PROPERTY TAXES 1.0 A SUMMARY OF TAXES OTHER THAN INCOME TAX. A summary of taxes other than income and capital taxes is presented below:

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1 Filed: May, EB--000 Exhibit C Schedule Page of PROPERTY TAXES.0 A SUMMARY OF TAXES OTHER THAN INCOME TAX A summary of taxes other than income and capital taxes is presented below: Table ($ Millions) Description Historic Bridge Test Property Tax Indemnity Payment Rights Payment Total Property Tax and Rights Payments funding levels generally reflect higher tax rates, increases in the assessed value of Hydro One properties and increases in land values..0 PROPERTY TAX Hydro One Transmission, like every other land owner within the Province of Ontario, is responsible for the payment of property taxes. Property taxes for Hydro One are regulated under the Electricity Act, the Municipal Act 0, and the Assessment Act 0. Property taxes are levied on Hydro One Transmission s land and buildings, including service centre sites, transmission stations and transmission lines. Hydro One Transmission pays property tax to about 00 municipalities each year.

2 Filed: May, EB--000 Exhibit C Schedule Page of A summary of annual transmission property taxes is presented in Table, below: Description Stations and buildings, including proxy tax Transmission lines Table Breakdown of Property Tax Expense ($ Millions) Historic Bridge Test Other Property Tax Total Transmission Stations and Buildings For municipal property tax purposes, transmission station buildings are assessed at a statutory rate of $. per square metre, according to the Assessment Act R.S.O. 0, Chapter A, Section. The lands containing the transmission stations are assessed using the Current Value Assessment ("CVA") method -- the valuation method used for other property owners within the Province. Hydro One Transmission property other than transmission lines and not classified as a transmission station (for example, a service centre), is assessed using only the CVA method. The Municipal Property Assessment Corporation assigns the total assessed value, which is updated utilizing the same schedule as for the rest of the Province. Provincial reassessment was issued for 0 tax year, the next scheduled province wide assessment is. Under the Assessment Act, an increase in assessed value between January, 0 and January, 0 is phased in over four years, from 0 to, assuming the property characteristics and assessment evaluation stays the same.

3 Filed: May, EB--000 Exhibit C Schedule Page of Notices of Assessment are received and reviewed for accurate valuation and tax classification each year. Any incorrect classes and/or over-valuations are appealed through the Municipal Property Assessment Corporation, and/or the Assessment Review Board. Additional property tax payments, called proxy property taxes, for owned transmission stations are levied and paid to the Minister of Finance, to be applied against the stranded debt of the former Ontario Hydro. The details of this additional assessment are contained within Ontario Regulation /00 under the Electricity Act,. The additional tax is the difference between the statutory rate for transmission station buildings and the municipal tax that would apply to the buildings if they were taxed using the CVA method. This amount is calculated each year for each transmission station owned by Hydro One Transmission. Ontario Power Generation Inc. ("OPGI") is the owner of various properties within the Province of Ontario, on which are located Hydro One Transmission s facilities. OPGI and Hydro One Networks entered into lease and easement agreements with respect to these properties, effective April,. Under subsection.0 of the easements and subsection (b) of the lease agreements, Hydro One Transmission is required to pay realty taxes with respect to its occupancy, to OPGI.. Transmission Lines Hydro One Transmission s line corridors are assessed, and municipal taxes are calculated at a rate per acre of owned corridor land. These rates were established by Ontario Regulation / made under the Municipal Act and Ontario Regulation / made under the Education Act, titled Tax Matter Taxation of Certain Railway, Power Utility Lands. As payments are made based on an area of land multiplied by a legislated rate, appeals must be based on corrections to the area of the property, or on the decision to re-

