National Grid Conference Call Summary Company Overview - **Company**: National Grid - **Industry**: Energy and Utilities Key Points Investment Plans - National Grid plans to invest at least **GBP 70 billion** over the next **5 years**, marking a **70% increase** compared to the previous five-year period [2][5] - The investment will focus on modernizing and expanding networks in the **UK** and **US**, particularly in sectors like **data centers**, **AI**, **healthcare**, and **defense** [2][3] - The investment aims to enhance energy security, affordability, and cleaner energy delivery amidst rising energy costs [3] Financial Performance and Projections - The company anticipates **10% annual asset growth** through to **FY31** and an **underlying earnings per share (EPS) CAGR** of **8%-10%** [5][11] - The dividend per share is expected to grow in line with **CPIH inflation** [5] - The **strong balance sheet** will support the investment strategy while maintaining an investment-grade credit rating [6][10] Regulatory Framework - National Grid has reached an agreement on **RIIO-T3**, the regulatory contract for its UK electricity transmission business, which enhances visibility on required investment levels [4][6] - The new regulatory framework includes improved protections for project cost recovery and introduces **Output Delivery Incentives (ODIs)** for on-time delivery and innovation [9][10] - The company expects to achieve an overall **return on equity (ROE)** above **9%** under the new price control [10][30] Growth Drivers - Key growth drivers include **decarbonization**, **energy security**, and increased demand from **data centers** and **AI** [4] - The company is focused on enhancing its delivery capabilities and has established partnerships to ensure efficient project execution [38][39] Challenges and Considerations - There are ongoing discussions regarding the **US power generation fleet** and the potential impact of contracts expiring in **2028** [18] - The company is navigating planning challenges and is focused on ensuring timely project delivery [50][51] - Cost inflation is being monitored, but the increase in the investment plan is primarily driven by the extension of the timeline and additional project volume rather than significant supply chain cost increases [59] Future Outlook - National Grid aims to maintain a strong balance sheet and leverage its funding options, including unused hybrid debt capacity, to support future investments [10][26] - The company is open to exploring new projects in the US, particularly in transmission, as part of its growth strategy [72] Conclusion - National Grid is positioned to deliver significant growth and value creation through its ambitious investment plans, regulatory agreements, and focus on operational efficiency, while also addressing the challenges posed by market dynamics and regulatory environments [75]

Core Insights - Hydro One is focusing on significant transmission projects to meet the long-term electricity demand forecast in Ontario, driven by factors such as new housing, electric vehicle manufacturing, and advanced manufacturing [3][5] Project Developments - The Barrie to Sudbury Transmission Line is a 290-kilometer, single-circuit, 500 kV line expected to be operational by 2032 [1] - The Greenstone Transmission Line is a 230-kilometer single-circuit line also expected to be in service by 2032 [2] - A 500 kV double-circuit transmission line from Bowmanville to the Greater Toronto Area is planned to support clean electricity delivery from small modular reactors at Darlington, with service expected in the early 2030s [3] Financial Performance - Hydro One reported a fourth-quarter basic EPS of CAD 0.39, up from CAD 0.33 year-over-year, and a full-year EPS of CAD 2.23 compared to CAD 1.93 in the previous year [6][10] - Quarterly net income increased by approximately 16% year-over-year, while full-year net income rose by 15.8% [10] - The company achieved CAD 254 million in savings in 2025, with CAD 166 million shared with customers through reduced future rates [4][15] Capital Investment - Capital deployment accelerated with Q4 investments totaling CAD 939 million, leading to a full-year total of approximately CAD 3.4 billion, a 9.9% increase year-over-year [5][16] - Assets placed in service totaled CAD 1.3 billion in Q4, up 19.1%, and approximately CAD 2.9 billion for the full year, up 17.8% [17] Customer Satisfaction and Safety - Hydro One reported strong customer satisfaction scores, with 88% satisfaction among residential and small business customers [9] - The company maintained a strong safety record, achieving 20 consecutive months without a high-energy serious injury [8] Future Outlook - Hydro One expects annual EPS growth of 6% to 8% for the current rate period, using a normalized 2022 EPS of CAD 1.61 as a base [20] - The company is actively participating in Ontario's competitive transmission procurement process, providing input on project criteria [21]

