EX-99.1 2 a2023q3hoifs.htm EX-99.1 Document
HYDRO ONE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
For the three and nine months ended September 30, 2023 and 2022
Three months ended September 30Nine months ended September 30
 (millions of Canadian dollars, except per share amounts)
2023202220232022
Revenues
Distribution (includes related party revenues of $90 and $267 (2022 - $72 and $214) for the three and nine months ended September 30, respectively) (Note 23)
1,329 1,459 4,123 4,290 
Transmission (includes related party revenues of $590 and $1,697 (2022 - $558 and $1,588) for the three and nine months ended September 30, respectively) (Note 23)
594 563 1,710 1,599 
1,923 2,022 5,833 5,889 
Costs
Purchased power (includes related party costs of $456 and $1,609 (2022 - $555 and $1,753) for the three and nine months ended September 30, respectively) (Note 23)
854 963 2,662 2,829 
Operation, maintenance and administration (Note 23)
283 288 928 847 
Depreciation, amortization and asset removal costs (Note 4)
245 238 739 728 
1,382 1,489 4,329 4,404 
Income before financing charges and income tax expense541 533 1,504 1,485 
Financing charges (Note 5)
142 121 417 353 
Income before income tax expense399 412 1,087 1,132 
Income tax expense (Note 6)
37 101 169 249 
Net income 362 311 918 883 
Other comprehensive income (loss) (Note 7)
— (12)14 
Comprehensive income362 313 906 897 
Net income attributable to:
    Noncontrolling interest
    Common shareholder359 308 911 876 
362 311 918 883 
Comprehensive income attributable to:
    Noncontrolling interest
    Common shareholder359 310 899 890 
362 313 906 897 
Earnings per common share (Note 21)
    Basic$2,524$2,165$6,405$6,159
    Diluted$2,524$2,165$6,405$6,159

See accompanying notes to Condensed Interim Consolidated Financial Statements (unaudited).
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HYDRO ONE INC.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (unaudited)
At September 30, 2023 and December 31, 2022
As at (millions of Canadian dollars)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents— 458 
Accounts receivable (Note 8)
747 765 
Due from related parties (Note 23)
516 453 
Other current assets (Note 9)
171 276 
1,434 1,952 
Property, plant and equipment (Note 10)
26,182 24,970 
Other long-term assets:
Regulatory assets (Note 12)
3,186 2,964 
Deferred income tax assets
Intangible assets (Note 11)
643 605 
Goodwill 373 373 
Other assets (Note 13)
534 422 
4,741 4,368 
Total assets32,357 31,290 
Liabilities
Current liabilities:
Bank indebtedness33 — 
Short-term notes payable (Note 16)
927 1,374 
Long-term debt payable within one year (Notes 16, 17)
700 733 
Accounts payable and other current liabilities (Note 14)
1,304 1,250 
Due to related parties (Note 23)
74 251 
3,038 3,608 
Long-term liabilities:
Long-term debt (Notes 16, 17)
13,378 12,606 
Regulatory liabilities (Note 12)
1,307 1,123 
Deferred income tax liabilities 1,004 713 
Other long-term liabilities (Note 15)
1,567 1,558 
17,256 16,000 
Total liabilities20,294 19,608 
Contingencies and Commitments (Notes 25, 26)
Subsequent Events (Note 28)
Noncontrolling interest subject to redemption 20 20 
Equity
Common shares (Note 19)
2,957 2,957 
Retained earnings9,028 8,634 
Accumulated other comprehensive (loss) income (7)
Hydro One shareholder’s equity11,978 11,596 
Noncontrolling interest 65 66 
Total equity12,043 11,662 
32,357 31,290 

See accompanying notes to Condensed Interim Consolidated Financial Statements (unaudited).


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HYDRO ONE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)
For the nine months ended September 30, 2023 and 2022

Nine months ended September 30, 2023
(millions of Canadian dollars)


Common
Shares


Retained
Earnings
Accumulated
Other
Comprehensive
Loss

Hydro One
Shareholder’s
Equity
Non-
controlling
Interest


Total
Equity
January 1, 20232,957 8,634 11,596 66 11,662 
Net income— 911 — 911 916 
Other comprehensive loss (Note 7)
— — (12)(12)— (12)
Distributions to noncontrolling interest— — — — (6)(6)
Dividends on common shares (Note 20)
— (517)— (517)— (517)
September 30, 20232,957 9,028 (7)11,978 65 12,043 


Nine months ended September 30, 2022
(millions of Canadian dollars)


Common
Shares


Retained
Earnings
Accumulated
Other
Comprehensive
Loss

Hydro One
Shareholder’s
Equity
Non-
controlling
Interest


Total
Equity
January 1, 20222,957 8,229 (14)11,172 68 11,240 
Net income— 876 — 876 881 
Other comprehensive income (Note 7)
— — 14 14 — 14 
Distributions to noncontrolling interest— — — — (6)(6)
Dividends on common shares (Note 20)
— (487)— (487)— (487)
September 30, 20222,957 8,618  11,575 67 11,642 

See accompanying notes to Condensed Interim Consolidated Financial Statements (unaudited).

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HYDRO ONE INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the three and nine months ended September 30, 2023 and 2022
Three months ended September 30Nine months ended September 30
(millions of Canadian dollars)
2023202220232022
Operating activities
Net income 362 311 918 883 
Environmental expenditures(3)(5)(27)(24)
Adjustments for non-cash items:
Depreciation and amortization (Note 4)
212 210 643 630 
Regulatory assets and liabilities26 (3)18 
Deferred income tax expense 23 92 131 228 
Other11 21 
Changes in non-cash balances related to operations (Note 24)
(2)(31)(81)(155)
Net cash from operating activities622 576 1,596 1,601 
Financing activities
Long-term debt issued425 — 1,475 — 
Long-term debt repaid— — (731)(601)
Short-term notes issued2,120 1,730 5,480 4,590 
Short-term notes repaid(2,295)(1,650)(5,930)(4,120)
Dividends paid (Note 20)
(176)(165)(517)(487)
Distributions paid to noncontrolling interest(2)(2)(8)(8)
Change in bank indebtedness(25)11 33 39 
Costs to obtain financing(1)(1)(7)(5)
Net cash from (used in) financing activities46 (77)(205)(592)
Investing activities
Capital expenditures (Note 24)
Property, plant and equipment(576)(473)(1,626)(1,435)
Intangible assets(36)(28)(95)(81)
Change in future use assets(59)— (133)— 
Capital contributions received
— 13 
Other(1)(5)
Net cash used in investing activities(668)(499)(1,849)(1,508)
Net change in cash and cash equivalents — — (458)(499)
Cash and cash equivalents, beginning of period— — 458 499 
Cash and cash equivalents, end of period    

See accompanying notes to Condensed Interim Consolidated Financial Statements (unaudited).