4 Filed: May, EB--000 Exhibit C Schedule Page of classify a property as outside the utility corridor tax class. An additional amount is paid annually to various First Nations bands for Payment in Lieu of Taxes ("PILs"), covering transmission lines and transmission stations on reserves. Since June, Section of the Indian Act has provided for taxation by First Nations, of property interests on their Reserve lands. Hydro One Transmission makes payments in lieu of taxes similar to taxes paid to municipalities that have Hydro One Transmission facilities contained within them.. Other Other municipal property tax costs relate to costs on other sundry properties, such as transmission communication towers, and administrative buildings..0 INDEMNITY PAYMENT TO PROVINCE The Ontario Electricity Financial Corporation (OEFC) has indemnified Hydro One Transmission with respect to the failure of the transfer orders (orders used to establish the company as one of the successor companies to the former Ontario Hydro) in. The OEFC indemnification covers any defects in the transfer orders encompassing the following areas: the transfer of any asset, right, thing, or any interest related to the business; some adverse claims or interests of third parties or based on property title deficiencies arising from the transfer orders, except for some claims and rights of the Crown; and, claims related to any equity account previously referred to in the financial statements of Ontario Hydro including amounts relating to any judgement, settlement or payment in connection with litigation initiated by certain utilities commissions.

5 Filed: May, EB--000 Exhibit C Schedule Page of The Province has unconditionally and irrevocably guaranteed to Hydro One Transmission the payment of all amounts owing by the OEFC under its indemnity. Hydro One Networks pays an annual fee of $.0 million to the OEFC. As the transfer order relates primarily to land assets, the amount allocated to Hydro One Transmission is based on the proportion of Hydro One Transmission land assets in relation to the total land assets of Hydro One. This results in $. million of the $.0 million total being allocated to Hydro One Transmission..0 RIGHTS PAYMENT Through agreements or permits, Hydro One Transmission line facilities cross and/or occupy properties owned by railway companies (e.g. Canadian National) and/or governmental bodies (e.g. Federal Government, Rideau Canal). According to the terms of the individual agreements, Hydro One Transmission pays an annual fee to the railway companies and the government entities for the right to cross and/or occupy their properties. These agreements contain rental review provisions allowing for rent increases tied to increased land values, subject to negotiation by both parties. The Company anticipates increased costs as reviews within the individual agreements are triggered, due to recent increases in land values. Rights payments associated with the railway companies are currently under review and steps are being taken to reach new agreements. At this point Hydro One is not able to predict the outcome nor the timing of the future negotiated agreements and the amount that it will have to pay to secure the crossing or occupation rights with railway companies. However, for planning purposes, the rights payments for the and test years are budgeted to be $.0 million per year. Through agreements or permits granted by the Department of Indian and Northern Affairs, Canada ("INAC"), Hydro One has approval for its transmission and distribution facilities (that is, lines and transformer and distribution stations), to cross and/or occupy

6 Filed: May, EB--000 Exhibit C Schedule Page of First Nation Reserves. Some of these permits and agreements require Hydro One to pay annual rental fees, the payments of which, are administered by INAC. The transfer orders by which Hydro One acquired Ontario Hydro s electricity transmission, distribution and energy services businesses as of April, did not transfer title to some assets located on lands held for First Nations under the Indian Act (Canada). The transfer of title to these assets did not occur because authorizations originally granted by the federal Minister of Indian and Northern Affairs for the construction and operation of these assets could not be transferred without the consent of the Minister and the relevant First Nations or, in several cases, because the authorizations had either expired or had never been properly issued. The transmission portion comprises approximately about kilometres of transmission lines, primarily, held by the OEFC. Under the terms of the transfer orders, Hydro One is required to manage these assets until it has obtained all consents necessary to complete the transfer of title of them to the Company. Hydro One is seeking to obtain from the relevant First Nations, the consents necessary to complete the transfer of title to these assets. Hydro One cannot predict with accuracy the aggregate amount that it may have to pay to obtain the required consents; for planning purposes, however, the First Nations rights payments for the and test years are budgeted to be $. million per year. This amount is based on continuing payments and the current status of the on-going negotiations with various First Nations bands.