Core Insights - Hydro One Limited reported strong financial results for the fourth quarter of 2025, with a net income of $233 million, an increase of 16.5% from $200 million in the same period of 2024, resulting in basic earnings per share (EPS) of $0.39 compared to $0.33 in the prior year [1][2][3] Financial Highlights - The company declared a quarterly dividend of $0.3331 per share, payable on March 31, 2026 [1] - Capital investments for the quarter were $939 million, up from $799 million in 2024, while assets placed in service totaled $1,310 million compared to $1,100 million in the previous year [1][2] - Total revenues for the fourth quarter reached $2,268 million, an increase of $173 million from $2,095 million in the same quarter of 2024 [1][2] - Net income attributable to common shareholders for the year ended December 31, 2025, was $1,339 million, up from $1,156 million in 2024, leading to an annual EPS of $2.23 compared to $1.93 [1][2] Operational Highlights - Hydro One was recognized as one of Canada's Best Employers for 2026 by Forbes and Statista [1] - The company achieved productivity savings of $254 million in 2025 through ongoing cost optimizations [1] - Hydro One was selected to develop and construct several new transmission lines, including the Greenstone Transmission Line and the Sudbury to Barrie Transmission Line, in partnership with First Nations [1][2] Investment and Financing Activities - Hydro One priced $1.6 billion in Medium-Term Notes under its Sustainable Financing Framework, with proceeds allocated to finance eligible green projects [1][2] - The company filed an application with the Ontario Energy Board (OEB) to construct the Welland Thorold Power Line, further enhancing its infrastructure [1][2] Community Engagement - All five partner First Nations secured financing to become equity partners in the Chatham to Lakeshore Transmission Line, marking a significant milestone in Hydro One's First Nations Equity Partnership model [1][2]

Core Viewpoint - The Ontario government has designated Hydro One to develop a new priority transmission line between Bowmanville and the Greater Toronto Area (GTA) to meet growing energy demand and support economic growth in the region [1][2][3]. Group 1: Project Details - The new project involves constructing a double-circuit 500-kilovolt (kV) transmission line from the Bowmanville Switching Station to one of three potential transformer stations, with expected service in the early 2030s [1]. - Hydro One will collaborate with nearby First Nations, allowing them to invest in a 50% equity stake in the transmission line component through a partnership model [2]. - The project is part of a broader initiative to expand Ontario's transmission system, which is critical for ensuring a reliable electricity supply as demand is projected to grow significantly over the next 25 years [3]. Group 2: Economic Impact - The new transmission line is expected to create thousands of jobs across Ontario and secure the province's energy supply for decades, delivering reliable electricity from small modular reactors (SMRs) [4]. - The project will support key industrial sectors, including agriculture and manufacturing, and is aimed at strengthening Ontario's economy amid global instability [3]. Group 3: Company Overview - Hydro One Limited is Ontario's largest electricity transmission and distribution provider, serving 1.5 million customers and holding $36.7 billion in assets as of December 31, 2024, with annual revenues of $8.5 billion in 2024 [5]. - In 2024, Hydro One invested $3.1 billion in its transmission and distribution networks and supported the economy by purchasing $2.9 billion in goods and services [7].

Core Insights - Hydro One Limited reported an earnings per share (EPS) of $0.50, exceeding the estimated $0.47, but its revenue of approximately $876.2 million fell significantly short of the anticipated $2.3 billion [1][5] - The company's price-to-earnings (P/E) ratio is 25.44, indicating a positive market valuation of its earnings potential despite the revenue miss [2][5] Financial Performance - The EPS growth reflects strong operational efficiency, even with the revenue shortfall [2] - Hydro One's price-to-sales ratio is 3.65, and the enterprise value to sales ratio is 5.71, suggesting a robust market valuation relative to its sales [3] - The enterprise value to operating cash flow ratio stands at 20.49, indicating investor confidence in the company's cash-generating capabilities [3] Financial Health - The debt-to-equity ratio of 1.46 shows a balanced approach to financing, utilizing both debt and equity [4][5] - The current ratio of 0.36 suggests potential challenges in covering short-term liabilities with short-term assets [4][5] Strategic Focus - Hydro One is committed to supporting Ontario's growth through infrastructure projects, such as the St. Clair Transmission Line, aimed at enhancing power reliability and meeting increasing electricity demand [4]