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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
For the three and nine months ended September 30, 2023 and 2022

1.    DESCRIPTION OF THE BUSINESS
Hydro One Inc. (Hydro One or the Company) was incorporated on December 1, 1998, under the Business Corporations Act (Ontario) and is wholly-owned by Hydro One Limited. The principal businesses of Hydro One are the transmission and distribution of electricity to customers within Ontario.
Earnings for interim periods may not be indicative of results for the year due to the impact of seasonal weather conditions on customer demand and market pricing.
The Company's transmission business consists of the transmission system operated by its subsidiaries, which include Hydro One Networks Inc. (Hydro One Networks) and Hydro One Sault Ste. Marie LP (HOSSM), as well as an approximately 66% interest in B2M Limited Partnership (B2M LP), and an approximately 55% interest in Niagara Reinforcement Limited Partnership (NRLP).
Hydro One’s distribution business consists of the distribution system operated by its subsidiaries, Hydro One Networks and Hydro One Remote Communities Inc. (Hydro One Remotes).
Rate Setting
Hydro One Networks
On August 15, 2021, Hydro One Networks filed a custom Joint Rate Application (JRAP) for distribution rates and transmission revenue requirement for the period from 2023-2027. On November 29, 2022, the Ontario Energy Board (OEB) issued a Decision and Order approving the application and issued its final rate order for 2023-2027 transmission and distribution rates. As part of this decision, the OEB approved revenue requirement of $1,952 million for 2023, $2,073 million for 2024, $2,168 million for 2025, $2,277 million for 2026 and $2,362 million for 2027 for the Transmission Business. The OEB also approved revenue requirement of $1,727 million for 2023, $1,813 million for 2024, $1,886 million for 2025, $1,985 million for 2026 and $2,071 million for 2027 for the Distribution Business.
Deferred Tax Asset (DTA)
On March 7, 2019, the Ontario Energy Board (OEB) issued its reconsideration decision (DTA Decision) with respect to Hydro One's rate-setting treatment of the benefits of the DTA resulting from the transition from the payments in lieu of tax regime to tax payments under the federal and provincial tax regimes. On July 16, 2020, the Ontario Divisional Court rendered its decision on the Company's appeal of the OEB's DTA Decision. On April 8, 2021, the OEB rendered its decision and order (DTA Implementation Decision) regarding the recovery of the DTA amounts allocated to ratepayers for the 2017 to 2022 period. See Note 12 - Regulatory Assets and Liabilities for additional details.
Hydro One Remotes
On August 31, 2022, Hydro One Remotes filed its distribution rate application for 2023-2027. On March 2, 2023, the OEB approved Hydro One Remote Communities' 2023 revenue requirement of $128 million with a price cap escalator index for 2023-2027, and a 3.72% rate increase effective May 1, 2023.
2.    SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation and Presentation
These unaudited condensed interim consolidated financial statements (Consolidated Financial Statements) include the accounts of the Company and its subsidiaries. Inter-company transactions and balances have been eliminated.
Basis of Accounting
These Consolidated Financial Statements are prepared and presented in accordance with United States (US) Generally Accepted Accounting Principles (GAAP) for interim financial statements and in Canadian dollars.
The accounting policies applied are consistent with those outlined in Hydro One's annual audited consolidated financial statements for the year ended December 31, 2022, with the exception of the adoption of new accounting standards as described in Note 3. These Consolidated Financial Statements reflect adjustments, that are, in the opinion of management, necessary to reflect fairly the financial position and results of operations for the respective periods. These Consolidated Financial Statements do not include all disclosures required in the annual financial statements and should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2022.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
3.    NEW ACCOUNTING PRONOUNCEMENTS
The following table presents Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board that are applicable to Hydro One:
Recently Adopted Accounting Guidance
GuidanceDate issuedDescriptionEffective dateImpact on Hydro One
ASU
2021-08
October 2021The amendments address how to determine whether a contractual obligation represents a liability to be recognized by the acquirer in a business combination.January 1, 2023No impact upon adoption
ASU 2022-02March 2022The amendments eliminate the troubled debt restructuring (TDR) accounting model for entities that have adopted Topic 326 Financial Instrument – Credit Losses and modifies the guidance on vintage disclosure requirements to require disclosure of current-period gross write-offs by year of origination.January 1, 2023No impact upon adoption
4.    DEPRECIATION, AMORTIZATION AND ASSET REMOVAL COSTS
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Depreciation of property, plant and equipment191 186 560 548 
Amortization of intangible assets18 19 56 58 
Amortization of regulatory assets27 24 
Depreciation and amortization212 210 643 630 
Asset removal costs33 28 96 98 
245 238 739 728 
5.    FINANCING CHARGES
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Interest on long-term debt143 124 422 369 
Interest on short-term notes14 36 14 
Interest on regulatory accounts13 
Realized (gain) loss on cash flow hedges (interest-rate swap agreements) (Notes 7, 17)
— (2)(2)
Other10 
Less: Interest capitalized on construction and development in progress(20)(16)(53)(47)
           Interest earned on cash and cash equivalents(1)— (8)(1)
           DTA carrying charges— — — 
142 121 417 353 

