important as we invest responsibly in our core transmission and distribution businesses and continue to innovate and grow our business, primarily through our investments in organic rate-based growth. And in addition to this organic growth, we were pleased to announce the completion of the two local distribution company acquisitions this past year. This resulted in further rate-based growth. We are now busy integrating Orillia and Peterborough into the Hydro One network. As we grow, we're also keeping a keen eye towards innovation. Earlier in 2020, we launched the IV Charging Network, a partnership with Ontario Power Generation to create Ontario's largest and most connected electric vehicle charging network. I am pleased to report that we have opened 23 fast charging sites across Ontario and are on track to have over 160 fast chargers across approximately 60 locations in Ontario by the end of 2021. Part of our vision of a better and brighter future for all includes a cleaner and greener future. We are proud to transmit and distribute energy that comes predominantly from zero carbon emitting sources. We know we can take this further by reducing our carbon footprint and managing the impacts of climate change on our business. As we reinvest in our system, we continue to adapt to our design and equipment standards to address the impacts of climate change. We recognize that great companies, are those that value diversity and create equitable and inclusive cultures. Gender diversity has always been important to us, and as signatories to the Catalyst Accord, I am proud to say we met those commitments. As a leading Canadian institution, it is also our duty to take a leadership position in the fight against racism. In addition to signing on to the Black North Initiative, We also started a dialogue with our black employees with the objective of listening and understanding to inform the creation of meaningful racial equality programs. We have now established a diversity and inclusion council to help guide us through our journey. In the wake of the COVID-19 lockdowns, we also felt that it was important to address mental health and well-being. Hydro One and Jack.org announced a partnership to address a growing demand for mental health resources. The partnership brings free virtual mental health talks to young people and their families across Ontario. At Hydro One, we believe that governance around our initiatives is important. That is why we chose to enhance our sustainability report further this year. We aligned with the Global Reporting Initiative's core standards and the Sustainability Accounting Standards Board's framework. We also committed to aligning with the Task Force on climate-related financial disclosures in coming years. This effort is paying dividends as we were yet again designated a sustainable electric company by the Canadian Electricity Association, and we recently received an ESG risk rating of low risk from Sustainalynix. a global leader in ESG research and ratings, placing us 11th out of 156 in its global industry group from the utilities sector. And we were again voted one of the 50 best corporate citizens in Canada by Corporate Knights. This past year has been a busy one on the legal and regulatory front. We obtained a positive decision from the Ontario Divisional Court on the Deferred Tax Assets with the expectation to have full resolution of the case from the Ontario Energy Board in the first half of 2021. We received a number of rulings from the OEB that highlighted the constructive nature of our relationship. The OEB approved the Aurelia and Peterborough transactions that I referenced earlier, In their decisions, they highlighted Hydro One's unique position to extract value from these transactions. We also obtained a favorable approval on our transmission rate application that set the transmission capital investments and rates till the end of 2022. This means that both our distribution and transmission segments are now in an incentive rate making framework till the end of 2022, giving us regulatory certainty for the coming years. We like the incentive rate making framework as it gives us an opportunity to share the fruits of our labor with our customers. This year we shared approximately $15 million with our customers on account of high demand and disciplined cost management. The successes on the regulatory front have helped reaffirm our preparation for the upcoming joint rate application for both transmission and distribution businesses. The JRAP will consist of both the distribution and transmission rate applications for a five-year period, starting in 2023. To prepare, we have embarked on a robust customer engagement that helps inform our views and plans with respect to affordability and service levels. We are more in tune with the needs of our customers, and this application will be informed by that feedback. We expect to file the application in the second half of the year. Our ability to problem solve and be nimble would not have been possible without the devotion and hardworking of our employees and the partnership of our unions. We were pleased that despite the pandemic, we were able to renew two collective agreements with the Power Workers Union covering a large sector of our employees. We have great partnerships with our unions, particularly as we continue on our journey to zero serious injuries. And I am proud of how all our employees have supported one another, being creative and adapting to our changing circumstances and united behind our vision, which enables us to deliver great results for our customers and shareholders. Hydro One was selected for Forbes annual list of Canada's best employers for six consecutive time. This honor reflects Hydro One's ongoing commitment to our incredible employees who proudly energize life for our customers and communities in Ontario. Chris, over to you.