Financial Data and Key Metrics Changes - The company reported a 13% increase in underlying operating profit to GBP 2.3 billion, driven by higher regulatory revenues in both U.K. and U.S. electricity transmission businesses [13][27] - Underlying earnings per share rose by 6% to GBP 29.8, reflecting strong operational performance despite higher finance costs [14][28] - Capital investment reached a record GBP 5.1 billion, up 12% year-on-year at constant currency [14][28] Business Line Data and Key Metrics Changes - U.K. electricity distribution saw underlying operating profit decrease by GBP 22 million to GBP 551 million due to lower revenues from Ofgem's real price effects mechanism [29] - U.K. electricity transmission reported an underlying operating profit increase of GBP 122 million to GBP 846 million, supported by higher allowed revenues [30] - In the U.S., New York's underlying operating profit increased by GBP 167 million to GBP 443 million, driven by higher net revenue from network upgrades [31] Market Data and Key Metrics Changes - The company is experiencing strong visibility in its investment program, with a projected investment growth of around 10% per annum and underlying earnings per share growth of 6%-8% [7][8] - The U.S. regulatory environment remains supportive, with approximately 75% of the five-year investment plan approved within rate cases [10] - In New England, capital investment increased by 23% to GBP 1 billion, reflecting increased spending on asset condition and system capacity [24] Company Strategy and Development Direction - The company is focused on a GBP 60 billion capital investment plan aimed at future-proofing networks to meet rising energy demand [4][5] - There is a commitment to operational excellence and capital discipline, with an emphasis on delivering cleaner energy and supporting economic growth [5][7] - The company is actively engaging with regulators and stakeholders to ensure the delivery of infrastructure projects and to adapt to evolving energy policies [11][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver a compelling investment proposition, citing strong progress in securing supply chains for major projects [8][9] - The company is well-prepared for winter, with electricity margins forecasted at around 10%, the highest since 2019 [15] - Management highlighted the importance of regulatory support and policy developments in facilitating future investments [10][11] Other Important Information - The company has achieved over GBP 100 million in synergy savings six months ahead of target following the U.K. electricity distribution acquisition in 2021 [16] - The Lost-Time Injury Frequency Rate was reported at 0.09, indicating a strong focus on safety across operations [15] - The company is working on developing AI infrastructure in the U.K., which is expected to drive significant investment in energy infrastructure [12] Q&A Session Summary Question: T3 expectations and dialogue with Ofgem - Management indicated ongoing discussions with Ofgem regarding the overall investable framework and the workability of the regulatory framework, emphasizing the need for a higher base return [44][46][47] Question: Net debt guidance and working capital effects - Management clarified that the net debt guidance has improved due to transaction proceeds and working capital effects, with a modest increase expected [44][49][50] Question: U.K. electricity distribution operational performance - Management confirmed that operational performance is on track to meet the 50 basis points guide for the year, with expectations to approach 100 basis points by the end of the price control period [52][53][54] Question: Sufficiency of Ofgem allowances for maintenance - Management affirmed that past allowances have been sufficient to maintain a reliable network, with ongoing discussions for future price controls [57][58][59] Question: U.K. infrastructure investment needs - Management emphasized the importance of stable fiscal and regulatory frameworks and streamlined planning processes to facilitate infrastructure investment across the U.K. [59][60]

