HYDRO OTTAWA HOLDING INC.

Transcription

1 HYDRO OTTAWA HOLDING INC. Remarks to Ottawa City Council Pierre Richard, Q.C. Chair of the Board Wednesday, June 13, 2012 (Please Check Against Delivery)

2 [Slide 1 cover slide] Good morning Mayor Watson and members of City Council. Once again it is a pleasure to report on Hydro Ottawa s performance, and the positive results we have achieved in 2011 for you, our shareholder, and for our community. With me today is Hydro Ottawa s President and CEO, Bryce Conrad. Bryce joined our company last August from the federal government, where he served as Assistant Deputy Minister Program Operations at Infrastructure Canada. We are very pleased to have Bryce leading the company. Also present today is Alan Hoverd, our Chief Financial Officer; and Norm Fraser, our Chief Operating Officer - Distribution and Customer Service. I would also like to recognize the contribution of the four individuals who represent you, as the Shareholder, on our Boards of Directors: Councillor Hume, Councillor McRae and Mayor Watson, who represent Council on the Hydro Ottawa Holding Inc. Board, and Councillor Monette, who serves with equal distinction on the Board of Hydro Ottawa Limited. [Slide 2 Hydro Ottawa Performance] I will begin by discussing Hydro Ottawa s performance, and then Bryce will present the new strategy that will guide our company over the 2012 to 2016 period. After that, we will be pleased to answer your questions. Over the past year, and over the four years that we have been reporting against our 2008 to 2012 Strategic Direction and Financial Outlook, we are very pleased with our accomplishments. Our earnings have outperformed expectations and our company is on a solid financial footing. Page 2 of 6

3 Our relationship with you, our shareholder, is very important to us, and we are pleased to work closely with the city on major projects. One example is our support of the City s LRT project, where we will provide the electrical supply and relocate distribution facilities to accommodate the new LRT. Going forward, we expect there will be many more partnership opportunities where we can use our expertise to help improve the City s services and infrastructure as well as contribute to shareholder value. [Slide Net Income vs. Plan] Turning to our financial results, I am pleased to report that between 2008 and 2011, we have been a sound and rewarding investment for the City of Ottawa. Over this period, normalized net income exceeded projections by 24 percent, of which 60 percent has been returned to the City in the form of dividends. Continued growth and enhanced shareholder value are the tenets that we at Hydro Ottawa live by. That is why I am very pleased to be able to report today on our strategic acquisition of signing a purchase and sale agreement for three hydroelectric plants and a 38.3 percent interest in the Ring Dam at Chaudière Falls from Domtar Corporation. The purchase and sale agreement is up to $45 million which will double our clean, green hydroelectric generation capacity. Page 3 of 6

4 [Slide Dividends vs. Plan] These dividends over the past four years have exceeded the target by 40 percent. The dividend for 2011, paid in April of this year, was $16.6 million $1.6 million greater than plan. Since we paid our first dividend in 2005, Hydro Ottawa has delivered $121.3 million in dividends to you, our shareholder, for City of Ottawa priorities. [Slide 5 Shareholder Value, ] When growth in shareholder s equity is considered along with dividends, the company has created more than $135 million in shareholder value over the past four years. Given this success, it is time to set new strategic goals for Hydro Ottawa, to meet the new challenges on the horizon. As we move forward, we will be guided by the same core values that we have adhered to since our creation in 2000 a commitment to shareholder value; value to our customers; and a sustainable energy future. [Slide 6 Change in Distribution Rates, ] I am pleased to report that our distribution rates have again decreased, and are 10 percent lower over the past two years. One-time credits approved by the Ontario Energy Board were a significant factor, as was our emphasis on cost control. In 2011 we remained well within the top quartile of our industry in delivering lowest cost per customer, as measured by the Ontario Energy Board. [Slide 7 Reliable Electrical Service] Reliability was a challenge in 2011 as a result of three major storms that caused widespread outages. The severe wind storm on April 28 in particular caused extensive damage. More poles were damaged in that storm than during the 1998 ice storm. Once again our employees worked through adverse conditions to get the electricity flowing again as quickly as possible. Page 4 of 6

5 We continue to make major investments in our distribution infrastructure to enhance reliability. Last year, we made our highest capital investment ever, an increase in gross capital expenditures of $16.5 million compared to [Slide 8 Conserving Energy] Our energy conservation programs continue to be popular with our customers. Since we began offering these programs in 2006, our customers have saved enough electricity to power about 52,000 homes for a year. [Slide 9 Awards] In closing, I want to acknowledge the major role that our employees have played again this year in our success. They are a major reason for our accomplishments not only in 2011, but also over the past four years. We are proud of their efforts. They are the first responders in good and bad weather to ensure that our citizens have safe and reliable electricity. We are also very proud of their contributions to the community. In 2011, our United Way workplace campaign raised a record of almost $188,000 through employee donations and corporate matching dollars, and our campaign was honoured with a Community Builder Award, Going forward, as we are guided by a new strategy, we will maintain our focus on providing value to you, our shareholder. We will maximize the value we provide to our customers. We will continue to build a highly effective and efficient organization. Page 5 of 6

6 [Slide 13 Committed to our Community] And we will not waver in our commitment to being excellent corporate citizens. Thank you for the opportunity to present these results. In closing I would like to thank and acknowledge the contribution of departing members of our Boards. On Hydro Ottawa Holding Inc., Mr. Shawn Gibbons, Chair of the Governance & Management Resources Committee, and Mr. Patrick Dion and Mr. John Kelly, who served as governance committee members. On Hydro Ottawa Limited, I would like to thank Mr. Alan Kupcis and Mr. Duncan Watts, who also served as members of the Audit Committee. I wish them all success in their future endeavors. Now, let me turn the podium over to Bryce Conrad, who will speak about our new strategy for the next five years. Page 6 of 6