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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
6.    INCOME TAXES
As a rate regulated utility company, the Company recovers income taxes from its ratepayers based on estimated current income tax expense in respect of its regulated business. The amounts of deferred income taxes related to regulated operations which are considered to be more likely-than-not to be recoverable from, or refundable to, ratepayers in future periods are recognized as deferred income tax regulatory assets or liabilities, with an offset to deferred income tax recovery or expense, respectively. The Company’s consolidated tax expense or recovery for the period includes all current and deferred income tax expenses for the period net of the regulated accounting offset to deferred income tax expense arising from temporary differences to be recovered from, or refunded to, customers in future rates. Thus, the Company’s income tax expense or recovery differs from the amount that would have been recorded using the combined Canadian federal and Ontario statutory income tax rate.
The reconciliation between the statutory and the effective tax rates is provided as follows:
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Income before income tax expense399 412 1,087 1,132 
Income tax expense at statutory rate of 26.5% (2022 - 26.5%)
106 109 288 300 
Increase (decrease) resulting from:
Net temporary differences recoverable in future rates charged to customers:
    Capital cost allowance in excess of depreciation and amortization(42)(22)(103)(74)
    Impact of DTA Implementation Decision1
— 24 48 72 
Overheads capitalized for accounting but deducted for tax purposes(17)(7)(35)(20)
Interest capitalized for accounting but deducted for tax purposes(7)(5)(16)(14)
Pension and post-retirement benefit contributions in excess of pension expense(4)(8)
Environmental expenditures(2)— (6)(7)
Other(3)— (4)— 
Net temporary differences attributable to regulated business(70)(8)(120)(51)
Net permanent differences— — 
Total income tax expense37 101 169 249 
Effective income tax rate9.3 %24.5 %15.5 %22.0 %
1 Pursuant to the DTA Implementation Decision, the amounts represent the recovery of DTA amounts that were previously shared with ratepayers which ended June 30, 2023. See Note 12 - Regulatory Assets and Liabilities.
7.    OTHER COMPREHENSIVE INCOME (LOSS)
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Gain (loss) on cash flow hedges (interest-rate swap agreements) (Notes 5, 17)1
— (4)12 
Gain (loss) on transfer of other post-employment benefits (OPEB) (Note 18)
— — (8)
— (12)14 
1 No realized gain for the three months ended September 30, 2023 (2022 - after-tax $1 million gain and before-tax $2 million gain), and $2 million after-tax realized gain (2022 - $1 million loss) and $2 million before-tax realized gain (2022 - $2 million loss) on cash flow hedges reclassified to financing charges for nine months ended September 30, 2023.
8.    ACCOUNTS RECEIVABLE
As at (millions of dollars)
September 30,
2023
December 31,
2022
Accounts receivable - billed386 356 
Accounts receivable - unbilled419 472 
Accounts receivable, gross805 828 
Allowance for doubtful accounts(58)(63)
Accounts receivable, net747 765 
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
The following table shows the movements in the allowance for doubtful accounts for the nine months ended September 30, 2023 and the year ended December 31, 2022:
(millions of dollars)
September 30,
2023
December 31,
2022
Allowance for doubtful accounts – beginning(63)(56)
Write-offs14 25 
Additions to allowance for doubtful accounts(9)(32)
Allowance for doubtful accounts – ending(58)(63)
9.     OTHER CURRENT ASSETS
As at (millions of dollars)
September 30,
2023
December 31,
2022
Prepaid expenses and other assets72 58 
Regulatory assets (Note 12)
67 189 
Materials and supplies32 24 
Derivative assets (Note 17)
— 
171 276 
10.    PROPERTY, PLANT AND EQUIPMENT
As at (millions of dollars)
September 30,
2023
December 31,
2022
Property, plant and equipment38,136 36,989 
Less: accumulated depreciation(13,663)(13,220)
24,473 23,769 
Construction in progress1,709 1,201 
26,182 24,970 
11. INTANGIBLE ASSETS
As at (millions of dollars)
September 30,
2023
December 31,
2022
Intangible assets1,341 1,180 
Less: accumulated depreciation(798)(742)
543 438 
Development in progress100 167 
643 605 

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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
12.    REGULATORY ASSETS AND LIABILITIES
Regulatory assets and liabilities arise as a result of the rate-setting process. Hydro One has recorded the following regulatory assets and liabilities:
As at (millions of dollars)
September 30,
2023
December 31,
2022
Regulatory assets:
Deferred income tax regulatory asset2,961 2,724 
Post-retirement and post-employment benefits - non-service cost105 141 
Environmental67 93 
Rural and Remote Rate Protection variance29 25 
Stock-based compensation28 34 
Conservation and Demand Management (CDM) variance25 
Deferred tax asset sharing73 
Other53 38 
Total regulatory assets3,253 3,153 
Less: current portion(67)(189)
3,186 2,964 
Regulatory liabilities:
Post-retirement and post-employment benefits506 506 
Pension benefit regulatory liability476 358 
Distribution rate riders112 
Earnings sharing mechanism deferral (ESM)62 75 
Retail settlement variance account (RSVA)57 53 
Tax rule changes variance38 100 
External revenue variance28 50 
Asset removal costs cumulative variance28 41 
Capitalized overhead tax variance26 16 
Pension cost differential26 
Deferred income tax regulatory liability
Green energy expenditure variance— 
Other34 26 
Total regulatory liabilities1,380 1,262 
Less: current portion(73)(139)
1,307 1,123 
Deferred Tax Asset Sharing
At September 30, 2023, Hydro One has a regulatory asset of $5 million (December 31, 2022 - $73 million) representing the interest accrued within the Transmission Business on the cumulative DTA amounts shared with ratepayers over the 2017 to 2021 period. At December 31, 2022, the regulatory asset of $73 million consists of $24 million and $49 million for Hydro One Networks’ distribution and transmission segments, respectively. The principal balance of this regulatory account was fully recovered as at June 30, 2023. The Company will seek recovery of the remaining interest balance in the next rate application.
Post-Retirement and Post-Employment Benefits - Non-Service Cost
This balance includes the rider established for the disposition of the approved balances from Hydro One Networks' JRAP for 2023-2027 rates.
Distribution Rate Riders
As part of the decision received in November 2022 for Hydro One Networks' JRAP, the OEB approved the disposition of certain deferral and variance account balances as at December 31, 2020, including accrued interest. These approved balances, including those for RSVA, tax rule changes variance, pension cost differential, and ESM were accumulated in distribution rate riders which makes up the majority of this balance. The amounts are being disposed of over a period of 36 months ending December 31, 2025.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
13.    OTHER LONG-TERM ASSETS
As at (millions of dollars)
September 30,
2023
December 31,
2022
Deferred pension assets (Note 18)
476 358 
Right-of-Use assets 47 53 
Other long-term assets11 11 
534 422 
14.    ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
As at (millions of dollars)
September 30,
2023
December 31,
2022
Accrued liabilities824 673 
Accounts payable233 284 
Accrued interest144 118 
Regulatory liabilities (Note 12)
73 139 
Environmental liabilities20 25 
Lease obligations10 11 
1,304 1,250 
15.    OTHER LONG-TERM LIABILITIES
As at (millions of dollars)
September 30,
2023
December 31,
2022
Post-retirement and post-employment benefit liability (Note 18)
1,402 1,364 
Environmental liabilities47 68 
Lease obligations37 42 
Asset retirement obligations30 28 
Due to related parties (Note 23)
21 26 
Long-term accounts payable— 
Other long-term liabilities30 29 
1,567 1,558 
16.    DEBT AND CREDIT AGREEMENTS
Short-Term Notes and Credit Facilities
Hydro One meets its short-term liquidity requirements in part through the issuance of commercial paper under its Commercial Paper Program which has a maximum authorized amount of $2,300 million. These short-term notes are denominated in Canadian dollars with varying maturities up to 365 days. The Commercial Paper Program is supported by the Company’s revolving standby credit facilities totalling $2,300 million (Operating Credit Facilities). In January 2022, Hydro One successfully amended its Operating Credit Facilities to incorporate environmental, social and governance targets. On June 1, 2023, the maturity date for the Operating Credit Facilities was extended from 2027 to 2028. At September 30, 2023, no amounts have been drawn on the Operating Credit Facilities.
The Company may use the Operating Credit Facilities for working capital and general corporate purposes. If used, interest on the Operating Credit Facilities would apply based on Canadian benchmark rates. The obligation of each lender to make any credit extension under its credit facility is subject to various conditions including that no event of default has occurred or would result from such credit extension.