Financial Data and Key Metrics Changes - The company reported an underlying operating profit of GBP 2.3 billion, a 13% increase year-on-year, driven by higher regulatory revenues in both the U.K. and U.S. electricity transmission businesses [12][25] - Underlying earnings per share rose by 6% to GBP 29.8, reflecting strong operating performance despite higher finance costs [12][25] - Cash generated from continuing operations increased by 35% to GBP 3.6 billion, attributed to improved profitability and favorable working capital movements [32] Business Line Data and Key Metrics Changes - In U.K. electricity distribution, underlying operating profit decreased by GBP 22 million to GBP 551 million due to lower revenues from Ofgem's real price effects [26][28] - U.K. electricity transmission saw an underlying operating profit increase of GBP 122 million to GBP 846 million, supported by higher allowed revenues [28] - In the U.S., New York's underlying operating profit increased by GBP 167 million to GBP 443 million, driven by higher net revenue from network upgrades [29] Market Data and Key Metrics Changes - Capital investment in the first half reached GBP 5.1 billion, a record level and up 12% year-on-year [12][26] - U.K. electricity transmission capital investment increased by 31% to GBP 1.7 billion, reflecting ongoing investments in substations and ASTI projects [28][17] - In New England, capital investment rose by 23% to GBP 1 billion, driven by asset condition improvements and smart meter installations [22] Company Strategy and Development Direction - The company is focused on a GBP 60 billion capital investment plan aimed at future-proofing networks and meeting growing energy demand [3][6] - There is a commitment to operational excellence and capital discipline, with a target of 10% annual investment growth and 6%-8% underlying earnings per share growth [6][12] - The company is actively engaging with regulators and policymakers to support infrastructure development and accelerate economic growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver a compelling investment proposition, supported by strong regulatory backing and policy developments [6][9] - The company is well-prepared for winter, with electricity margins forecasted at around 10%, the highest since 2019 [14] - Management highlighted the importance of maintaining momentum and focusing on performance amidst challenges and opportunities in the energy sector [4][5] Other Important Information - The interim dividend declared is GBP 16.35 per share, representing 35% of the previous year's full-year dividend [12][26] - The company has achieved over GBP 100 million in synergy savings six months ahead of target following the U.K. electricity distribution acquisition in 2021 [15][28] - The transition to a more balanced geographical footprint, with over three-quarters of operations now in electricity, reflects a successful portfolio repositioning [38] Q&A Session Summary Question: T3 expectations and dialogue with Ofgem - Management indicated ongoing discussions with Ofgem regarding the investment framework and the need for a higher base return, supported by recent regulatory developments [41][43][44] Question: Net debt guidance and working capital effects - The company provided clarity on net debt guidance, indicating a modest increase due to transaction proceeds and working capital improvements [41][46][47] Question: U.K. electricity distribution operational performance - Management confirmed that operational performance is on track for the year, with expectations to reach closer to 100 basis points by the end of the ED2 period [49][50][51] Question: Sufficiency of allowances for maintenance - Management affirmed that past allowances have been sufficient to maintain network reliability, with a focus on ensuring future regulatory frameworks support necessary capital expenditures [54][55][56] Question: Infrastructure investment and planning regime - Management emphasized the need for stable fiscal and regulatory frameworks to facilitate efficient infrastructure investment across the U.K. [56][57] Question: Update on network windfalls and TOTEX uncertainty - Management clarified that there have been no windfall profits and discussed the expected clarity on TOTEX numbers as new connection offers are issued [59][63][64]

