Building a Grid
for the Future

 
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Sustainability is at the heart of our mission to provide the people of Ontario with a robust and reliable source of electricity.

Infrastructure Renewal
and Modernization

We know that to reach our strategic objectives will require ongoing investments in our assets. By upgrading our infrastructure, we will deliver the reliable electricity that our customers and communities depend upon. We intend for these investments to contribute economically to local communities in Ontario by creating jobs, new skills and new opportunities.

Approach

Hydro One makes capital investments to maintain the safety, reliability and integrity of our transmission and distribution assets. In the same spirit, we continue to reinforce our position as a leading utility in North America and actively support the application of the reinforcement of Hydro One’s grid. This includes the integration of industry standards that result in higher resilience, reliability and security. Investing in infrastructure renewal and modernization allows us to deliver best-in-class service and position our company for growth, benefiting both our transmission and our distribution customers.

Performance

Transmission
Hydro One’s transmission network delivers energy to industrial and utility customers and accounts, providing approximately 98% of Ontario’s transmission capacity, based on revenues approved by the Ontario Energy Board.

The transmission energy mix is composed of primarily nuclear electricity (39%), followed by fossil fuel electricity (26%) and hydroelectricity (22%), wind (12%) and solar (1%).

We received OEB approval of our two-year cost of service plan and five-year capital plan during 2017. This plan ensures we continue to replace stations, equipment and lines that are at or near their end of life.

Distribution
Hydro One’s distribution area is so large and thinly populated that locating, accessing and responding to outages takes longer and consumes more resources than it does for many other Canadian utilities. Our distribution circuits are configured to deliver greater efficiency in bringing power to remote areas, but lacks the redundancy that makes urban distribution systems more robust. In addition, the vast area accounts for a diverse exposure to environmental conditions, with incidents of ice, snow, drought, forest fires, torrential rain, floods, lightning storms, tornadoes and everything in between. These effects are felt year round in all areas of the province.

The distribution energy mix is composed of primarily renewable energy (86%); solar (46%), wind (20%), hydro (14%), and biogas (6%), and the remaining portion comprised of fossil fuel (14%).

On average, customers currently experience 2.5 power interruptions annually and 46% of the time, power is restored between 60 minutes before and 30 minutes after the estimated restoration time given to the customer. In 2017, the system average length of an interruption, per customer, was 7.9 hours.

In 2017, we continued to invest in our distribution system to reduce both outage frequency and time of repairs. During the year, we strengthened or replaced weak links in the chain of reliability, including equipment with a higher failure potential due to its deteriorated condition, or equipment whose failure could affect larger groups of customers. We also invested in remote monitoring and control systems that enable us to locate a breakdown in real-time, dispatch repair crews more rapidly and enhance service by alerting customers and providing a realistic forecast of time to repair.

Projects
In 2017, Hydro One made capital investments totalling approximately $1.6 billion in support of various infrastructure renewal and modernization projects. We currently have three major projects underway to enhance our capacity to provide the people of Ontario with a robust and reliable source of electricity.

Clarington Transmission Station: This project involves the construction of a new 500/230 kilovolt transformer station east of the GTA and the connection of the existing 230 kilovolt and 500 kilovolt transmission lines in the area. The station is required to ensure an adequate, safe and reliable supply of power to support the growing communities in the eastern part of the GTA. The estimated total project cost to complete Clarington is $267 million, with an anticipated in-service date of 2018.

Supply to Essex County Transmission Reinforcement: Hydro One is constructing a new transmission station in the Municipality of Leamington and a 13 kilometre, double circuit 230 kilovolt transmission line on a new corridor to connect the station with the existing 230 kilovolt transmission line. The project is needed to provide for load growth in the Kingsville-Leamington area and to improve operational flexibility in the Windsor-Essex region in the long-term. The estimated total project cost to complete Leamington’s reinforcement is $57 million, with an anticipated in-service date of 2018.

East-West Tie Station Expansion: Hydro One is performing station upgrades to our Wawa, Marathon and Lakehead transmission stations. The upgrades are necessary to support the East-West Tie Line project, a priority project in the Province of Ontario’s Long-Term Energy Plan. The estimated total project cost to complete the East-West Tie Station expansion is $157 million, with an anticipated completion date of 2021.