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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
Long-Term Debt
The following table presents long-term debt outstanding at September 30, 2023 and December 31, 2022:
As at (millions of dollars)
September 30,
2023
December 31,
2022
Hydro One long-term debt (a)14,120 13,245 
HOSSM long-term debt (b)— 133 
14,120 13,378 
Add: Net unamortized debt premiums
Less: Unamortized deferred debt issuance costs(50)(47)
Total long-term debt14,078 13,339 
Less: Long-term debt payable within one year(700)(733)
13,378 12,606 
(a) Hydro One long-term debt
At September 30, 2023, long-term debt of $14,120 million (December 31, 2022 - $13,245 million) was outstanding, the majority of which was issued under Hydro One Inc.’s Medium Term Note (MTN) Program. In June 2022, Hydro One Inc. filed a short form base shelf prospectus in connection with its MTN Program, which has a maximum authorized principal amount of notes issuable of $4,000 million and expires in July 2024. At September 30, 2023, $1,775 million remained available for issuance under the MTN Program prospectus. During the three and nine months ended September 30, 2023 $425 million and $1,475 million long-term debt was issued, respectively, (2022 - $nil) and $600 million long-term debt was repaid (2022 - $600 million).
See Note 28 - Subsequent Events for long-term debt issued under Hydro One Inc.'s MTN Program subsequent to September 30, 2023.
(b) HOSSM long-term debt
On June 16, 2023, the HOSSM long-term debt matured and was fully repaid, leaving no debt outstanding at September 30, 2023 (December 31, 2022 - $133 million). During the three months ended September 30, 2023 and 2022, no debt was issued or repaid. During the nine months ended September 30, 2023, $131 million of long-term debt was repaid (2022 - $1 million) and no long-term debt was issued.
Principal and Interest Payments
At September 30, 2023, future principal repayments, interest payments, and related weighted-average interest rates were as follows:
Long-Term Debt
Principal Repayments
Interest
Payments
Weighted-Average
Interest Rate
(millions of dollars)(millions of dollars)(%)
Year 1700 583 2.5 
Year 2750 562 2.3 
Year 3925 541 4.0 
Year 4— 510 — 
Year 5750 492 4.9 
3,125 2,688 3.5 
Years 6-103,450 2,061 4.0 
Thereafter7,545 3,684 4.5 
14,120 8,433 4.1 
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
17.    FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Non-Derivative Financial Assets and Liabilities
At September 30, 2023 and December 31, 2022, the Company’s carrying amounts of cash and cash equivalents, accounts receivable, due from related parties, short-term notes payable, accounts payable, and due to related parties are representative of fair value due to the short-term nature of these instruments.
Fair Value Measurements of Long-Term Debt
The fair values and carrying values of the Company’s long-term debt at September 30, 2023 and December 31, 2022 are as follows:
September 30, 2023December 31, 2022
As at (millions of dollars)
Carrying ValueFair ValueCarrying ValueFair Value
Long-term debt, including current portion14,078 12,824 13,339 12,655 
Fair Value Measurements of Derivative Instruments
Fair Value Hedges
At September 30, 2023 and December 31, 2022, Hydro One had no fair value hedges.
Cash Flow Hedges
At September 30, 2023 and December 31, 2022, Hydro One Inc. had $nil and a total of $800 million, respectively, in pay-fixed, receive-floating interest-rate swap agreements designated as cash flow hedges. These cash flow hedges were intended to offset the variability of interest rates on the issuances of short-term commercial paper between January 9, 2020 and March 9, 2023.
At September 30, 2023 and December 31, 2022, the Company had no derivative instruments classified as undesignated contracts.
Fair Value Hierarchy
The fair value hierarchy of financial assets and liabilities at September 30, 2023 and December 31, 2022 is as follows:

As at September 30, 2023 (millions of dollars)
Carrying
Value
Fair
 Value

Level 1

Level 2

Level 3
Liabilities:
 Long-term debt, including current portion14,078 12,824 — 12,824 — 

