Toronto Hydro Corporation Releases its Second Quarter Financial Results
(ENP Newswire Via Acquire Media NewsEdge) ENP Newswire - 18 August 2014
Release date- 15082014 - TORONTO - Toronto Hydro Corporation announced today that it has filed with Canadian securities regulators its Interim Consolidated Financial Statements and related Management's Discussion and Analysis for the six months ended June 30, 2014, prepared in accordance with United States Generally Accepted Accounting Principles, including the application of rate-regulated accounting policies, presented in Canadian dollars.
Copies may be obtained from the Corporation or accessed through SEDAR's website www.sedar.com.
Net income for the six months ended June 30, 2014 was $53.7 million compared to $56.1 million for the same period in 2013.
Distribution and Other Revenue were higher at $303.7 million compared to $291.6 million for the same period in 2013.
Capital Expenditures were higher at $242.3 million compared to $188.4 million for the same period in 2013.
'We continue to achieve strong financial results while strategically investing in the modernization of our electricity grid to renew our aging infrastructure and support the growth of Toronto', said Anthony Haines, President and Chief Executive Officer.
On May 10, 2012, Toronto Hydro-Electric System Limited ('LDC') filed an application for electricity distribution rates for 2012, 2013, and 2014 using the Incentive Regulation Mechanism ('IRM') framework, including the filing of an Incremental Capital Module ('ICM') application.
On April 2, 2013, the Ontario Energy Board ('OEB') approved new rates for LDC effective June 1, 2013, which reflected approved capital expenditures amounting to $203.3 million for 2012 and $484.2 million for 2013. In a separate decision rendered on December 19, 2013, the OEB approved capital expenditures amounting to$398.8 million for 2014.
On January 16, 2014, the OEB approved LDC's requested disposition of the smart meter deferral account balances related to smart meter installations in 2008, 2009 and 2010, through two separate rate riders effective May 1, 2014. The first rate rider relates to the recovery of $23.9 million, which represents the cumulative revenue requirement net of recoveries from an existing smart meter rate rider.
This existing smart meter rate rider was discontinued when the new rate riders became effective. The second rate rider relates to the recovery of $9.6 million, which represents the forecasted 2014 incremental revenue requirement.
On July 31, 2014, LDC filed a rate application with the OEB under the custom incentive rate-setting mechanism, seeking approval of separate and successive revenue requirements and corresponding electricity distribution rates for the five rate years commencing on May 1, 2015. The rate application includes capital expenditures of approximately $2.5 billion and operating expenses as sufficient over the period to provide for a safe and reliable source of electricity and acceptable customer service levels for LDC's customer base.
Also included in the rate application are capital amounts spent in 2012 through 2014 that were not specifically approved by the OEB in the ICM decisions due to the standard operation of the regulatory model and recovery of the net book value of stranded meters. Revenue for LDC over the period will be based on the existing rate base, capital expenditures and operating expenses ultimately approved by the OEB in the rate application plus cost of capital allowed by the OEB.
On June 13, 2014, the borrowing capacity under the Revolving Credit Facility was increased from $600.0 million to $700.0 million and the amount the Corporation may issue under its Commercial Paper Program was increased from $400.0 million to $500.0 million.
Net income for the six months ended June 30, 2014 was $53.7 million compared to $56.1 million for the comparable period in 2013.
The decrease in net income for the six months ended June 30, 2014 was primarily due to higher income tax expense ($8.1 million), higher depreciation and amortization expense ($7.7 million), higher operating expenses ($3.6 million), and lower other revenue ($0.7 million). These variances were offset by higher distribution revenue ($12.8 million) and lower net financing charges ($4.9 million).
Capital expenditures amounted to $242.3 million for the six months ended June 30, 2014 compared to $188.4 million for the comparable period in 2013. The most significant regulated capital expenditures incurred by LDC for the six months ended June 30, 2014 related to spending on underground infrastructure ($46.9 million), overhead infrastructure ($46.5 million), the facilities consolidation program ($40.4 million), Copeland Station ($29.4 million), customer connections ($22.0 million), and reactive remediation work ($17.3 million).
About Toronto Hydro Corporation
The Corporation is a holding company which wholly-owns two subsidiaries:
LDC-which distributes electricity and engages in Conservation and Demand Management activities and
Toronto Hydro Energy Services Inc.-which provides street lighting services.
The principal business of the Corporation and its subsidiaries is the distribution of electricity by LDC. LDC owns and operates an electricity distribution system, delivering electricity to approximately 734,000 customers located in the City of Toronto.
The Corporation includes forward-looking information in its news release within the meaning of applicable securities laws in Canada ('forward-looking information').
The purpose of the forward-looking information is to provide management's expectations regarding the Corporation's future results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes. All forward-looking information is given pursuant to the 'safe harbour' provisions of applicable Canadian securities legislation.
The words 'expected', 'forecasted', 'seek', and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects management's current beliefs and is based on information currently available to the Corporation's management.
The forward-looking information in the news release includes, but is not limited to, statements regarding the Corporation's plans and expectations regarding the current rate application under the custom incentive rate-setting mechanism.
The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the future course of the economy and financial markets, the receipt of applicable regulatory approvals and requested rate orders, the level of interest rates and the Corporation's ability to borrow.
The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.
The factors which could cause results or events to differ from current expectations include, but are not limited to, market liquidity and the quality of the underlying assets and financial instruments, the timing and extent of changes in prevailing interest rates, inflation levels, legislative, judicial and regulatory developments that could affect revenues and the results of borrowing efforts.
All forward-looking information in the news release is qualified in its entirety by the above cautionary statements and, except as required by law, the Corporation undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
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