Financial Data and Key Metrics Changes - The underlying operating profit increased by 13% to GBP 2.3 billion, driven by higher regulatory revenues in both the U.K. and U.S. electricity transmission businesses [13][25][26] - Underlying earnings per share rose by 6% to GBP 29.8, reflecting strong operational performance despite higher finance costs [26][32] - The company achieved a record capital investment of GBP 5.1 billion, up 12% year-on-year at constant currency [13][26] Business Line Data and Key Metrics Changes - In U.K. electricity distribution, underlying operating profit decreased by GBP 22 million to GBP 551 million due to lower revenues from Ofgem's real price effects mechanism [26][27] - U.K. electricity transmission saw an increase in underlying operating profit by GBP 122 million to GBP 846 million, supported by higher allowed revenues [26][28] - In the U.S., New York's underlying operating profit increased by GBP 167 million to GBP 443 million, driven by higher net revenue and recovery of previously unremunerated costs [28][29] Market Data and Key Metrics Changes - Capital investment in the U.S. reached GBP 1.6 billion, up 5%, reflecting increased maintenance replacement expenditure [21][29] - In New England, capital investment increased by 23% to GBP 1 billion, driven by asset condition and system capacity investments [23] Company Strategy and Development Direction - The company is focused on a GBP 60 billion capital investment plan aimed at future-proofing networks and meeting growing energy demand [4][6] - There is a commitment to operational excellence and capital discipline while delivering for customers and creating shareholder value [5][6] - The company is actively engaging with government and industry to support the development of AI infrastructure and data centers in the U.K. [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver a compelling investment proposition with expected investment growth around 10% per annum and underlying earnings per share growth of 6%-8% [6][13] - The company is well-prepared for winter with plans in place to ensure reliability and safety across networks [14] - Management highlighted the importance of regulatory support and policy developments in facilitating future investments [10][11] Other Important Information - The board declared an interim dividend of GBP 16.35 per share, representing 35% of last year's full-year dividend [26] - The company achieved over GBP 100 million of synergy savings six months ahead of target following the U.K. electricity distribution acquisition in 2021 [15][27] Q&A Session Summary Question: T3 expectations and dialogue with Ofgem - Management indicated that they are focused on the overall investable framework and the workability of the regulatory framework, advocating for a higher base return [40][41][42] Question: Net debt guidance - The net debt guidance improved, with a projected increase of around GBP 1 billion for the full year, accounting for disposals and working capital effects [43][44] Question: U.K. electricity distribution operational performance - Management confirmed that performance is on track for the year, guiding towards 50 basis points and aiming for closer to 100 basis points by the end of ED2 [45][46][47] Question: Ofgem price controls and maintenance allowances - Management expressed satisfaction with past allowances, noting continued delivery of world-class reliability and a resilient network [49][50] Question: Infrastructure investment in the U.K. - Management emphasized the need for stable fiscal and regulatory frameworks and improvements in the planning regime to facilitate efficient infrastructure development [51][52] Question: Select committee focus on network windfalls - Management clarified that they have not received windfall profits and that Ofgem has already addressed this issue [53][54] Question: RIIO-T3 TOTEX expectations - Management indicated that the GBP 35 billion TOTEX is contingent on the speed of connections and that clarity will improve as new connection offers are made [56][57]

Core Viewpoint - Hydro One continues to invest in its transmission and distribution networks to meet the growing energy demands in Ontario, supporting economic and community growth [3][10]. Financial Highlights - Revenues for the second quarter of 2025 were CAD 2,066 million, an increase of CAD 35 million compared to the same period in 2024 [5][16]. - Net income attributable to common shareholders was CAD 327 million, up from CAD 292 million in the second quarter of 2024, resulting in basic EPS of CAD 0.54 compared to CAD 0.49 [4][5]. - Capital investments for the quarter were CAD 913 million, compared to CAD 818 million in the same quarter of 2024 [5][10]. Operational Highlights - Hydro One distributed 7,231 GWh of electricity to customers in the second quarter of 2025, an increase from 6,970 GWh in the same period of 2024 [3]. - The average monthly peak demand in Ontario was 20,836 MW, compared to 20,749 MW in the previous year [3]. Strategic Initiatives - The Government of Ontario released its Integrated Energy Plan, outlining strategies to meet energy demand growth through 2050, including new transmission lines [5]. - Hydro One announced 50 recipients of the Ice Storm 2025: Recovery Grant, providing up to CAD 10,000 each for local recovery efforts following an ice storm [12]. Sustainability and Recognition - Hydro One released its annual sustainability report, highlighting progress on environmental, social, and governance (ESG) commitments [14]. - The company was recognized by Corporate Knights as one of the Best 50 Corporate Citizens in Canada for the 10th consecutive year [5].

Group 1 - Hydro One Limited plans to release its second quarter financial results on August 13, 2025, before North American financial markets open [1] - A teleconference will be hosted by Hydro One's management at 8 a.m. ET on the same day to discuss the results and outlook [2] - Participants can access the live webcast through Hydro One's Investor Relations section, and a rebroadcast will be available afterward [2][3] Group 2 - Hydro One is Ontario's largest electricity transmission and distribution provider, serving 1.5 million customers with $36.7 billion in assets as of December 31, 2024, and annual revenues of $8.5 billion in 2024 [4] - The company employed 10,100 skilled employees and invested $3.1 billion in its transmission and distribution networks in 2024, while also supporting the economy by purchasing $2.9 billion in goods and services [5] - Hydro One is committed to community investment, sustainability, and diversity initiatives [5]