IN 2017, HYDRO ONE INVESTED $5 MILLION IN RESEARCH AND DEVELOPMENT ACTIVITIES AND $3.8 MILLION ON DISRUPTIVE TECHNOLOGIES AND DISTRIBUTED ENERGY RESOURCES.
In 2017, Hydro One invested $5 million in research and development.

Key Performance & Future Initiatives

Hydro One is committed to executing on our strategy to transmit and distribute electricity safely and reliably in a manner that produces the greatest value for our customers.

Optimization & Innovation
Innovation is a key focus and we plan to invest to modernize the transmission and distribution grids, improve reliability and efficiencies, as well as build a platform for connecting distributed energy resources. As part of our strategy to optimize and innovate across our networks, we are tackling distribution reliability. Two primary programs will result in improved reliability, including OCP for vegetation maintenance and distribution grid modernization, both of which will have a positive impact on reliability over the next few years.

We are developing a Non-Wires Alternatives strategy in 2018 to identify prudent opportunities to incorporate energy storage and, microgrid technologies into our distribution grid over the next 10 years. Part of this strategy will be to initiate several projects with strategic partners in 2018 to develop knowledge and expertise in this area that is changing quickly in terms of technology, economics and regulatory framework. We are also currently piloting several new technologies in the customer choice area.

The Demand Response for Operations initiative is evaluating three use cases:

1. The rollout of a new, integrated Distributed Energy Resource Management System that will enable customers (initially in Leamington) to connect a load that exceeds planning limits in exchange for the shedding of dispatchable loads (Automated Load Rejection Scheme);

2. The procurement and installation of behind-the-meter battery storage for commercial and industrial customers (Economic Dispatch of Battery Storage); and

3. Enabling operational control over large distributed generation for planned outages and emergency situations.

Diversification
The electricity industry is transforming from a system based on large centralized generation, transmission and distribution, to small-scale, distributed generation, as a result of declining technology costs and customers’ desire for choice in electricity supply. Hydro One’s strategy is to adapt our grid investments to reflect this new reality and to provide the new energy services that customers are demanding.

Hydro One will evaluate new businesses such as those providing behind-the-meter products and services that meet requirements for resiliency, reliability, sustainability, quality and security, more cost effectively than grid-only supply. We will also seek to invest in emerging technology that focuses on innovation in the electricity sector, to identify technologies that could disrupt our business, or that can enhance our business.

Growth
In July 2017, we announced our plan to merge with Avista Corporation, where we would acquire 100% of the shares of Avista Corporation, a fully-integrated, regulated transmission and distribution utility headquartered in Spokane, Washington. The acquisition, which is expected to close in the second half of 2018, following the necessary regulatory approvals, is expected to see Hydro One and Avista Corporation create a diversified and growing North American utility leader with tremendous enterprise value.

Disruptive and Innovative Technologies

Our investments in innovation focus on assessing and developing technologies that improve our systems’ productivity, health and safety and robustness. In a competitive environment, innovation helps us to keep pace with other North American utilities.

We focus our R&D efforts in two areas:

Disruptive Technologies

Microgrids, renewable energy storage and electric transportation present fresh challenges and opportunities for the electricity industry. We will continue to investigate the benefits and impacts of these technologies and how to integrate them into our system to prepare for the future.

Innovative Technologies

These solutions are more mainstream but necessary to renewal. Research in these areas contributes to planning, building and operating a more reliable, secure and efficient power system. For Hydro One customers and stakeholders, tomorrow’s system must operate more economically, and also respect our environmental and social responsibility goals.

In 2017, Hydro One invested $5 million in research and development.

Business Model
Pressures

As we transform our business to meet evolving customer needs and position ourselves as one of North America’s leading utilities, we continue to evaluate technologies that could both disrupt or enhance our business. Our goal is to ensure resiliency, reliability, sustainability, quality and security of energy supply for our customers.

Hydro One faces a number of sustainability-centred pressures on our business model that have the potential to impact our business in the future, including, but not limited to, risks relating to: natural and unexpected occurrences such as severe weather conditions, natural disasters; cyber and physical attacks and resulting impacts on infrastructure; health, safety, environmental regulations, assessments and approvals; asset conditions and aging infrastructure; information technology infrastructure, data security and disruptive technologies; and workforce demographics and labour relations. Additionally, within the global energy utility sector, innovation is creating rapid change, leading to increasing industry decentralization, decarbonization and digitalization.