As at December 31, 2022 (millions of dollars)
Carrying
Value
Fair
 Value

Level 1

Level 2

Level 3
Assets:
    Derivative instruments (Note 9)
Cash flow hedges, including current portion— — 
Liabilities:
Long-term debt, including current portion13,339 12,655 — 12,655 — 
The fair value of the interest rate swaps designated as cash flow hedges is determined using a discounted cash flow method based on period-end swap yield curves.
The fair value of the long-term debt is based on unadjusted period-end market prices for the same or similar debt of the same remaining maturities.
There were no transfers between any of the fair value levels during the nine-months ended September 30, 2023 or the year ended December 31, 2022.
Risk Management
Exposure to market risk, credit risk and liquidity risk arises in the normal course of the Company’s business.
Market Risk
Market risk refers primarily to the risk of loss which results from changes in values, foreign exchange rates and interest rates. The Company is exposed to fluctuations in interest rates, as its regulated return on equity is derived using a formulaic approach that takes anticipated interest rates into account. The Company is not currently exposed to material commodity price risk or material foreign exchange risk.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
The Company uses a combination of fixed and variable-rate debt to manage the mix of its debt portfolio. The Company also uses derivative financial instruments to manage interest-rate risk. The Company may utilize interest-rate swaps designated as fair value hedges as a means to manage its interest rate exposure to achieve a lower cost of debt. The Company may also utilize interest-rate derivative instruments, such as cash flow hedges, to manage its exposure to short-term interest rates or to lock in interest-rate levels on forecasted financing.
A hypothetical 100 basis points increase in interest rates associated with variable-rate debt would have resulted in an increase to financing charges for the three and nine months ended September 30, 2023 of $3 million and $7 million, respectively. There would have been no significant decrease in Hydro One’s net income for the three and nine months ended September 30, 2022.
For derivative instruments that are designated and qualify as cash flow hedges, the unrealized gain or loss, after tax, on the derivative instrument is recorded as OCI or OCL and is reclassified to results of operations in the same period during which the hedged transaction affects results of operations. During the three months ended September 30, 2023, there was a $nil after-tax change (2022 - $3 million gain), $nil before-tax change (2022 - $4 million gain), recorded in OCI, and a $nil after-tax realized gain (2022 - $1 million gain), $nil before-tax gain (2022 - $2 million gain), reclassified to financing charges. During the nine months ended September 30, 2023, a $2 million after-tax change (2022 - $11 million gain), $3 million before-tax change (2022 - $15 million gain), was recorded in OCI, and a $2 million after-tax realized gain (2022 - $1 million loss), $2 million before-tax gain (2022 - $2 million loss), was reclassified to financing charges. This resulted in an accumulated other comprehensive income (AOCI) of $nil related to cash flow hedges at September 30, 2023 (December 31, 2022 - $4 million).
The Pension Plan manages market risk by diversifying investments in accordance with the Pension Plan’s Statement of Investment Policies and Procedures. Interest rate risk arises from the possibility that changes in interest rates will affect the fair value of the Pension Plan’s financial instruments. In addition, changes in interest rates can also impact discount rates which impact the valuation of the pension and post-retirement and post-employment liabilities. Currency risk is the risk that the value of the Pension Plan’s financial instruments will fluctuate due to changes in foreign currencies relative to the Canadian dollar. Other price risk is the risk that the value of the Pension Plan’s investments in equity securities will fluctuate as a result of changes in market prices, other than those arising from interest risk or currency risk. All three factors may contribute to changes in values of the Pension Plan investments. See Note 18 - Pension and Post-Retirement and Post-Employment Benefits for further details.
Credit Risk
Financial assets create a risk that a counterparty will fail to discharge an obligation, causing a financial loss. At September 30, 2023 and 2022, there were no significant concentrations of credit risk with respect to any class of financial assets. The Company’s revenue is earned from a broad base of customers. As a result, Hydro One did not earn a material amount of revenue from any single customer. At September 30, 2023 and 2022, there was no material accounts receivable balance due from any single customer.
At September 30, 2023, the Company’s allowance for doubtful accounts was $58 million (December 31, 2022 - $63 million). The allowance for doubtful accounts reflects the Company's Current Expected Credit Loss (CECL) for all accounts receivable balances, which are based on historical overdue balances, customer payments and write-offs. At September 30, 2023, approximately 5% (December 31, 2022 - 4%) of the Company’s net accounts receivable were outstanding for more than 60 days.
Hydro One manages its counterparty credit risk through various techniques including (i) entering into transactions with highly rated counterparties, (ii) limiting total exposure levels with individual counterparties, (iii) entering into master agreements which enable net settlement and the contractual right of offset, and (iv) monitoring the financial condition of counterparties. The Company monitors current credit exposure to counterparties on both an individual and an aggregate basis. The Company’s credit risk for accounts receivable is limited to the carrying amounts on the consolidated balance sheets.
Derivative financial instruments result in exposure to credit risk since there is a risk of counterparty default. The maximum credit exposure of derivative contracts, before collateral, is represented by the fair value of contracts in an asset position at the reporting date. At September 30, 2023, there was no counterparty party risk. At September 30, 2022, the counterparty credit risk exposure on the fair value of these interest-rate swap contracts was not material.
The Pension Plan manages its counterparty credit risk with respect to bonds by investing in investment-grade corporate and government bonds and with respect to derivative instruments by transacting only with highly rated financial institutions and by ensuring that exposure is diversified across counterparties.
Liquidity Risk
Liquidity risk refers to the Company’s ability to meet its financial obligations as they come due. Hydro One meets its short-term operating liquidity requirements using cash and cash equivalents on hand, funds from operations, the issuance of commercial paper, and the Operating Credit Facilities. The short-term liquidity under the commercial paper program, the Operating Credit Facilities, and anticipated levels of funds from operations are expected to be sufficient to fund the Company’s operating requirements.
At September 30, 2023, $1,775 million remained available for issuance under the MTN Program prospectus, and $2,000 million remained available for issuance under the Universal Base Shelf Prospectus.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
The Pension Plan’s short-term liquidity is provided through cash and cash equivalents, contributions, investment income and proceeds from investment transactions. In the event that investments must be sold quickly to meet current obligations, the majority of the Pension Plan’s assets are invested in securities that are traded in an active market and can be readily disposed of as liquidity needs arise.
18.    PENSION AND POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS
The following table provides the components of the net periodic benefit (recovery) costs for the three and nine months ended September 30, 2023 and 2022:

