Hydro One Ltd (OTC: HRNNF)

Hydro One Ltd operates as Ontario’s largest electricity transmission and distribution utility, managing approximately $37 billion in assets and generating $8.5 billion in revenues in 2024. The company owns and operates substantially all of Ontario’s electricity transmission network and is the largest electricity distributor in the province by customer count. Hydro One delivers electricity to approximately 1.5 million customers across Ontario, including large industrial customers and municipal utilities, through its extensive network of high-voltage transmission and low-voltage distribution lines.

Hydro One generates revenue primarily through its regulated transmission and distribution operations. The company earns revenues from transmission rates, which are subject to approval by the Ontario Energy Board (OEB) and are based on monthly peak electricity demand across Ontario’s transmission network. Additionally, Hydro One derives revenue from distribution services, which involve delivering electricity to end customers and other municipal electricity distributors within Ontario. The company also generates ancillary revenue from providing maintenance services to generators and from third-party land use.

• Transmission Business Segment: This segment involves owning and operating Hydro One’s transmission system, which accounts for approximately 90% of Ontario’s transmission capacity. The transmission business is carried out by subsidiaries of Hydro One Inc., including Hydro One Networks, Hydro One Sault Ste. Marie LP (HOSSM), and Chatham x Lakeshore Limited Partnership (CLLP), as well as through equity partnerships such as B2M Limited Partnership (B2M LP) and Niagara Reinforcement Limited Partnership (NRLP). The segment serves 34 local distribution companies and 87 large industrial customers connected directly to the transmission network, facilitating the transport of approximately 140 TWh of energy throughout the province in 2024.

• Distribution Business Segment: This segment focuses on owning and operating Hydro One’s distribution system, which delivers electricity to end customers and other municipal electricity distributors within Ontario. The distribution business is operated by Hydro One Networks and Hydro One Remote Communities Inc. (Hydro One Remotes). This segment caters to a broad customer base, including residential, commercial, and industrial consumers across the province.

• Other Segment: This segment includes Hydro One’s telecommunications business, which provides support for the company’s transmission and distribution operations through its subsidiary, Acronym Solutions Inc. (Acronym). Additionally, the segment encompasses the deferred tax asset (DTA) arising from the revaluation of Hydro One’s assets, Aux Energy Inc., which provides energy solutions to commercial and industrial clients, and Ontario Charging Network LP, a joint venture that operates electric vehicle fast charging stations under the Ivy Charging Network brand.

Hydro One holds a dominant position in Ontario’s electricity sector, operating the province’s largest transmission and distribution network. The company’s extensive infrastructure and regulatory approvals provide it with a significant competitive advantage. Key competitors include other regional electricity distributors and transmission operators, but Hydro One’s scale and regulatory framework ensure its leading position. The company’s competitive advantages include its extensive network, regulatory approvals, and partnerships with First Nation communities, which enhance its operational capabilities and community engagement.

Hydro One’s customer base is diverse, encompassing residential, commercial, and industrial consumers across Ontario. The company serves approximately 1.5 million customers, including large industrial customers and municipal utilities. The transmission network also connects to generators and interties, allowing for the import and export of electricity to and from Ontario. This broad customer base underscores Hydro One’s integral role in the province’s electricity infrastructure.