Hydro One is working proactively to respond to these risk factors and changing pressures that could potentially impact our business model. Indeed, as we transform our business to meet evolving customer needs and position ourselves as one of North America’s leading utilities, we continue to evaluate technologies that could both disrupt or enhance our business. Our goal is to ensure resiliency, reliability, sustainability, quality and security of energy supply for our customers.

Applicable Laws & Regulations

Hydro One’s core businesses are highly regulated. The licenced transmission and distribution businesses comply with relevant laws, the terms of their licences and with codes and rules issued by the OEB, including:

  • Electricity Act
  • Ontario Energy Board Act
  • Distribution System Code
  • Electricity Distribution Rate Handbook
  • Retail Settlement Code
  • Standard Supply Service Code

We also comply with regulations set by the National Energy Board. In Ontario, the Market Rules issued by the IESO require us to, among other things, comply with reliability standards established by the North American Electric Reliability Corporation (NERC) and Northeast Power Coordinating Council, Inc. (NPCC).

Our practices also meet the applicable rules and regulations issued by the Canadian Securities Administrators and the Toronto Stock Exchange, including national corporate governance guidelines and related disclosure requirements.

We conduct bi-annual reviews of our vendors using the Vendor Embargo Review Tool (VERT). The process is designed to screen any Hydro One vendors that appear on Anti-Terrorism Financing lists published by the Canadian Office of the Superintendent of Financial Institutions and the U.S. Department of Treasury.

Customer Ombudsman

Hydro One’s Office of the Ombudsman was established in March 2016 to provide a confidential, impartial and independent review of customer complaints that could not otherwise be resolved by the Company, as well as systemic investigations to uncover the root causes of ongoing problems. Sophie Petrillo was appointed Ombudsman in August 2017 and reports directly to the Board to ensure independence. By working with both customers and the Company, she aims to help Hydro One deliver just, fair, and equitable services to the public. To learn more, visit www.hydrooneombudsman.com

Privacy

We understand that when they ask to be connected to our network, customers are sharing valuable personal information with us. In the interest of protecting their privacy, we comply with applicable provincial and federal legislation including the Personal Health Information Protection Act (PHIPA) and the Personal Information Protection and Electronic Documents Act (PIPEDA). As a condition of our licences, we comply with the OEB’s restrictions on disclosure and the use of consumer information.

Connect with Us

Receiving your feedback is a key element of our reporting process. It helps us to address the issues that matter most to our stakeholders. Please email us at CSR@HydroOne.com

For information about this report, please contact:
Jay Armitage
Director of Communications
Jay.Armitage@HydroOne.com

For Investor Relations, please contact:
Omar Javed
Vice President, Investor Relations
investor.relations@HydroOne.com

Discover more about our corporate social responsibility:
www.HydroOne.com/about/corporate-social-responsibility

Hydro One’s corporate office is located at:
483 Bay Street, Toronto, ON M5G 2P5
www.HydroOne.com

This report is primarily published in electronic format to minimize its environmental impact. Please think before printing. The fibre used in the manufacture of the stock of the printed version comes from well-managed forests, controlled sources and recycled wood or fibre.

All dollar amounts are expressed in Canadian dollars.

    
About this Report

Hydro One’s 2017 Corporate Social Responsibility (CSR) Report updates the progress we made during the past year to advance our health, safety, environmental and social performance. Our report is organized around Hydro One’s five strategic CSR pillars: customers come first, using resources responsibly, people and potential, powering economies, and building a grid 
for the future. It also describes our performance under the Canadian Electricity Association’s (CEA’s) Sustainable Electricity™ Program, which promotes the integration of CSR in business decision-making and pursues leading practices in continuous improvement.

As our CSR strategy and reporting program continue to evolve in support of Hydro One’s business strategy, we will review further opportunities to align our reporting with the internationally recognized Sustainability Reporting Standards, developed by the Global Reporting Initiative (GRI).

The information in this report reflects our performance from January 1, 2017 to December 31, 2017 and covers our Canadian operations. This CSR report is limited to Hydro One Limited (referred to as “Hydro One” throughout this report). All dollar amounts are in Canadian dollars. The scope of the report excludes Hydro One Remote Communities Inc. and Hydro One Telecom Inc.