Pension Benefits
Post-Retirement and
Post-Employment Benefits
Three months ended September 30 (millions of dollars)
2023202220232022
Current service cost24 53 12 16 
Interest cost98 71 19 15 
Expected return on plan assets, net of expenses1
(141)(127)— — 
Amortization of prior service (credit) cost(1)
Amortization of actuarial (gains) losses(4)15 (7)— 
Net periodic benefit (recovery) costs(24)13 27 33 
Charged to results of operations2
10 14 16 
Pension BenefitsPost-Retirement and Post-Employment Benefits
Nine months ended September 30 (millions of dollars)
2023202220232022
Current service cost74 161 38 48 
Interest cost296 213 55 45 
Expected return on plan assets, net of expenses1
(425)(381)— — 
Amortization of prior service (credit) cost(2)
Amortization of actuarial (gains) losses(14)45 (21)
Net periodic benefit (recovery) costs(71)40 79 103 
Charged to results of operations2
13 2549 56 
1    The expected long-term rate of return on pension plan assets for the year ending December 31, 2023 is 7.00% (2022 - 6.00%).
2    The Company accounts for pension costs consistent with their inclusion in OEB-approved rates. During the three and nine months ended September 30, 2023, pension costs of $2 million (2022 - $27 million) and $47 million (2022 - $65 million), respectively, were attributed to labour, of which $1 million (2022 - $10 million) and $13 million (2022 - $25 million), respectively was charged to operations, and $1 million (2022 - $17 million) and $34 million (2022 - $40 million), respectively, was capitalized as part of the cost of property, plant and equipment and intangible assets.

