Hydro One Announces Third Quarter Results

Net income in 2002 continues to be affected by the rate mitigation plan, introduced in 2001, to help offset other energy cost pressures that customers are facing. Net income for the nine months ended September 30, 2002 is $317 million, a decrease of $34 million, or 10 per cent, compared to $351 million for the same period in 2001. The negative impact of the rate mitigation plan on net income was offset this quarter by increased transmission revenue related to higher summer electricity demand.

Hydro One uses funds generated from our operations primarily for paying dividends to the Government of Ontario and for further investment into the electricity system. For the first nine months of the year Hydro One had net cash from operations of $368 million. The company has paid $133 million in dividends to the Province this year to date. For the nine months ended September 30, 2002, Hydro One used $350 million for investing activities, primarily capital expenditures on the transmission and distribution systems.

Revenues for the third quarter increased $364 million to $1,244 million compared to the same period in 2001. For the nine months ended September 30, 2002, revenues reached $3,154 million, an increase of $736 million over the same nine months in 2001. The increase in revenues is partially a result of the higher demand for, and higher price of, electricity consumed this summer. The extreme hot weather conditions experienced throughout July, August and September resulted in heavy use of the transmission and distribution systems. Transmission revenues increased by $37 million to $367 million while third quarter distribution revenues were up $333 million over the same period last year to $873 million this quarter. Hydro One's distribution revenues include recovery for power used by our customers. The company's purchased power costs went up $352 million for the third quarter compared to 2001.

Third quarter operation, maintenance and administration (OM&A) costs declined $4 million to $200 million and increased by $44 million, or 8 per cent to $573 million in the first nine months, compared to the same periods in 2001. Third quarter costs included a one-time provision of $21 million for a staff reduction program that will affect approximately 140 employees.