Hydro One Limited, Canada’s largest electricity distribution utility, reported its second quarter earnings dropped by almost a quarter compared with the same period last year because of weather, higher debt costs and increased maintenance.
Earnings per share during the three months to June 30 slid to 26 cents versus 34 cents in the same period in 2018, a 24 per cent decrease, the utility said. Net income fell 22.5 per cent to $155 million from $200 million over the same period as revenue declined to $1.41 billion from $1.48 billion. It set a quarterly dividend of 24.15 cents a share.
“Less favourable weather and accelerated tax depreciation” drove revenue lower, the utility said in a filing Friday. Clearing transmission lines of trees sprouting because of milder weather accounted for higher operating and maintenance costs, while a higher weighted-average of long-term debt outstanding in 2019 increased interest expenses, it said.
The utility, which is a Crown corporation with public shareholders owning about 60 per cent, spent $370 million on new infrastructure and put $276 million of new assets in service. It championed a 9 per cent increase in keeping clients happy to 85 per cent this year, the highest in a decade.
“The significant increase in our residential customer satisfaction in the first half of 2019 is proof of our unwavering commitment to put customers first, as well as our use of innovation to improve reliability, while reducing costs,” Mark Poweska, president and chief executive officer of Hydro One, said in a statement. “We have made meaningful progress in building the foundations of a corporate sustainability strategy.”
The company’s System Average Interruption Duration Index, a commonly used indicator of reliability for electric power utilities that measures outages per client, improved to 1.4 hours during the quarter compared with 1.7 hours in the same period last year.
Hydro One, which has 1.4 million customers and $25.7 billion in assets, began preparations to build a new line in the province’s southwest as it raised debt and appointed a new chief financial officer, Chris Lopez, and a new chairman of the board, Tim Hodgson.
Construction of the new 230 kilovolt transmission line running from Chatham to Leamington is due to last until 2025 and will add 400 megawatts to the area, according to Hydro One. Costs figures weren’t immediately available.
The company issued $1.5 billion of debt in three tranches in April with interest ranging from 2.54 per cent to 3.64 per cent, it said. The proceeds will be used to repay short-term debt and general expenses, according to the statement.
Hydro One placed 16th, up from 24th last year, on an annual list by Corporate Knights, a Toronto-based sustainability-booster, of Canada’s 50 best corporate citizens.
“We will continue to improve our performance in Indigenous procurement, customer satisfaction, reliability, protecting the environment and supporting strong communities and thriving economies,” Poweska said.
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