Transfers from Other Plans
Hydro One and Inergi LP agreed to transfer the employment of certain Inergi LP employees (Transferred Employees) to Hydro One Networks. Employees related to the Information Technology Operations, Finance and Accounting, Payroll, Source to Pay, Settlements and certain Shared Services functions transferred over a period ending January 1, 2022. The Transferred Employees who are participants in the Inergi LP Pension Plan (Inergi Plan) became participants in the Hydro One Pension Plan (the Plan) upon transfer to Hydro One Networks. On March 2, 2023, the assets and liabilities of the Inergi Plan were transferred to the Plan. The value of assets and liabilities of the Inergi Plan transferred to the Plan were approximately $378 million and $333 million, respectively, at the date of transfer. Inergi and Hydro One Networks also agreed to transfer OPEB liabilities related to the Transferred Employees to Hydro One’s post-retirement and post-employment benefit plans, which occurred on the date of transfer of each group of Transferred Employees.
The transfer of Finance and Accounting, Payroll and certain Shared Services functions occurred on January 1, 2022 and the transfer of the OPEB liability of $9 million related to these Employees was completed in the first quarter of 2022. The liability was recorded as a post-retirement and post-employment benefit liability with an offset to OCL, and cash totalling $10 million was transferred to Hydro One and recorded as an asset with an offset to OCI. Both the OCI resulting from the transfer of the cash asset and the OCL resulting from the transfer of the other post-retirement benefit liability are being recognized in net income over the expected average remaining service lifetime (EARSL) of the Finance and Accounting, Payroll and certain Shared Services employees.
Eligible Inergi retirees were transferred to the Plan on June 1, 2023. The transfer of the OPEB liability of $15 million related to these retirees was completed in the second quarter of 2023. The liability was recorded as a post-retirement and post-employment benefit liability with an offset to OCL, and cash totalling $3 million was transferred to Hydro One, in accordance with the agreement. Both the OCI resulting from the transfer of the cash asset and the OCL resulting from the transfer of OPEB
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
liabilities are being recognized in net income over the expected average remaining life expectancy of the Retirees and Other Former Members employees.
19.    SHARE CAPITAL
Common Shares
The Company is authorized to issue an unlimited number of common shares. At September 30, 2023 and December 31, 2022, the Company had 142,239 common shares issued and outstanding.
Preferred Shares
The Company is authorized to issue an unlimited number of preferred shares, issuable in series. At September 30, 2023 and December 31, 2022, the Company had no preferred shares issued and outstanding.
20.     DIVIDENDS
During the three months ended September 30, 2023, common share dividends in the amount of $176 million (2022 - $165 million) were declared and paid.
During the nine months ended September 30, 2023, common share dividends in the amount of $517 million (2022 - $487 million) were declared and paid. See Note 28 - Subsequent Events for dividends declared subsequent to September 30, 2023.
21.    EARNINGS PER COMMON SHARE
Basic and diluted earnings per common share is calculated by dividing net income attributable to common shareholder of Hydro One by the weighted-average number of common shares outstanding. The weighted-average number of common shares outstanding during the three and nine months ended September 30, 2023 and 2022 were 142,239. There were no dilutive securities during the three and nine months ended September 30, 2023 and 2022.
22.    STOCK-BASED COMPENSATION
Share Grant Plans
Hydro One Limited has two share grant plans (Share Grant Plans), one for the benefit of certain members of the Power Workers’
Union (the PWU Share Grant Plan) and one for the benefit of certain members of the Society of United Professionals (the Society Share Grant Plan). A summary of share grant activity under the Share Grant Plans during the three and nine months ended September 30, 2023 and 2022 is presented below:
Three months ended September 30Nine months ended September 30
(number of share grants)2023202220232022
Share grants outstanding - beginning1,795,524 2,234,425 2,151,578 2,616,351 
Granted339 — 339 — 
Vested and issued1
(339)— (356,393)(381,926)
Share grants outstanding - ending1,795,524 2,234,425 1,795,524 2,234,425 
1During the nine months ended September 30, 2023, Hydro One Limited issued 356,393 (2022 - 381,926) common shares from treasury to eligible employees in accordance with provisions of the PWU and the Society Share Grant Plans.
Directors' Deferred Share Unit (DSU) Plan
A summary of DSU awards activity under the Directors' DSU Plan during the three and nine months ended September 30, 2023 and 2022 is presented below:
Three months ended September 30Nine months ended September 30
(number of DSUs)
2023202220232022
DSUs outstanding - beginning92,418 90,999 99,939 80,813 
    Granted5,303 4,606 27,886 14,792 
    Paid— — (30,104)— 
DSUs outstanding - ending97,721 95,605 97,721 95,605 
At September 30, 2023, a liability of $3 million (December 31, 2022 - $4 million) related to Directors' DSUs has been recorded at the closing price of Hydro One Limited common shares of $34.58 (December 31, 2022 - $36.27). This liability is included in other long-term liabilities on the consolidated balance sheets.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
Management DSU Plan
A summary of DSU awards activity under the Management DSU Plan during the three and nine months ended September 30, 2023 and 2022 is presented below:
Three months ended September 30Nine months ended September 30
(number of DSUs)
2023202220232022
DSUs outstanding - beginning138,081 125,866 118,505 90,240 
    Granted1,063 1,013 20,639 36,639 
     Paid(5,778)— (5,778)— 
DSUs outstanding - ending133,366 126,879 133,366 126,879 
At September 30, 2023, a liability of $5 million (December 31, 2022 - $4 million) related to Management DSUs has been recorded at the closing price of Hydro One Limited common shares of $34.58 (December 31, 2022 - $36.27). This liability is included in other long-term liabilities on the consolidated balance sheets.
Long-term Incentive Plan (LTIP)
Performance Share Units (PSU) and Restricted Share Units (RSU)
A summary of PSU and RSU awards activity under the LTIP during the three and nine months ended September 30, 2023 and 2022 is presented below:
Three months ended September 30
Nine months ended September 30
                                PSUs                               RSUsPSUsRSUs
(number of units)20232022202320222023202220232022
Units outstanding - beginning140,330 — 178,031 — — — — — 
    Granted1,007 — 3,608 — 141,337 — 181,639 — 
    Forfeited(1,312)— (2,623)— (1,312)— (2,623)— 
Units outstanding - ending140,025 — 179,016 — 140,025 — 179,016 — 
The grant date total fair value of the awards granted during the three and nine months ended September 30, 2023 was $nil and $12 million (2022 – $nil and $nil), respectively. The compensation expense related to these awards recognized by the Company during the three and nine months ended September 30, 2023 was $1 million and $2 million (2022 – $nil and $nil), respectively.
Society RSU Plan
A summary of RSU awards activity under the Society RSU Plan during the three and nine months ended September 30, 2023 and 2022 is presented below:
Three months ended September 30Nine months ended September 30
(number of RSUs)
2023202220232022
RSUs outstanding - beginning— 35,029 34,619 68,005 
Granted— — — 1,638 
Transfers1
— — 140 — 
Vested and issued— — (31,688)(32,841)
Settled— — (2,942)(1,106)
Forfeited— — (129)(667)
RSUs outstanding - ending— 35,029 — 35,029 
1 Transfers relate to PWU employees transferred from Acronym Inc. to Hydro One Inc. during 2023.
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
23.    RELATED PARTY TRANSACTIONS
Hydro One is owned by Hydro One Limited. The Province is a shareholder of Hydro One Limited with approximately 47.1% ownership at September 30, 2023. The IESO, Ontario Power Generation Inc. (OPG), Ontario Electricity Financial Corporation (OEFC), the OEB, Acronym Solutions Inc. (Acronym Solutions) and Hydro One Broadband Solutions Inc. (HOBSI) are related parties to Hydro One because they are controlled or significantly influenced by the Ministry of Energy or by Hydro One Limited. The following is a summary of the Company’s related party transactions during the three and nine months ended September 30, 2023 and 2022:
(millions of dollars)
Three months ended September 30Nine months ended September 30
Related PartyTransaction2023202220232022
IESOPower purchased451 553 1,596 1,739 
Revenues for transmission services589 558 1,694 1,586 
Amounts related to electricity rebates199 259 628 803 
Distribution revenues related to rural rate protection63 62 187 183 
Distribution revenues related to supply of electricity to remote northern communities12 35 26 
Distribution revenues related to Wataynikaneyap Power LP14 — 41 — 
Funding received related to CDM programs— 
OPGPower purchased12 12 
Revenues related to provision of services and supply of electricity
Capital contribution received from OPG
Costs related to the purchase of services— 
OEFCPower purchased from power contracts administered by the OEFC— 
OEBOEB fees
Hydro One LimitedDividends paid176 165 517 487 
Stock-based compensation costs
Cost recovery for services provided
AcronymServices received – costs expensed23 19 
Revenues for services provided— 
HOBSIReduction in capital contribution from HOBSI— — — 
Revenues for services provided— — 
Sales to and purchases from related parties are based on the requirements of the OEB’s Affiliate Relationships Code. Outstanding balances at period end from external related parties are interest-free and settled in cash. Invoices are issued monthly, and amounts are due and paid on a monthly basis.
24.    CONSOLIDATED STATEMENTS OF CASH FLOWS
The changes in non-cash balances related to operations consist of the following:
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Accounts receivable — (58)18 (45)
Due from related parties(14)11 (63)(37)
Materials and supplies (Note 9)
(2)(8)(3)
Prepaid expenses and other assets (Note 9)
(14)(11)
Other long-term assets (Note 13)
— — (2)
Accounts payable (56)12 (74)(39)
Accrued liabilities (Note 14)
35 (37)151 56 
Due to related parties(2)20 (176)(123)
Accrued interest (Note 14)
19 26 
Long-term accounts payable and other long-term liabilities (Note 15)
(3)— 
Post-retirement and post-employment benefit liability 16 59 38 
(2)(31)(81)(155)
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
Capital Expenditures
The following tables reconcile investments in property, plant and equipment and intangible assets and the amounts presented in the consolidated statements of cash flows for the three and nine months ended September 30, 2023 and 2022. The reconciling items include net change in accruals and capitalized depreciation.
Three months ended September 30, 2023Nine months ended September 30, 2023
(millions of dollars)
Property, Plant and Equipment
Intangible Assets


