Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hydro One Ltd (HRNNF, Financial) reported an increase in basic earnings per share to 62 cents compared to 60 cents in the third quarter of 2023.
- The company achieved a 6% year-over-year increase in revenue net of purchased power, driven by higher transmission and distribution revenues.
- Hydro One Ltd (HRNNF) successfully issued $1.2 billion of medium-term notes under its sustainable financing framework, demonstrating strong financial management.
- The Chatham Lakeshore transmission line project is on track for completion by the end of 2024, ahead of schedule and under budget.
- Hydro One Ltd (HRNNF) was named one of Canada's most responsible companies for 2025 by Newsweek, recognizing its commitment to climate, social welfare, and responsible governance.
Negative Points
- Higher income tax expenses were reported due to unfavorable timing differences and higher pretax earnings.
- The company experienced a 10.5% increase in interest expense year over year, attributed to higher interest rates and increased long-term debt.
- There was a 14.6% decrease in assets placed in service for customers compared to the prior year, indicating potential delays or reductions in service enhancements.
- Hydro One Ltd (HRNNF) faces ongoing supply chain and inflation risks, which could impact future project costs and timelines.
- The broadband project remains uncertain, with a wide range of expected rate base growth ($300 million to $700 million) and no immediate clarity on the impact of government subsidies.
Q & A Highlights
Q: Given the higher demand forecast from the ISO, can you discuss the incremental transmission opportunities moving forward?
A: David Lebeter, President and CEO, explained that Hydro One is working with the ISO to identify capacity constraints in the province. They anticipate addressing these constraints and expect updated planning from the ISO early next year.
Q: How are you managing supply chain and inflation risks with the increasing demand for electricity?
A: Harry Taylor, CFO, stated that Hydro One's procurement team has been proactive in securing supply and pricing through long-term contracts with multiple vendors, ensuring adequate supply and market-based pricing.
Q: Regarding government support for broadband, when will you have clarity on its impact, and could it push you to the higher end of your rate base growth estimate?
A: Harry Taylor mentioned that it's too early to determine the impact, but they welcome the incentive and expect it to break the logjam in orders. They will update as trends develop, hoping to reach the higher end of the range.
Q: What role does Hydro One play in Ontario's goal to become an energy exporter, and how does this affect transmission planning?
A: David Lebeter highlighted that Hydro One is working with the ISO and government to identify constraints and opportunities for additional flow ties. They expect more details on energy export plans and transmission build-out next year.
Q: Has Hydro One been officially awarded the Wall Porcupine project, and if not, why the delay?
A: David Lebeter confirmed that Hydro One was designated for the project, and after a consultative process, they are confident of receiving the final designation soon, with no expected changes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
