Hydro One Ltd (OTC: HRNNF)

Hydro One Limited is Ontario's largest electricity transmission and distribution utility, owning and operating substantially all of Ontario's electricity transmission network and serving as the province's largest electricity distributor by number of customers. The company delivers electricity safely and reliably to approximately 1.5 million customers across Ontario, including large industrial customers and municipal utilities. Through its subsidiaries, Hydro One Inc. manages approximately 30,000 circuit kilometres of high-voltage transmission lines and 126,000 circuit kilometres of primary low-voltage distribution lines. Hydro One's regulated transmission and distribution operations are conducted via subsidiaries of Hydro One Inc., enabling shared infrastructure and operational efficiencies between its transmission and distribution businesses.

Hydro One generates revenue primarily through rate-regulated transmission and distribution services approved by the Ontario Energy Board (OEB). Transmission revenues are derived from charges based on monthly peak electricity demand across Ontario's transmission network, administered and collected by the Independent Electricity System Operator (IESO) and remitted to Hydro One monthly, eliminating direct end-counterparty risk. Distribution revenues come from delivering electricity to end customers and certain municipal electricity distributors within Ontario. Additional revenue streams include ancillary services such as maintenance provided to generators, third-party land use on transmission corridors, and export of energy to markets outside Ontario. The company also earns revenue from its telecommunications solutions, energy solutions for commercial and industrial clients, and electric vehicle fast charging stations operated under the Ivy Charging Network brand. These non-regulated activities contribute to the Other segment.

The company operates through the following segments: Transmission Business, Distribution Business, and Other.

• The Transmission Business segment consists of owning and operating Hydro One's transmission system, which transmits high voltage electricity across the province and interconnects local distribution companies and large industrial customers. This segment includes Hydro One Networks Inc., Hydro One Sault Ste. Marie LP (HOSSM), approximately 66% interest in B2M Limited Partnership, approximately 55% interest in Niagara Reinforcement Limited Partnership, approximately 50% interest in Chatham x Lakeshore Limited Partnership, and a 48% minority interest in East-West Tie Limited Partnership. The transmission system includes approximately 30,000 circuit kilometres of high-voltage lines, 312 in-service transmission stations, transmission lines, a control centre, and telecommunications facilities. Hydro One's transmission business represented approximately 60% of total assets and accounted for about 53% of total revenues net of purchased power in 2025.

• The Distribution Business segment owns and operates Hydro One's distribution system, delivering electricity to end customers and certain municipal electricity distributors within Ontario. This segment includes the distribution systems operated by Hydro One Networks and Hydro One Remote Communities Inc. (Hydro One Remotes). Hydro One serves approximately 1.5 million customers across Ontario through its distribution network, which comprises approximately 126,000 circuit kilometres of primary low-voltage distribution lines. The distribution business is rate-regulated and contributes significantly to the company's overall revenue base.

• The Other segment consists principally of Hydro One's telecommunications business, which provides telecommunications support for transmission and distribution operations, as well as certain corporate activities. This segment is carried out by Acronym Solutions Inc., a wholly-owned subsidiary that also offers Information Communications Technology solutions to external clients. The Other segment further includes Aux Energy Inc., which provides energy solutions to commercial and industrial clients, and Ontario Charging Network LP (OCN LP), a wholly-owned subsidiary that owns and operates electric vehicle fast charging stations across Ontario under the Ivy Charging Network brand. Additionally, the segment includes a deferred tax asset arising from the company's transition to the federal tax regime at the time of its initial public offering in 2015, which is not shared with ratepayers and thus excluded from regulated segment assets.

Hydro One holds a dominant position in Ontario's electricity sector as the province's sole major transmission provider and largest electricity distributor. The company faces limited direct competition due to the regulated nature of its transmission and distribution monopolies, which are granted and overseen by the OEB. Its competitive advantages include scale, extensive infrastructure assets valued at approximately $40 billion, operational synergies between transmission and distribution businesses, and long-term rate-regulated revenue frameworks approved by the OEB. Hydro One's First Nation equity partnership model for new transmission projects exceeding $100 million in value also strengthens its social license and access to capital for infrastructure development.

Hydro One serves approximately 1.5 million customers across Ontario, including residential consumers, commercial enterprises, and industrial clients. Its transmission business directly serves 34 local distribution companies—including its own distribution subsidiary—and 88 large industrial customers connected to the transmission network, such as those in automotive manufacturing, chemical processing, and natural resources sectors. The distribution business delivers electricity to end users throughout the province, while the Other segment serves business clients through telecommunications, energy solutions, and electric vehicle charging services under the Ivy Charging Network brand.