Total
Property, Plant and Equipment
Intangible Assets


Total
Capital investments(594)(39)(633)(1,673)(96)(1,769)
Reconciling items18 21 47 48 
Cash outflow for capital expenditures(576)(36)(612)(1,626)(95)(1,721)
Three months ended September 30, 2022Nine months ended September 30, 2022
(millions of dollars)
Property, Plant and Equipment
Intangible Assets


Total
Property, Plant and Equipment
Intangible Assets


Total
Capital investments(468)(28)(496)(1,457)(88)(1,545)
Reconciling items(5)— (5)22 29 
Cash outflow for capital expenditures(473)(28)(501)(1,435)(81)(1,516)
Supplementary Information
Three months ended September 30Nine months ended September 30
(millions of dollars)
2023202220232022
Net interest paid152 110 421 371 
Income taxes paid10 43 26 
25.    CONTINGENCIES
Hydro One is involved in various lawsuits and claims in the normal course of business. In the opinion of management, the outcome of such matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
26.     COMMITMENTS
The following table presents a summary of Hydro One’s commitments under outsourcing and other agreements due in the next five years and thereafter:
As at September 30, 2023 (millions of dollars)
Year 1Year 2Year 3Year 4Year 5Thereafter
Outsourcing and other agreements76 54 25 13 
Capital agreements45 75 — — — 
Long-term software/meter agreement11 
Outsourcing and other agreements
In February 2021, Hydro One entered into a three-year agreement for information technology services with Capgemini Canada Inc., which expires on February 29, 2024 and includes an option to extend for two additional one-year terms at Hydro One's discretion. In June 2023, Hydro One provided Capgemini Canada Inc. with notice to extend the agreement, effective March 1, 2024 and to expire March 1, 2026.
Capital Agreements
In the course of business, Hydro One has entered into agreements committing to the purchase of specified equipment from various suppliers upon successful completion of certain milestones. As at September 30, 2023, Hydro One has committed to future contingent payments of $124 million.

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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
The following table presents a summary of Hydro One’s other commercial commitments by year of expiry in the next five years and thereafter:
As at September 30, 2023 (millions of dollars)
Year 1Year 2Year 3Year 4Year 5Thereafter
Operating Credit Facilities— — — 2,300 — 
Letters of credit1
171 — — — — — 
Guarantees2
475 — — — — — 
1 Letters of credit consist of $163 million letters of credit related to retirement compensation arrangements, a $7 million letter of credit provided to the IESO for prudential support, and $1 million in letters of credit for various operating purposes.
2 Guarantees consist of $475 million prudential support provided to the IESO by Hydro One on behalf of its subsidiaries.
27.    SEGMENTED REPORTING
Hydro One has three reportable segments:
The Transmission Segment, which comprises the transmission of high voltage electricity across the province, interconnecting local distribution companies and certain large directly connected industrial customers throughout the Ontario electricity grid;
The Distribution Segment, which comprises the delivery of electricity to end customers and certain other municipal electricity distributors; and
Other Segment, which includes certain corporate activities. The Other Segment includes a portion of the DTA which arose from the revaluation of the tax bases of Hydro One’s assets to fair market value when the Company transitioned from the provincial payments in lieu of tax regime to the federal tax regime at the time of Hydro One’s initial public offering in 2015. This DTA is not required to be shared with ratepayers, the Company considers it not to be part of the regulated transmission and distribution segment assets, and it is included in the other segment.
The designation of segments has been based on a combination of regulatory status and the nature of the services provided. Operating segments of the Company are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of each of the segments. The Company evaluates segment performance based on income before financing charges and income tax expense from continuing operations (excluding certain allocated corporate governance costs).
Three months ended September 30, 2023 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues594 1,329 — 1,923 
Purchased power— 854 — 854 
Operation, maintenance and administration116 164 283 
Depreciation, amortization and asset removal costs131 114 — 245 
Income (loss) before financing charges and income tax expense347 197 (3)541 
Capital investments384 249 — 633 
Three months ended September 30, 2022 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues563 1,459 — 2,022 
Purchased power— 963 — 963 
Operation, maintenance and administration110 176 288 
Depreciation, amortization and asset removal costs131 107 — 238 
Income (loss) before financing charges and income tax expense322 213 (2)533 
Capital investments311 185 — 496 
Nine months ended September 30, 2023 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues1,710 4,123 — 5,833 
Purchased power— 2,662 — 2,662 
Operation, maintenance and administration373 541 14 928 
Depreciation, amortization and asset removal costs385 354 — 739 
Income (loss) before financing charges and income tax expense952 566 (14)1,504 
Capital investments1,055 714 — 1,769 
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HYDRO ONE INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
For the three and nine months ended September 30, 2023 and 2022
Nine months ended September 30, 2022 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues1,599 4,290 — 5,889 
Purchased power— 2,829 — 2,829 
Operation, maintenance and administration316 521 10 847 
Depreciation, amortization and asset removal costs385 343 — 728 
Income (loss) before financing charges and income tax expense898 597 (10)1,485 
Capital investments899 646 — 1,545 
Total Assets by Segment:
As at (millions of dollars)
September 30,
2023
December 31,
2022
Transmission19,615 18,747 
Distribution12,490 11,880 
Other252 663 
Total assets32,357 31,290 
Total Goodwill by Segment:
As at (millions of dollars)
September 30,
2023
December 31,
2022
Transmission 157 157 
Distribution 216 216 
Total goodwill373 373 
All revenues, assets and costs, as the case may be, are earned, held or incurred in Canada.
28.     SUBSEQUENT EVENTS
Debt Issuance
On October 20, 2023, Hydro One issued $400 million of green bonds (Series 57 notes) under its MTN Program with a maturity date of October 20, 2025 and a coupon rate of 5.54%. Concurrently, Hydro One executed a $400 million fixed-to-floating interest rate swap agreement to convert these notes into daily compounded variable rate debt.
Dividends
On November 7, 2023, common share dividends of $176 million were declared.

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